advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Thursday, January 17, 2013

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.


                                                                “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.
-----------------------
40


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.