“REPORTABLE”
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.8848-8849 OF 2012
Kallakkurichi Taluk Retired Official Association,
Tamilnadu, etc. …. Appellants
Versus
State of Tamilnadu …. Respondent
WITH
CIVIL APPEAL NO.8850-8852 OF 2012
Tiruneveli Corporation city Pensioners Federation …. Appellant
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8853-8855 OF 2012
Madurai Corp. Retired Officers Welfare Association …. Appellant
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8856 OF 2012
Tamilnadu Retired Officers Assn. & Its Affiliate, etc. …. Appellant
Versus
State of Tamil Nadu …. Respondent
WITH
CIVIL APPEAL NO.8857 OF 2012
N. Subramaniam & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8858 OF 2012
Chennai District Retired Officials Assn. …. Appellant
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8859 OF 2012
Tamilnadu Retired Govt. Employees Assn. …. Appellant
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8860 OF 2012
Navaneethakrishnan & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8861-8863 OF 2012
M.M.C. Pensioners Welfare Association & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8864 OF 2012
G. Lakshmikanthan & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8865 OF 2012
L.N. Ranganathan & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8866 OF 2012
P.V. Thirumal & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8868 OF 2012
K.N. Alavandar & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8869 OF 2012
Retired Officials Association …. Appellants
Versus
State of Tamilnadu …. Respondent
WITH
CIVIL APPEAL NO.8871 OF 2012
S. Jeevi Kanagammal & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8872 OF 2012
V. Thirunavukkarasu & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8873-8874 OF 2012
Tamilnadu Retired School-College Tech. Assn. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8875 OF 2012
Ramanathanpuram District All Pensioners & Senior
Citizens Welfare Assn. …. Appellant
Versus
Government of Tamilnadu …. Respondent
WITH
CIVIL APPEAL NO.8876 OF 2012
S. Shan Mugam & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8877-8878 OF 2012
S. Shanmugum & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8879 OF 2012
R. Thanumoorthy & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8880 OF 2012
K. Parthasarathy & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8881 OF 2012
A. Sethu & Ors. …. Appellants
Versus
State of Tamilnadu …. Respondent
WITH
CIVIL APPEAL NO.8882 OF 2012
A. Shanmugathai & Ors. …. Appellants
Versus
State of Tamilnadu & Ors. …. Respondents
WITH
CIVIL APPEAL NO.8883 OF 2012
R. Kandasamy & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
WITH
CIVIL APPEAL NO.8870 OF 2012
P. Chellappan & Ors. …. Appellants
Versus
State of Tamilnadu & Anr. …. Respondents
J U D G M E N T
JAGDISH SINGH KHEHAR, J.
1. The Government of Tamil Nadu has been issuing executive order from
time to time to determine the composition of allowances to be added to pay
for quantifying wages for calculating pension.
It is the case of the
appellants, that the State Government followed a consistent practice of
treating ‘dearness allowance’ as ‘dearness pay’ for the computation of
pension and other retiral benefits.
Illustratively, we are informed, that
by a Government Order dated 11.3.1970 the State Government included
‘dearness allowance’ at the rate then prevalent, as a component of wages
for calculating average emoluments for determining pension, for those who
retired on or after 26.2.1970.
The instant Government Order dated
11.3.1970 was applicable to employees who retired between 26.2.1970 and
1.10.1970.
2. One R. Narasimachar who had retired on 21.11.1969 was not extended
the benefit of ‘dearness allowance’ drawn by him at the time of his
retirement, while computing his pension.
This denial was because the
Government order dated 11.3.1970, extended the benefit referred to above
only to such employees who had/would retire on or after 26.2.1970.
Dissatisfied with the aforesaid denial, he filed Writ Petition no.1815 of
1986 contending, that his pension should have been calculated by taking
into consideration ‘dearness allowance’ which was being drawn by him at the
time of his retirement, as ‘dearness pay’.
A learned Single Judge of the
High Court of Judicature at Madras (hereinafter referred to as, the High
Court) allowed the aforesaid writ petition on 15.3.1990 by holding, that
the State Government was not right in restricting the applicability of the
Government Order dated 11.3.1970 only to employees who retired between
26.2.1970 and 1.10.1970.
The learned Single Judge directed, that ‘dearness
allowance’ which the appellant was drawing, at the time of his retirement,
be treated as ‘dearness pay’ for calculating his pension.
On 26.2.1991,
the writ appeal filed by the State Government against the order dated
15.3.1990 (passed by the learned Single Judge allowing Writ Petition
no.1815 of 1986), was dismissed.
3. Based on the aforesaid judgment dated 15.3.1990, which the State
Government accepted, a clarificatory Government Order dated 4.12.1991, was
issued.
Under the Government Order dated 4.12.1991, even for employees who
had retired prior to 1.12.1966, ‘dearness allowance’ actually drawn by
them, at the time of their retirement,would be taken as ‘dearness pay’ for
purposes of calculating pension.
For employees retiring between 1.12.1966
and 25.2.1970, ‘dearness allowance’ upto the level obtaining in December,
1966 would be taken into consideration as ‘dearness pay’ for determining
pension (and gratuity).
It is therefore submitted, that ‘dearness
allowance’ became a component of pension, for all employees who had retired
upto 25.2.1970.
4. In order to place the sequence of facts in the correct perspective,
it was further brought to our notice that
the Government order dated
11.3.1970 was clarified by a subsequent letter dated 4.12.1991.
As per the
aforesaid order and letter, Government servants retiring from service on or
after 26.2.1970, and upto 1.10.1970, ‘dearness allowance’ up to the level
obtaining in December, 1966, was to be reckoned as ‘dearness pay’ for
purposes of pension (and gratuity).
Thereupon, through a subsequent
Government order dated 4.12.1991, directions were issued for extending the
benefit contemplated by the Government order dated 11.3.1970 and the
Government’s letter dated 4.2.1991, even to those who had retired prior to
26.2.1970.
5. A Government order dated 4.12.1991 was then brought to our notice.
It provided, that notional revised pension payable from 1.6.1988 would be
encashable only with effect from 1.12.1991.
It also provided, that those
Government servants who had retired prior to 26.2.1970 but had died before
1.12.1991, would be ineligible for the benefits contemplated for retirees
prior to 26.2.1970.
However, if the concerned Government employee had died
after 1.12.1991, the benefits contemplated for retirees prior to 26.2.1970
would be released to the legal heirs of such retirees.
It is, therefore
apparent, that for the benefits of the aforesaid Government order, the
retirees under reference would be deprived of the actual monetary benefit
payable to him, from the date of his or her retirement, till 30.11.1991 (as
arrears of pension under the aforesaid Government orders were payable only
with effect from 1.12.1991).
6. The aforesaid R. Narasimachar again assailed the Government order
dated 4.12.1991, by contesting the determination of the State Government,
in denying to him, the benefit of arrears from the date of his retirement
(on 21.11.1969) till 30.11.1991, by filing Writ Petition no. 4038 of 1992
before the High Court.
The aforesaid Writ Petition was allowed by the High
Court.
The High Court held, that monetary benefits could not be denied for
the period preceding 1.12.1991. In other words, retirees before 1.12.1991
were held entitled to arrears from the date of their retirement till
30.11.1991. The cut off date (1.12.1991) for extending the benefit of
arrears was accordingly set aside.
7. The judgment rendered by the High Court in Writ Petition no. 4038 of
1992 on 15.6.1993, quashing the action of the State Government in limiting
payment of arrears, only with effect from 1.12.1991, was accepted by the
State Government.
The judgment of the High Court was given effect to, by a
Government order dated 26.7.1993, whereby, the earlier Government order
dated 4.12.1991 was modified.
Under the Government order dated 26.7.1993,
pensioners were held eligible for arrears of pension from the date of their
actual retirement.
The aforesaid benefit of arrears was also extended to
legal heirs of such pensioners, who had died in the meantime.
8. Based on the factual position narrated in the foregoing paragraphs,
it clearly emerges, that ‘dearness allowance’ was taken as ‘dearness pay’
for employees retiring from government service, at all times, without any
interruption, for the computation of retiral benefits including pension.
The aforesaid narration also reveals, that the component of ‘dearness
allowance’ to be treated as ‘dearness pay’ for being taken into
consideration for calculating pension, was determined by the State
Government, through Government orders issued from time to time.
The
narration recorded hereinabove pertains to employees whose date of
retirement preceded 1.10.1970.
9. The factual position being recorded hereinafter relates to the period
after 1.10.1970.
10. On 6.2.1974, a Dearness Allowance Committee was constituted, to inter
alia make recommendations, of allowances which should be treated as a
component of wages, for calculating pension of retired/retiring employees.
On 7.7.1974, the Dearness Allowance Committee inter alia recommended, that
‘dearness allowance’ be treated as ‘dearness pay’ in full, for computing
retiral benefits including pension.
Accepting the recommendations of the
Dearness Allowance Committee, the Finance Department, issued a Government
Order dated 6.2.1975 directing, that ‘dearness allowance’ actually being
drawn by employees retiring on or after 1.2.1975 be treated as ‘dearness
pay’ for calculating average pay ( by taking not consideration 10 months
wages, prior to the date of retirement), for calculating pension, (gratuity
and travelling allowance).
It would be relevant to mention, that at the
aforesaid juncture, employees drawing pay upto Rs.299/-, were entitled to
Rs.55/- as ‘dearness allowance’; and those drawing pay at Rs.300/- and
above, were entitled to Rs.70/- as ‘dearness allowance’.
Accordingly, by
the Government Order dated 6.2.1975, the State Government, determined the
component of ‘dearness allowance’ (Rs.55/- or Rs.70/-, as the case may be)
to be taken into consideration, for calculating pension.
The intention of
the instant Government Order was, that employees retiring on or after
1.2.1975, should derive full benefit of, the merger of the then existing
‘dearness allowance’ into wages, as ‘dearness pay’ for computing pension.
The Government order dated 6.2.1975 permitted employees retiring on or
after 1.2.1975, an addition of ‘dearness allowance’ actually being drawn by
them, (during the period of ten months, prior to the date of their
retirement), by treating the same as ‘dearness pay’, for calculating
average wages. The said average wage, would lead to the computation of
pension actually payable.
11. K. Venkataraman filed Writ Petition no. 8237 of 1995 before the High
Court with a prayer that ‘dearness allowance’ drawn by him for a period of
ten months prior to the date of his retirement (on 30.6.1974) be treated as
‘dearness pay’ for calculating his pension.
The benefit sought, had been
denied because he had retired on 30.6.1974, whereas, the benefit of the
Government order dated 6.2.1975 was extended only to such employees who had
retired after 1.2.1975.
The aforesaid Writ Petition came to be transferred
to the Tamil Nadu Administrative Tribunal (hereinafter referred to as, the
Administrative Tribunal). Before the Administrative Tribunal, the Writ
Petition was renumbered as T.A. 845 of 1991.
The Administrative Tribunal,
by its order dated 1.4.1993, held that K. Venkataraman was entitled to the
benefits extended to other pensioners, irrespective of the fact that he had
retired (on 30.6.1974 i.e., prior to the cut off date (1.2.1975).
12. The State Government, accepted the decision of the Administrative
Tribunal in K. Venkataraman’s case (in T.A. no. 845 of 1991 decided on
1.4.1993), and implemented the same.
For the aforesaid purpose, the
Finance (Pension) Department issued a Government order dated 23.9.1993.
Accordingly, K. Venkataraman’s pension was recalculated by treating
‘dearness allowance’ actually drawn by him, during the ten months preceding
the date of his retirement, as ‘dearness pay’.
It therefore emerges, that
the manner of computing pension for retired and retiring employees were
equated, in so far as the component of ‘dearness allowance’ is concerned.
13. We were told, that when one or the other Government order
introduced a distinction in pensionary benefits, for computing pension, the
same was equated through judicial intervention.
Such judicial
interventions were then adopted by the State Government, from time to
time.
This aspect of the matter, factual as well as legal, was not
disputed by the learned counsel representing the respondents.
This
position continued till the adoption of the recommendations of the Fourth
Tamil Nadu Pay Commission Report, details whereof, shall be narrated soon
hereafter.
14. On 1.1.1979, the Tamil Nadu Pension Rules, 1978 (hereinafter referred to as “the Pension Rules”) came to be enforced.
After the promulgation of
the Pension Rules, pension of retiring government employees had to be
determined in consonance with the said Rules.
It is not in dispute, that
pension to Government employees is now regulated under the Pension Rules.
Under the Pension Rules, pension is calculated on the basis of an
employee’s emoluments/wages, immediately before his retirement.
For this,
reference may be made to Rule 30 of the Pension Rules, which is being
extracted hereunder:-
“30. Emoluments—In the rules, unless the context otherwise requires,-
-
(1) Emoluments means and include:-
(i) Pay, other than special pay granted in view of his
personal qualifications, which has been sanctioned
for a post held by him substantively or in an
officiating capacity (including temporary capacity
under emergency provisions) or to which he is
entitled by reason of his position in a cadre:
(ii) special pay, dearness pay and personal pay; and
(iii) any other remuneration which may be specially
claused as emoluments by the Government.”
(emphasis is ours)
The emoluments/wages to be taken into consideration for computing pension
is dependent on the allowances which are added to pay.
The composition and
component of the said allowances is determined by the State Government from
time to time through Government orders.
A perusal of Rule 30 of the
Pension Rules reveals, that ‘dearness pay’ is a component of the wages to
be taken into consideration for computing pension.
And ‘dearness pay’ is a
component of ‘dearness allowance; which on a declaration by the State
Government approves (through a Government order) for being taken into
consideration for calculating pension.
15. In 1986, the Fourth Tamil Nadu Pay Commission gave its report.
The
Pay Commission recommended, that ‘dearness allowance’, prevalent at the end
of three years (after the Pay Commission’s recommendations), should be
treated as ‘dearness pay’, in order to ensure a reasonable pension level.
The Finance (Pension) Department having considered the recommendations made
by the Pay Commission, issued a Government Order dated 30.4.1986, providing
that ‘dearness allowance’ and ‘additional dearness allowance’ sanctioned
upto 30.9.1987 would be treated as ‘dearness pay’ for calculating pension,
in respect of those who retired (or died) on or after 1.10.1987.
The
concession of adding ‘dearness pay’ was extended to the period of 10 months
for calculating average emoluments, for those who retired before or after
31.7.1987.
But employees retiring on or after 1.10.1987 were entitled to
add ‘dearness allowance’ sanctioned upto 1.10.1987 to their wages, for
quantifying pension (family pension and death-cum-retirement gratuity).
It
is therefore apparent, that even after the acceptance of the
recommendations of the Fourth Pay Commission report, ‘dearness allowance’
remained a component of wages.
As such, ‘dearness allowance’ continued to
be taken into consideration for computing pension of retiring government
employees.
16. The Fifth Tamil Nadu Pay Commission submitted its report in 1989.
The instant Pay Commission recommended, the following formula for
calculating pension:
| |Basic Pay Per Month |Rate of Pension Per Month |
|i) |Not exceeding Rs.1,500 |30 percent of basic pay subject|
| | |to a minimum of Rs.375 p.m. |
|ii) |Exceeding Rs.1,500 but not |20 per cent of basic pay |
| |exceeding Rs.3,000/- |subject to a minimum of Rs.450 |
| | |p.m. |
|iii)|Exceeding Rs.3,000/- |15 per cent of basic pay |
| | |subject to a minimum of Rs.600 |
| | |and a maximum of Rs.1,250 p.m. |
| | | |
The Fifth Pay Commission also recommended different percentages of increase
in pension for existing pensioners, who had retired prior to 1.6.1988. By
a Government Order dated 9.8.1989 the Finance Department while accepting
the recommendations of the Fifth Tamil Nadu Pay Commission fixed a slab
system, for adding ‘dearness allowance’ as ‘dearness pay’ for calculating
pension. This decision of the State Government was to be implemented for
employees retiring on or after 1.6.1988.
17. Original Application no. 1919 of 1991 was filed by Ambasamudaram,
Taluk Pensioner Associations before the Administrative Tribunal.
Likewise,
a large number of other Original Applications (including OA no. 4952 of
1992, O.A. no. 2227 of 1992, O.A. no. 4265 of 1992, O.A. no. 4953 of 1992,
OA no.2645 of 1994 and OA no.2646 of 1994) were filed before the
Administrative Tribunal.
Through the aforesaid original applications, the
petitioners/applicants assailed the Government Order dated 30.4.1986
(issued in furtherance of the recommendations made by the Fourth Tamil Nadu
Pay Commission), as well as, the Government Order dated 9.8.1989 (issued in
furtherance of the recommendations made by the Fifty Tamil Nadu Pay
Commission).
All the aforesaid original applications were disposed of by
the Administrative Tribunal vide a common order dated 6.5.1996.
The
operative part of the order passed by the Administrative Tribunal while
disposing of the aforementioned original applications is being extracted
hereunder:
“OA 1919/91
We set aside the G.O.Ms. No.810 (Finance and Pay Commission)
Department dated 9.8.89 in so far as it affects the applicant’s
association and direct the respondent to extend the benefits of 60%
increase in the pre-revised pension plus the Dearness Allowance at 608
points available to those who retired prior to 1.6.60 to those
pensioners and family pensioners of cases of retirements or death
occurring after 1.6.60.
OA 2227/92
We quash the G.O.Ms. No.371, Finance dated 30.4.1986 and
G.O.Ms.No.911, finance dated 4.12.1991 in so far as they have
restricted their applicability to the pensioners and family who
retired prior to 1.10.1987 listed in Appendix 1 and 2 and those who
retired during the period from 1.10.1987 to 31.5.1988 as listed in
Appendix from the services of Government, local bodies and aided
educational institutions and direct the respondent to count the DA and
ADA as dearness pay for all ten months preceding retirement for
computing average emoluments to fix their pensionary benefits
including pension and value of commutation and also direct the
respondent to pay the arrears of pension, gratuity and value of
commutation of pension on such refixation computed from the date of
retirement or death as the case may be to the pensioners and family
pensioners.
OA 4265/92
We quash the G.O.Ms.No.115, Finance dated 6.2.1975 and
G.O.Ms.No.911 Finance dated 4.12.1991 in respect of the applicant as
far as it relates to classification of pensioners and direct the
respondent to extend the benefits of the impugned G.Os. to the
affected pensioners and family pensioners and pay the arrears of
pension and gratuity and the family pension computed on refixation of
their original pension or family pension from the date of their
retirement or the date of death of the Government servant as the case
may be.
OA 4953/92
We quash G.O.Ms.No.371, Finance dated 30.4.1986 and
G.O.Ms.No.911 Finance dated 4.112.91 in respect of the applicant as
far as they have restricted their applicability to the pensioners and
family pensioners’ who retired or died as the case may be prior to
1.10.87 and after 1.4.78 and direct the respondent to allow the
pensioners who retired during the period from 1.10.87 to 31.5.1988 to
count the DA and ADA as dearness pay for all the 10 months preceding
retirement for computing average emoluments and extend the benefits of
the impugned GOS to them, and pay them the arrears of pension,
gratuity and value of commutation on such refixation computed on and
from the date of retirement or death as the case may be to the
affected pensioners and family pensioners.
OA No.2645/94
We direct the respondents to extend the benefit of
G.O.Ms.No.679, Finance (Pension) Department, dated 23.9.93 to the
applicant also and revise his pension with effect from 1.11.1974
taking into account the Dearness Allowance drawn by him from 9.1.1974
to 31.10.1974 and pay him the arrears due to him consequent on the
revision from 1.11.1974.
OA No.2646/94
We quash the letter No.88079/Pension/93-I, Finance Department,
dated 1.10.1993 and direct the respondent to extend the benefit
granted in G.O.Ms.No.115, Finance dated 6.2.75 to those who retired
during the period from 1.10.70 to 1.2.75 and pay them ar4rears of
pension and DCRG from the dates of their retirement.
The applications are allowed. Taking into consideration the
fact that most of the applicants would have died or most of them would
have reached the age of more than 70, we direct the respondent to
refix their pension and pay the arrears within two months from the
date of receipt of this order or a copy thereof.”
18. The factual narration recorded hereinabove refers to the Government
orders issued from to time, directing the component of ‘dearness
allowance’, which was to be taken into consideration as ‘dearness pay’ for
computation of pension; the outcome of the challenges raised to the
aforesaid Government orders; and the eventual implementation thereof in the
context of the implementation of the component of ‘dearness pay’ to be
taken into consideration for calculating pension.
Even though the
exhaustive details of the same have been narrated above, it is necessary to
record a summary thereof, so as to have a bird’s eye view of the manner in
which ‘dearness pay’ has been extended to retired Government employees from
time to time.
Accordingly, the aforesaid summary is being paraphrased
below:-
(i) Government order dated 11.3.1970 included ‘dearness
allowance’ as a component of wages for calculating pension for
only such employees who retired between 26.2.1970 and 1.10.1970.
By judicial intervention, the aforesaid Government order
extending the benefit of treating ‘dearness allowance’ as
‘dearness pay’, was held to be applicable even to employees who
had retired prior to 26.2.1970. The State Government accepted
the aforesaid legal position and extended the same benefit of
‘dearness allowance’ by treating the same as ‘dearness pay’ to
all pensioners equally.
(ii) Government order dated 6.2.1975 was issued to give effect
to the recommendations made by the Dearness Allowance Committee
to the effect, that ‘dearness allowance’ sanctioned with effect
from 1.4.1974 (Rs.55/- for employees drawing pay upto Rs.599/-,
and Rs.70/- for employees drawing pay upto Rs.600/- and above)
would be treated as ‘dearness pay’ for employees retiring on or
after 1.2.1975 ( by ‘adding dearness allowance actually drawn by
them during the ten months preceding their retirement. By
judicial intervention, it was held that the aforesaid benefit
would also extend to such employees who had retired during the
period between 2.10.1970 and 31.1.1975, and that, ‘dearness
allowance’ sanctioned from time to time and actually drawn by
the retiring employee would be treated as ‘dearness pay’ in case
of those who retired during the period between 2.10.1970 and
31.1.1975 (for calculation of pension).
(iii) Government order dated 30.4.1986, while accepting the
recommendation made by the Fourth Tamil Nadu Pay Commission,
provided for certain pensionary benefits to employees who had
retired between 1.10.1987 and 31.5.1988, by allowing them to
count ‘dearness allowance’ and ‘additional dearness allowance’
as ‘dearness pay’. The concession of ‘dearness pay’ was
extended for the entire ten months for calculating average
emoluments in case of those who retired after 31.7.1987. By
judicial intervention, it was held that the concession of adding
‘dearness allowance’ as ‘dearness pay’ would extend even to
employees who had retired (or died) prior to 1.10.1987. It was
also held, that pensioners who had retired during the period
between 1.10.1987 and 31.5.1988 would be entitled to count
‘dearness allowance’ and ‘additional dearness allowance’ as
‘dearness pay’ (for all the ten months preceding their
retirement) for computing average wages for calculating pension.
The State Government accepted the aforesaid legal position and
extended the aforesaid benefits equally to all pensioners.
(iv) Government order dated 9.8.1989, while accepting the
recommendations made by the Fifty Tamil Nadu Pay Commission,
introduced a slab system, for adding ‘dearness allowance’ as
‘dearness pay’ into the component of wages for calculating
pension. A distinction was made between employees retiring
before and after 1.6.1988. By judicial intervention, the
benefit of treating ‘dearness allowance’ as ‘dearness pay’ was
extended to employees irrespective of the date of their
retirement.
(v) Government order dated 4.12.1991 provided, that arrears of
pension based on recalculation of pension, by taking into
consideration the component of ‘dearness allowance’ as ‘dearness
pay’, would be released to pensioners with effect from
1.12.1991, even in cases where the concerned pensioner had
retired with effect from a date preceding 1.12.1991. By
judicial intervention, arrears of pension, based on
recalculation of pension, were ordered to be released to
retired employees, by taking into consideration the component of
‘dearness allowance’ as ‘dearness pay’ equally for all
employees. The State Government accepted the aforesaid legal
position and extended the said benefit to pensioners who had
retired prior to 1.12.1991.
19. The aforesaid factual/legal position is a historical narration of the
inclusion of ‘dearness allowance’ as ‘dearness pay’ from time to time for
computation of pension.
What emerges from this narration is, that all
pensioners (past, present and future) were equally granted the benefit of
‘dearness allowance’ as ‘dearness pay’ for calculating pension.
Whenever a
class of pensioners was discriminated against, for computation of pension,
on the basis of dearness allowance/ pay judicial intervention restored the
equation.
The equation was then given effect to by the State Government
from time to time. Clearly, judicial intervention repeatedly erased the
classifications created between pensioners, on the basis of ‘dearness pay’.
20. The present controversy yet again presents a dispute, inter se,
between the State Government and retired employees in respect of the
component of ‘dearness allowance’ liable to be treated as ‘dearness pay’,
for computing pension payable to retired Government employees.
Even though
the instant controversy also arises out of Government order dated 9.8.1989,
the same remained unsettled in the earlier rounds of litigation (emerging
out of the same Government order dated 9.8.1989), presumably because none
of the retired employees fell within the classes of pensioners included in
the present litigation.
The employees herein are those who retired on or
after 1.6.1988. By the impugned Government order dated 9.8.1989,
pensionary benefits of an employee retired/retiring on or after 1.6.1988
were required to be computed by adding ‘dearness allowance’ to ‘dearness
pay’ at a fixed percentage.
By virtue of the aforesaid determination,
employees retiring on or after 1.6.1988 would be at a disadvantage, as
against the employees who had retired prior thereto.
21. The afore-stated challenge to the impugned Government order dated
9.8.1989 was raised before the Administrative Tribunal through an Original
Application (O.A. no. 5771 of 2001) by an Association of retired Government
employees.
The aforesaid Original Application came to be transferred to
the High Court, wherein it was renumbered as Writ Petition (T) no. 32045 of
2005. A learned Single Judge of the High Court allowed the aforesaid Writ
Petition on 20.4.2006. The learned Single Judge held, that the State
Government, in not extending benefits to members of the appellant
Association, had discriminated against them.
The impugned Government order
dated 9.8.1989, to the extent that it did not confer the same benefits
(based on the component of ‘dearness allowance’ treated as ‘dearness pay’),
for employees who retired on or after 1.6.1988, was held as unsustainable.
Writ Petition (T) no. 32045 of 2005 was accordingly allowed.
22. Dissatisfied with the order dated 20.4.2006 passed by the learned
Single Judge, allowing Writ Petition (T) no. 32045 of 2005, the State
Government preferred a Writ Appeal before a Division Bench of the High
Court. The aforesaid Writ Appeal, alongwith writ petitions filed before
the High Court on the same subject, were taken up for collective
adjudication. By an order dated 17.12.2007, Writ Appeal no. 1002 of 2006
was allowed. The order dated 20.4.2006, passed by the learned Single Judge
(allowing the claim of the employees who had retired on or after 1.6.1988),
was set aside. All writ petitions filed by retired employees on the same
subject matter which were taken up for disposal alongwith the Writ Appeal
referred to above, were simultaneously dismissed. Through the instant
Civil Appeals, different employees’ associations, as also employees
(singularly and collectively), have assailed the order passed on 17.12.2007
by the Division Bench of the High Court, allowing Writ Appeal no. 1002 of
2006 (and connected appeals); and dismissing the writ petitions preferred
by employees (and employees’ associations) taken up for collective
disposal, alongwith the aforesaid Writ Appeal (no. 1002 of 2006).
23. During the course of hearing, learned counsel representing the
appellants, first and foremost, vehemently contended, on the basis of the
legal and the factual position noticed above, that the benefit of ‘dearness
allowance’ as ‘dearness pay’ has always equally been extended to all the
pensioners, irrespective of the date of their retirement. It was further
contended, that as and when there was discrimination on the above subject,
the same was suitably remedied by the State Government, by
amending/modifying the earlier Government orders. It was submitted, that a
similar discrimination emanating out of the same Government order dated
9.8.1989, pertaining to a set of employees differently classified, was
corrected through judicial intervention (details already noticed above).
During the aforesaid course of repeated adjudication, on the subject under
consideration, the matter once came up to this Court, when Special Leave
Petition (Civil) no. 23643 of 1996, filed before this Court by the State
Government, was dismissed. Even a review petition filed before this Court,
by the State Government thereafter, admittedly met the same fate. It was
accordingly submitted, that the same principle which was made applicable to
different sections of pensioners, under the same Government order dated
9.8.1989, should be extended to the instant class of retired Government
employees i.e., those who retired on or after 1.6.1988.
24. Besides the aforesaid legal premise, for assailing the impugned
Government order dated 9.8.1989, learned counsel representing the
appellants, invited our pointed attention to a compilation enclosed by the
Retired Officers’ Association (in Civil Appeal no. 8856 of 2012). The said
compilation was relied upon to demonstrate to us, the extent of
discrimination caused to the appellants (who retired on or after 1.6.1988).
For this reason various hypothetical situations were illustratively placed
before us, for our consideration. In each such hypothetical illustration,
the appellants took into consideration the same number of years of service
rendered, against the same post, wherein the pensioner had also retired at
the same component of last pay drawn. Therefrom, it was sought to be
established, that employees who had retired on or after 1.6.1988 would be
at a substantial disadvantage. Illustratively, for the adjudication of the
present controversy, a hypothetical situation relating to an employee
holding the post of Deputy Collector is being placed below:
‘A’
Cadre taken : Deputy Collector
Date of retirement : 30.04.1988
Net qualifying service : 33 years
Scale of Pay : 1340-75—1715—90—2435
Pay last drawn : Rs. 2435/-
Average Emoluments : Rs. 2435/-
Original Pension fixed : Rs. 1218/-
Pension revised as per
G.O. 449 : Rs. 1448/-
Revision as per G.O. 810
As on 01.06.1988 : Rs. 1622/-
Pension as per G.O. 271 : 1622/-
Add: 50% increase : 811/-
-------------
Total Pension 2433/- (With effect from
1.6.1988)
(Pension as on 1.1.1966) : 2433/-
Add: 111% : 2701/-
Interim Relief-I 50/-
Interim Relief –II : 244/-
40% Hike : 974/-
------------------------
Total Pension : 6402/- (With effect from
1.1.1996)
xxx xxx xxx xxx
‘B’
Cadre taken : Deputy Collector
Date of retirement : 30.06.1988
Net qualifying service : 33 years
Scale of Pay : 2200-75—2800—100—4000
Average Emoluments : Rs. 2515/- +
Add: 13% as per G.O. 810 : Rs. 327/-
: Rs.2842/-
Pension 50% : Rs.1421/-
As on 1.1.96:
Pension : Rs.1421/-
Add 148% : 2104/-
Interim relief-I : 50/-
Interim relief-II : 143/-
40% Hike : 569/-
-------------
Total Pension Rs.4287/- (With effect from
1.1.1996)
xxx xxx xxx xxx
‘C’
Cadre taken : Deputy Collector
Date of retirement : 30.06.1993
Net qualifying service : 33 years
10 months average
emoluments : Rs.2725/-
Add: 13% increase : Rs. 355/-
: Rs.3080/-
Pension fixed at 50% : Rs.1540/-
Revised pension as on
1.1.1996 : Rs.1540/-
Add Dearness Allowance
148% : 2280/-
Interim relief-I : 50/-
Interim relief-II : 154/-
40% Hike : 616/-
-------------
Total Pension Rs.4640/- (With effect from
1.1.1996)
After narrating the computations made in the illustrations referred to
above, it was submitted that it clearly emerged, that a person who had
retired as a Deputy Collector on 30.4.1988 (before 1.6.1988) would get
pension of Rs.6,402/-; while a Deputy Collector, who retired on 30.6.1988,
would get Rs.4,287/-; and a Deputy Collector who retired on 30.6.1993,
would get Rs.4,640/- as pension, all of them having the same 33 years of
qualifying service, as well as, a similar last pay prior to their
retirement. What is important is, that the figures referred to above were
accepted in the response sought by the High Court from the Accountant
General, Tamil Nadu. In the response from the Accountant General, Tamil
Nadu, the only mistake found was the amount of pension depicted as
Rs.6,402/- for a Deputy Collector (who retired prior to 1.6.1988).
According to the Accountant General, Tamil Nadu, on a correct analysis, the
said figure would be Rs.6,808/-. It is therefore apparent, that in
identical circumstances, a Deputy Collector retiring prior to 1.6.1988
would draw pension at the monthly rate of Rs.6,808/-, whereas, a Deputy
Collector retiring thereafter on 30.6.1988, would get a monthly pension of
Rs.4,287/-. This would show that a person who retired from the same cadre
before the crucial date i.e., 1.6.1988, would get about Rs.2,500/- per
month more than the one who had retired from the same cadre after the said
date. The aforesaid illustration has been highlighted by us, in order to
determine the correctness of the following inferences drawn by the Division
Bench of the High Court, while passing the impugned order dated 17.12.2007:-
“Learned counsel for the parties circulated their respective
calculations showing working sheet of pension as admissible to a class
of employees, who retired prior to 1st June, 1988 in the unrevised
scales of pay and those similarly situated and retired after 1st June,
1988 in the revised scales of pay. Charts are varying. While in the
chart submitted by the State Government it has been shown that those
who retired after 1st June, 1988 will be getting a little bit higher
than those who retired prior to 1st June, 1988, the calculation
submitted by individual parties shows that those who retired just
prior to 1st June, 1988 may get a little higher emoluments than those
who retired after 1st June, 1988. It is for the said reason, we also
sought for opinion from the Accountant General, Tamil Nadu, who has
submitted its calculation chart, as circulated between the parties and
quoted hereunder:-
“As per instructions of the Hon’ble High Court of Madras in W.P.
11634 of 2002, the working sheets submitted by both the
Government and the petitioners in WA 1002 of 2006 have been
scrutinized and the following observations are made:-
A. Government Working Sheet:
|Details of the case |As it is |As it |
| | |should |
| | |be |
|Designation: Tahsildar |Rs.1387 |Rs.1573 |
|Date of Retirement: 31.5.1988 | | |
|Scale of Pay: Rs.1160-50-1460-70-1950 | | |
|Pay Rs.1880 | | |
|Designation: Tahsildar |Rs.1534 |Rs.1534 |
|Date of Retirement: after 1.6.1988 | | |
|Scale of Pay: Rs.2000-60-2300-75-3200 | | |
|Pay Rs.2300 | | |
1/579 revision is applied in this case, then the revised pension
from 1.6.88 works out to Rs.2000 + 18% D.A.
B. Petitioner Working Sheet: Out of nine illustrations, five
cases are found to be correct and in four cases, the
correct calculations are given below:-
|Details of the case |As it is |As it |
| | |should be |
|Designation: Deputy |Rs.2433 |Rs.2589 |
|Collector (‘A’) |(from 1.6.88) |(from 1.6.88) Rs.6808 |
|Date of Retirement: |Rs.6402 |(from 1.1.96) |
|30.4.1988 |(from 1.1.96) | |
|Scale of Pay: | | |
|Rs.1340-75-1715-90-24| | |
|35 | | |
|Pay Rs.2435 | | |
|Designation: Block |Rs.849 |Rs.947 |
|Development Officer |(from 1.2.88) |(from 1.2.88) Rs.1592 |
|(‘A’) |Rs.1427 |(from 1.6.88) |
|Date of Retirement: |(from 1.6.88) |Rs.4796 |
|31.1.1988 |Rs.4303 |(from 1.1.96) |
|Scale of Pay: |(from 1.1.96) | |
|Rs.1045-45-1450-65-16| | |
|75 | | |
|Pay Rs.1515 | | |
|Designation: |Rs.472 |Rs.513 |
|Secondary Grade |(from 1.1.88) |(from 1.1.88) |
|Teacher (‘A’) (Sel. |Rs.815 |Rs.890 |
|Grade) |(from 1.6.88) |(from 1.6.88) |
|Date of Retirement: |Rs.2480 |Rs.2790 |
|31.12.1987 |(from 1.1.96) |(from 1.1.96) |
|Scale of Pay: Rs. | | |
|Pay Rs.820 | | |
|Designation: |Rs.1232 |Rs.1209 |
|Tahsildar |(from 1.4.90) |(from 1.4.90) Rs.3654 |
|Date of Retirement: |Rs.3723 |(from 1.1.96) |
|31.3.1990 |(from 1.1.96) | |
|Scale of Pay: | | |
|Rs.1160-50-1460-70-19| | |
|50 | | |
|Pay Rs.2180 from | | |
|1.1.90 | | |
It is certified that subject to the observations made supra the
illustrative calculations are in order.
Branch Officer/Pension 30”
From the aforesaid chart it appears that those who retired prior
to 1st June, 1988 or after 30th June, 1988 from similar post, they
will get almost similar quantum of pension.
(emphasis is ours)
25. Learned counsel for the appellants pointed out, that the
determination by the High Court to the effect, that employees who had
retired prior to 1.6.1988 from a similar post, would “…get a little
higher…” pensionary emoluments, than those who retired afterwards, was
clearly preposterous.
Learned counsel for the appellants, while referring
to the illustration narrated above, also invited our attention to the
affidavit dated 15.12.2011 (filed by the first respondent in Civil Appeal
no.8856 of 2012), wherein the position canvassed at the behest of the
appellants was considered.
According to the acknowledged position, the
first respondent (in the affidavit dated 15.12.2011), on proper
calculations asserted, that in identical circumstances, a Deputy Collector
retiring prior to 1.6.1988 would draw pension at a monthly rate of
Rs.6,808/-, whereas, a Deputy Collector retiring after 30.6.1988 would get
a monthly pension of Rs.4,287/-. This would show, that merely on account
of the accident of retiring before or after 1.6.1988, one of the pensioners
would draw pension at the rate of about Rs.2,500/- per month more than the
other.
We are satisfied, that the illustration referred to hereinabove,
clearly negates the conclusion drawn by the Division Bench of the High
Court in the impugned order dated 17.12.2007, to the effect, that retirees
prior to 1.6.1988 from a similar post would “…get a little higher”
pensionary emoluments.
26. We have given our thoughtful consideration to the controversy in
hand. First and foremost, it needs to be understood that the quantum of
discrimination, is irrelevant to a challenge based on a plea of
arbitrariness, under Article 14 of the Constitution of India. Article 14
of the Constitution of India ensures to all, equality before the law and
equal protection of the laws. The question is of arbitrariness and
discrimination. These rights flow to an individual under Articles 14 and
16 of the Constitution of India. The extent of benefit or loss in such a
determination is irrelevant and inconsequential. The extent to which a
benefit or loss actually affects the person concerned, cannot ever be a
valid justification for a court in either granting or denying the claim
raised on these counts. The rejection of the claim of the appellants by
the High Court, merely on account of the belief that the carry home pension
for employees who would retire after 1.6.1988, would be trivially lower
than those retiring prior thereto, amounts to bagging the issue pressed
before the High Court. The solitary instance referred to above, which is
not a matter of dispute even at the hands of the first respondent, clearly
demonstrates, that in a given situation, an employee retiring on or after
1.6.1988 could suffer a substantial loss, in comparison to an employee
retiring before 1.6.1988. We are, therefore satisfied, that the High Court
clearly erred while determining the issue projected before it.
27. At this juncture it is also necessary to examine the concept of valid
classification. A valid classification is truly a valid discrimination.
Article 16 of the Constitution of India permits a valid classification
(see, State of Kerala vs. N.M. Thomas (1976) 2 SCC 310). A valid
classification is based on a just objective. The result to be achieved by
the just objective presupposes, the choice of some for differential
consideration/treatment, over others. A classification to be valid must
necessarily satisfy two tests. Firstly, the distinguishing rationale has
to be based on a just objective. And secondly, the choice of
differentiating one set of persons from another, must have a reasonable
nexus to the objective sought to be achieved. Legalistically, the test for
a valid classification may be summarized as, a distinction based on a
classification founded on an intelligible differentia, which has a rational
relationship with the object sought to be achieved. Whenever a cut off
date (as in the present controversy) is fixed to categorise one set of
pensioners for favourable consideration over others, the twin test for
valid classification (or valid discrimination) must necessarily be
satisfied. In the context of the instant appeals, it is necessary to
understand the overall objective of treating “dearness allowance” (or a
part of it) as “dearness pay”. There can be no doubt, that ‘dearness
allowance’ is extended to employees to balance the effects of ongoing
inflation, so as to ensure that inflation does not interfere with the
enjoyment of life, to which an employee is accustomed. Likewise, the
objective of ‘dearness pay’ is to balance the effects of ongoing inflation,
so that a pensioner can adequately sustain the means of livelihood to which
he is accustomed . Having understood the reason why the Government extends
the benefit of ‘dearness allowance’ and ‘dearness pay’, to its employees
and pensioners respectively, we would venture to search for answers to the
twin tests which must be satisfied, for making a valid classification (or a
valid discrimination), in the present fact situation.
28. In the present context, it needs to be kept in mind, that ‘dearness
allowance’ is paid to Government employees keeping in mind the All India
Consumer Price Index. Inflation in the market place is sought to be
balanced by paying ‘dearness allowance’ to Government employees. When a
State Government chooses to treat ‘dearness allowance’ as ‘dearness pay’,
the objective remains the same i.e., inflation in the market place is
sought to be balanced for retired employees by giving them the benefit of
‘dearness pay’. Since the component of inflation similarly affects all
employees, and all pensioners (irrespective of the date of their entry into
service or retirement), it is not per se possible to accept different
levels of ‘dearness pay’ to remedy the malady of inflation. Just like the
date of entry into service (for serving employees) would be wholly
irrelevant to determine the ‘dearness allowance’ to be extended to serving
employees, because the same has no relevance to the object sought to be
achieved. Likewise, the date of retirement (for pensioners) would be
wholly irrelevant to determine the ‘dearness pay’ to be extended to retired
employees. Truthfully, it may be difficult to imagine a valid basis of
classification for remedying the malaise of inflation. In the absence of
any objective, projected in this case, the question of examining the
reasonableness to the object sought to be achieved, simply does not arise.
Our straying into this expressed realm of imagination, was occasioned by
the fact, that the pleadings filed on behalf of the State Government, do
not reveal any reason for the classification, which is subject matter of
challenge in the instant appeal. The only position adopted in the
pleadings filed before this Court for introducing a cut off date for
differential treatment, is expressed in paragraph 4 of the counter
affidavit, filed by the State of Tamil Nadu, which is being extracted
herewith:.-
“With reference to the averments made in the Grounds of the Special
Leave Petition, I submit that the fifth Pay Commission has revised
pay and pension with effect from 1.6.1988. As per the
recommendation of the above Pay Commission, the Government had
issued orders for the revision of pension and Family Pension with
effect from 1.6.1988 in G.O.Ms. No. 810. Finance (PC) Department,
dated 9.8.1989. It is submitted that the fourth Tamil Nadu Pay
Commission has recommended that at the end of the period of three
years, the Dearness Allowance sanctioned upto that period could be
treated as Dearness Pay. The Fourth Pay Commission revision was
given with effect from 1.10.1984. Based on the above
recommendation, the Government has issued orders in G.O.Ms. No.371,
Finance, dated 30.4.1986, read with Government letter
No.124414/Pension/86-1, dt. 11.2.1987, that the Dearness Allowance
sanctioned upto 30.9.1987 shall be treated as Dearness Pay for the
purpose of pensionary benefit in the case of the Govt. Servant
retiring on or after 1.10.1987. The orders issued in G.O.Ms. 371,
Finance dated 30.4.1985 as amended in Government letter No.70707-
A/Pension /86-1, dated 8.7. 1986 read as follows:-
“The Fourth Tamil Nadu Pay Commission have among other things
recommended that at the end of a period of three years the
Dearness Allowance sanctioned upto the period could be treated
as Dearness Pay in order to ensure a reasonable pension level.
The Government accept the recommendation of the Commission and
direct that in the case of Government servant, who will be
retiring on or after 1.10.1987, the Dearness Allowance
sanctioned upto 1.10.1987 shall be reckoned as Dearness Pay for
purpose of pension in the case of death of a Government servant
occurring on or after 1.10.1987 while in service the Dearness
Allowance sanctioned upto 1.10.1987 shall be treated as
Dearness Pay for the purpose of computing Family Pension.”
It is therefore, evident, that the State Government has not disclosed any
object which is desired to achieve by the cut off date. Most importantly,
the financial constraints of the State Government, were not described as
the basis/reason for the classification made in the imputgned Government
order dated 9.8.1989.
29. The issue in hand needs to examine from another perspective as well.
It must be clearly understood, that no employee has a right to draw
‘dearness allowance’ as ‘dearness pay’ till such time as the State
Government decides to treat ‘dearness allowance’ as ‘dearness pay’. And
therefore, the State Government has the right to choose whether or not
‘dearness allowance’ should be treated as ‘dearness pay’. As such, it is
open to the State Government not to treat any part of ‘dearness allowance’
as ‘dearness pay’. In case of financial constraints, this would be the most
appropriate course to be adopted. Likewise, the State Government has the
right to choose how much of ‘dearness allowance’ should be treated as
‘dearness pay’. As such, it is open to the State Government to treat a
fraction, or even the whole of ‘dearness allowance’ as ‘dearness pay’.
Based on Rule 30 of the Pension Rules, it is clear that the component of
‘dearness pay’ would be added to emoluments of an employee for calculating
pension. In a situation where the State Government has chosen, that a
particular component of ‘dearness allowance’ would be treated as ‘dearness
pay’, it cannot discriminate between one set of pensioners and another,
while calculating the pension payable to them (for the reasons expressed in
the preceding paragraph). Of course, a valid classification may justify
such an action. In this case, the State Government has not come out with
any justification/basis for the classification whereby one set of
pensioners has been distinguished from others for differential treatment.
30. The instant controversy should not be misunderstood as a
determination of the total carry home pension of an employee. All the
Government orders referred to above, deal with the quantum of ‘dearness
allowance’ to be treated as ‘dearness pay’ for the calculation of pension.
‘Dearness pay’ is one of the many components, which go into the eventual
determination of pension. Therefore, the focus in the adjudication of the
present controversy must be on ‘dearness pay’, rather than on the eventual
carry home pension. The relevance and purpose of treating ‘dearness
allowance’ as ‘dearness pay’, has been brought out in the foregoing
paragraphs. Therefore, clearly, the object sought to be achieved by adding
‘dearness pay’ to the wage of a retiree, while determining pension payable
to him, is to remedy the adverse effects of inflation. The aforesaid
object has to be necessarily kept in mind, while examining the present
controversy. Any classification without reference to the object sought to
be achieved, would be arbitrary and violative of the protection afforded
under Article 14 of the Constitution of India, it would also be
discriminatory and violative of the protection afforded under Article 16 of
the Constitution of India.
31. Having given our thoughtful consideration to the controversy in hand,
it is not possible for us to find a valid justification for the State
Government to have classified pensioners similarly situated as the
appellants herein (who had retired after 1.6.1988), from those who had
retired prior thereto. Inflation, in case of all such pensioners, whether
retired prior to 1.6.1988 or thereafter, would have had the same effect on
all of them. The purpose of adding the component of ‘dearness pay’ to
wages for calculating pension is to offset the effect of inflation. In our
considered view, therefore, the instant classification made by the State
Government in the impugned Government order dated 9.8.1989 placing
employees who had retired after 1.6.1988 at a disadvantage, vis-à-vis the
employees who retired prior thereto, by allowing them a lower component of
‘dearness pay’, is clearly arbitrary and discriminatory, and as such, is
liable to be set aside, as violative of Articles 14 and 16 of the
Constitution of India.
32. It is also imperative for us to take into consideration, a few
judgments rendered by this Court, which were brought to our notice by the
learned counsel representing the State Government.
Reliance was placed on
three judgments to substantiate the submissions advanced on behalf of the
respondents.
(i) First of all, reliance was placed on the decision rendered by this
Court in Union of India Vs. P.N. Menon,. (1994) 4 SCC 68. Facts in the
first cited judgment reveal, that a recommendation was made by the Third
Pay Commission to the State Government, suggesting review of the existing
wage position, based on unprecedented inflation. The State Government was
asked (by the Third Pay Commission) to take a decision on whether the
dearness allowance scheme should be extended further; or in the alternative
pay-scales themselves should be revised. This suggestion of the Third Pay
Commission was based on the fact, that the price level index had arisen
above the 12 monthly average to 272. Having considered the matter, the
State Government decided to extend the dearness allowance scheme. It
simultaneously issued an Office Memorandum, (hereinafter referred to as
‘O.M.’) whereby, a portion of ‘dearness allowance’ was to be treated as
pay for computation of retiral benefits. The benefit of the aforesaid O.M.
was extended only to those employees who had/would retire on or after
30.9.1977. The aforesaid O.M, also contemplated, that persons who
had/would retire on or after 30.9.1977 but not later than 30.04.1979 would
be allowed to exercise an option, to choose one out of the two
alternatives. They could either seek the benefit of death-cum-retirement
gratuity by excluding the element of ‘dearness allowance’, alternatively,
they could seek the same, by including the element of ‘dearness allowance’.
The issue which came up for adjudication before this Court was, whether
the aforesaid O.M. was sustainable in law, as it did not extend equal
benefits to all retirees, irrespective of the dates of their retirement.
All the respondents had retired before 30.9.1997. While determining the
aforesaid issue, this Court took into consideration inter alia the fact
that the decision to merge a part of ‘dearness allowance’ with pay, was
taken with reference to the price index level. This decision was taken on
the recommendations of the Third Pay Commission. In the aforesaid view
of the matter, and specially because, an option was given to employees
who had retired between 30.09.1977 and 30.04.1979, to get their pension
and (death-cum-retirement gratuity) calculated, by including or excluding
the element on dearness pay, this Court ruled, that the State Government
had adopted measures ensuring similar benefits to all. And that, there was
no intention to create a class within a class. This Court felt that the
classification, had a reasonable nexus with the price level index at 272,
on 30.09.1977. This according to this Court was just and valid. The
factual position, that needs to be highlighted, in so far as the first
cited judgment i.e. in P.N. Menon’s case (supra) is that, the respondent
employees had never been in receipt of dearness pay, when they retired
from service, and therefore, the O.M. in question could not have been
applied to them. This is how this Court examined the matter in the cited
case. This Court also noticed, that prior to the O.M. in question, the
pension scheme was contributory, and only with effect from 22.9.1977, the
pension scheme was made non contributory. Since the respondent employees
in the first cited case, were not in service at the time of introducing the
same, they were held not eligible for the said benefit.
(ii) Next, learned counsel relied upon the judgment in State of Rajasthan
Vs. Amrit Lal Gandhi, (1997) 2 SCC 342. The facts, in the second cited
judgment were, that originally teachers of the Jodhpur University were
governed by contributory provident fund rules. There was no pension scheme
applicable to them. In 1983, a committee constituted by the University
Grants Commission, recommended the introduction of pension-cum- gratuity
for university and college teachers. Thereupon, the Senate and Syndicate of
the Jodhpur University resolved to introduce a pension scheme for
university teachers. The resolution of the Syndicate and Senate also
provided, that options would be sought from existing teachers, so as to
enable them, to choose whether they should be governed by the contributory
provident fund rules, or would like to accept the benefits under the
pension scheme. As the recommendation of the Syndicate and the Senate, of
the Jodhpur University had financial implications, approval of the State
Government was imperative. On examining the recommendations, the State
Government decided to introduce the pension scheme with effect from
1.1.1990. Based thereon, the Syndicate and the Senate passed a concurring
resolution expressing, that the pension scheme would become operational
with effect from 1.1.1990. Based thereon, those teachers who were in the
service of the Jodhpur University on or after 1.1.1990, were required to
submit their options. The question which arose for consideration in the
second cited judgment was, whether employees who had retired before
1.1.1990, had a similar right to claim pension, as was being extended to
employees, who had/would retire on or after 1.1.1990. The High Court
partly accepted the plea of the retirees by holding, that the pension
scheme should be extended to employees who had retired on or after
1.1.1986. This Court did not approve the decision rendered by the High
Court. This Court noticed, that the approval of the resolutions of the
Syndicate and Senate of the Jodhpur University had been accorded by the
State Government after the State Legislature had passed the University
Pension Rules, and the General Provident Fund Rules. This Court also
noticed, that the State Government in its affidavit had taken an express
stand, that the introduction of the pension scheme was economically viable
only with effect from 1.1.1990. In other words, the State Government
could bear the financial burden of the pension scheme, only if it was
introduced with effect from 1.1.1990. Based on the aforesaid position
adopted by the State Government, this Court concluded, that the
determination of the State Government in introducing the pension scheme
for employees, who had retired with effect from 1.1.1990 had not been fixed
arbitrarily or without any valid reason/basis. This Court accordingly, set
aside the judgment rendered by the High Court.
(iii) Finally, learned counsel placed reliance on the judgment rendered by
this Court in State of Punjab Vs. Amar Nath Goel, (2005)6 SCC 754. In the
third cited case, employees both of the Central Government, as also, of the
State Governments of Punjab and Himachal Pradesh, who had retired prior to
1.4.1995 sought death cum-retirement gratuity, up to the increased limit of
Rs. 2.5 lakhs. The claim raised by the employees was rejected in some
cases, whereas in some other cases the Central Administrative Tribunal and
the High Court took the view, that the benefit of increased quantum of
death-cum-retirement gratuity, should be extended to employees, who had
retired between 1.7.1993 and 31.3.1995 as well. Having examined the
aforesaid controversy, this Court arrived at the conclusion, that the
decision of the Central Government and State Governments to limit the
benefit only to employees, who had retired ( or died) on or after
1.4.1995, was based on a concrete determination of financial implications,
as such, it was held that the cut off date (1.4.1995) was neither
arbitrary nor irrational, as alleged. Consequently, the plea advanced at
the hands of the employees assailing the cut off date as arbitrary, and
by alleging that it was not based on any rational criteria, was rejected.
33. We have considered the submissions urged at the hands of the learned
counsel for the respondent, based on the judgments cited at the bar. In
our view, none of the judgments relied upon is relevant to the present
controversy.
(i) In so far as P.N. Menon’s case (supra) is concerned, having examined
the controversy. this Court arrived at the conclusion, that the State
Government adopted measures which would ensure, similar benefits to all.
This court also expressed the view, that there was no intention of the
State Government, to create any class within a class.
The price level index
at 272 on 30.9.1977 was the determining factor for the State Government’s
decision.
It was accordingly concluded, that there was a valid and
reasonable nexus to the object sought to be achieved.
But most importantly
this Court felt, that the decision of the State Government in not extending
benefits to the respondents was based on the fact, that they were not in
receipt of the any ‘dearness pay’ at the time of their retirement.
Moreover, since the family pension scheme was contributory when the
respondents had retired, the respondents could not justifiably seek the
benefits, which were available only to the retirees after the pension
scheme was made non contributory.
There is, therefore no co-relation of
the first cited judgment with the controversy in hand.
(ii) In Amrit Lal Gandhi’s case (supra) pension was introduced for the
first time for university teachers based on resolutions passed by the
Syndicate and the Senate of the Jodhpur University. The same were approved
by the State Government with effect from 1.1.1990. The instant controversy
is, therefore, not between one set of pensioners alleging discriminatory
treatment, as against another set of pensioners. There were no pensioners,
to begin with. Retirees were entitled to provident fund under the existing
Provident Fund Scheme. The question of discrimination of one set of
pensioners from another set of pensioners, therefore, did not arise in the
second cited judgment. Financial viability was, as such, a relevant issue.
The State Government adopted the stance, that the introduction of the
pension scheme was financially viable only if the scheme was introduced
with effect from 1.1.1990. The cut off date clearly disclosed a
classification founded on an intelligible differentia, which had a rational
relationship with the object sought to be achieved. There is therefore, in
our view, no correlation of the second cited judgment with the controversy
in hand.
(iii) In so far as the third cited judgment is concerned, this Court in
Amrit Lal Gandhi’s case (supra) examined an issue where, the increased
death-cum-retirement gratuity could only be claimed by employees, who had
retired after the cut off date (1.4.1995). Death-cum-retirement gratuity
is a one time benefit, whereas, pension enures to retired employees for the
entire length of their lives. Pension is therefore a continuing benefit.
Death-cum-retirement gratuity, is a one time benefit, disbursed in
accordance with to the rules prevalent at the time (of retirement). Herein
also, the issue under consideration was not different measures for
computing, a continuing retiral benefit, based on any cut off date.
We are
therefore of the view, that the instant judgment is also not relevant for
the adjudication of the controversy in hand.
In view of the above, we are satisfied, that none of judgments relied upon
by the learned counsel for the respondents, have any bearing to controversy
in hand.
34. The instant appeals are accordingly allowed. The impugned order
dated 17.12.2007 passed by the High Court is hereby set aside. The
impugned Government Order dated 9.8.1989, to the extent that it extends to
employees who retire on or after 1.6.1988, a lower component of ‘dearness
pay’, as against those who had retired prior to 1.6.1988, is set aside,
being violative of Articles 14 and 16 of the Constitution of India.
…………………………….J.
(D.K. Jain)
…………………………….J.
(Jagdish Singh Khehar)
New Delhi;
January 17, 2013.
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