Full Judgment Text
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PETITIONER:
O.K. UDAYASANKARAN & ORS.
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT: 27/03/1996
BENCH:
MANOHAR SUJATA V. (J)
BENCH:
MANOHAR SUJATA V. (J)
AHMADI A.M. (CJ)
VENKATASWAMI K. (J)
CITATION:
1996 AIR 1901 JT 1996 (4) 420
1996 SCALE (3)383
ACT:
HEADNOTE:
JUDGMENT:
WITH
WRIT PETITION (CIVIL) NO. 437 OF 1993
Ex-servicemen LIC Employees
Association and Ors.
V.
Life Insurance Corporation
of India & ors.
J U D G M E N T
Mrs. Sujata V. Manohar, J.
Leave granted in S.L.P..(C) No.2158 of 1992.
The appellants are the employees of the Life Insurance
Corporation of India at Kozhikode. They are ex-servicemen
who were re-employed by the Life Insurance Corporation of
India after their discharge from military service. There is
a gap of more than three years between their discharge from
military service and their appointment in the Life Insurance
Corporation of India. The dispute raised in this appeal
relates to the fixation of salary of these ex-servicemen on
their re-employment in the Life Insurance Corporation of
India. Along with this appeal. Writ Petition No. 437 of 1993
has also been heard. This petition is filed by the Ex-
servicemen Life Insurance Corporation Employees Association
and the issue raised in this petition is identical with the
issue raised in the appeal. The dispute relates to ex-
servicemen who have been appointed after a gap ’of three
years or more from their discharge from military service to
the life insurance Corporation of India and pertains to
those who have been so appointed after 1.1.1988.
The dispute pertains to the interpretation of
instructions dated 2nd of June. 1989 issued by the Central
Office of the Life Insurance Corporation of India relating
to re-employment of ex-servicemen in the Life Insurance
Corporation and their pay fixation. The relevant Paragraphs
of these Instructions are set out below::
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" 3. Pay Fixation on Re-employment:
3.1: Basic Salary of a re-employed
Ex-serviceman shall be fitted at
the minimum of the scale in which
he is appointed. However, if the
gross salary as per ’Y’ below at
the minimum of the scale does not
produce an amount equal to or more
than the last drawn gross salary as
per ’X’ below in the Defence
Services. additional increment/s as
may be necessary, over minimum of
the scale shall be allowed to make
up the difference and: thus:
provide protection to the last
drawn gross salary.
3.2: If in exceptional cases,
fitment, even at the ceiling of the
entry grade does not provide full
protection, personal allowance
shall be granted which may be
absorbed against future increase in
emoluments.
3.3: ’X’ i.e. last drawn gross
salary in the Defence Service at
the time of release shall be the
aggregate of the following
components:
i) Pay as defined in sub-para 3(ix)
of the Dept. of Personnel &
Training O.M.No. 3/1 /85-East
( P II ) dated 31 .7.1986.
Relevant extracts of the O.M.
are given in the Appendix ’A’;
ii) Dearness Allowances:
iii) Additional Dearness Allowance;
iv) Interim Relief;
v) City Compensatory Allowance;
vi) Compensation in lieu of
Quarters ( C . I. L . o . )
House Rent Allowance;
vii) Ration Allowance .
3.4: ’Y’ i.e. gross salary in
L.I.C. shall be the aggregate of
the following
i ) Basic salary in which the Ex-
servicemen is re-employed;
ii ) Dearness Allowance;
iii) House Rent Allowance:
iv) City Compensatory Allowance:
3.5: Components of last drawn
salary in the Defence Services
(’X’) including such allowances as
are indicated at (3.3) above are to
be taken into account on the basis
of discharge certificate/Last Pay
certificate of the individual
employees..............
3.6: The component of pension will
not be considered for pay fixation.
3.7: If the Ex-serviceman was
reemployed within a period not
exceeding 3 years from the date of
discharge from the Defence services
’X’ (Last Drawn Salary in Defence
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Services} to be compared shall be
as drawn on the date of release of
the Ex-serviceman whereas the Y’
(starting salary in L.I.C.) to be
compared shall be as on the date of
re-employment in L.I.C.
3.8: If. however, he was re-
employed more than three years
after the date of discharge from
Defence Services ’Y’ Salary to be
compared shall also be as obtaining
on the date of discharge.
Corresponding fitment may then be
given in the revised scale, where
necessary applicable at the time of
re-employment of the Ex-servicemen.
Example:...........................
The fitment is to be done
nationally and actual benefit may
be given from 1-1-1988 as shown in
para 4 below.
If the basic salary determined
on such comparison results in the
same or lower than the basic salary
at which the employee was fitted on
the date of re-employment the
existing salary fitment will
continue without any change.
4. If the basic salary determined
on such comparison is higher than
the basic salary at which the
employee was fitted on the date of
re-employment incremental
difference that would emerge out of
Such fitment would be added to
individual’s basic pay as on 1-1-
1988 and arrears released
accordingly from 1-1-1988 only.
Example:.......................
5. FITMENT OF EX-SERVICEMEN
APPOINTED ON OR AFTER 1-1-19988
Fitment in these cases will
be as per formula given in 3.1
above from 1-1-1988 or the date of
appointment in the industry
whichever is later.
6.OPTION-CUM-CONSENT LETTER:
An option-cum-consent letter
in the enclosed format (Appendix
’B’) should be obtained from each
existing Ex-serviceman employee
opting fitment of salary as per
these instruction.
7. FITMENT OF SALARY OF NEW
ENTRANTS:
Fitment of salary of all Ex-
servicemen appointed in the
industry henceforth shall be
governed by these instructions."
The dispute relates to the application of Paragraphs
3.7 and 3.8 to ex-servicemen who have been employed by the
life insurance Corporation after 1.1.1988. According to the
life insurance Corporation the benefit of pay fixation under
Paragraphs 3.7 and 3.8 was given only to ex-servicemen who
were already employed by the life Insurance Corporation
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prior to 1.1.1988. This benefit is not available to those
ex-servicemen who have been employed in Life Insurance
Corporation after 1.1.1988.
To resolve the dispute it is necessary to examine the
scheme framed by the Life Insurance Corporation on 2nd of
June. 1989. for pay fixation which is in supersession of
earlier existing scheme. Paragraph 3 deals with fixation of
pay on re-employment of ex-servicemen in Life insurance
Corporation. Since ex-servicemen including released
emergency commissioned officers. short service commissioned
officers and retrenched commissioned officers are relieved
from military service at a comparatively young age, certain
facilities have been given to them for re-employment in
various Government and Public Sector Undertakings including
the Life insurance Corporation.
Under Paragraph 3.5 when the ex-serviceman is re-
employed by the Life Insurance Corporation he is normally
fitted at the minimum of the scale for the post to which he
is appointed. However, if his last drawn gross salary in
Defence Service as specified in Paragraph 3.3 was more than
the gross salary which he will get in Life Insurance
Corporation as specified in paragraph 3.4 his salary to he
paid in Life Insurance Corporation is adjusted so that he
does not get less than his last drawn pay in the Defence
Services. This adjustment is done as per Paragraph 3.1
adding to his minimum of the scale additional increments as
may be necessary to make up the difference so that his last
drawn gross salary is protected, This adjustment is made so
as to protect the last drawn salary of ex-servicemen in the
case of all re-employed ex-servicemen whether they were
appointed prior to 1.1. 1988 or subsequent to 1.1.1988.
Paragraph 3.7, however, provides that if an ex-
servicemen was re-employed within three years from the date
of his discharge from Defence Services then his last drawn
salary in the Defence Services will be compared to his
starting salary on the date of his re-employment in life
Insurance Corporation so as to adjust the salary first drawn
by him on the date of re-employment to equal the last drawn
salary.
In other words, he is governed by paragraphs 3.1 to
3.6. Paragraph 3.8 provides that if an ex-servicemen was re-
employed more than three years from the date of his
discharge from Defence Services his last drawn salary in
Defence Services shall be compared with his salary that he
would have Been entitled to in the Life Insurance
Corporation had he been immediately re-employed. The basic
salary that he would have drawn in Life Insurance
Corporation on the date of his discharge is thus determined
and on the basis of such a salary. the salary which the ex-
serviceman will get on the actual date of his re-employment
by Life Insurance Corporation is nationally worked out. The
figure so arrived at is the basic salary Which will be paid
to the ex-serviceman on his re-employment. Paragraph 3.8
also provides that if in the interregnum any revision of pay
scales takes place in Life Insurance Corporation the ex-
serviceman will get the benefit of such revision in respect
of the pay scale so nationally worked out. However,
Paragraph 3.8 clearly provides that such a fitment has to be
made only nationally and any actual benefit so arising will
be given to the existing ex-servicemen only from 1.1.1988 as
shown in Paragraph 4. Paragraph 4 sets out that any
incremental difference that would emerge out of such fitment
would be added to the ex-serviceman’s basic pay as on 1.1.
1988 and arrears would be released accordingly from 1.1.1988
only.
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A perusal of Paragraph 3.8 and Paragraph 4 clearly
brings out the fact that the fitment under Paragraph 3.8 has
to be done only in the case of ex-servicemen who were
employed prior to 1.1.1988. Paragraph 3.8 itself clearly
provides that the benefit will be given to an existing ex-
serviceman. The existing ex-serviceman. though employed
prior to 1988 will get actual benefit only from 1.1.1988 and
not for any date prior thereto. Such a provision would not
have been required had this concept of notional fitment
under Paragraph 3.8 not been made applicable only to
existing ex-servicemen. Paragraph also says that the
incremental difference will be added to the individual’s
basic pay as on 1.1. 1988 and arrears will be released
accordingly. The entire scheme of Paragraph 3.8 and
Paragraph 4. therefore. deals with existing ex-servicemen or
ex-servicemen who had been employed prior to 1.1. 1988. The
examples which have been annexed to Paragraph 3.8 are also
all examples of ex-servicemen who joined Life Insurance
Corporation prior to 1.1.1988. thus clearly bringing out
the intention to cover under Paragraph 3.8 existing ex-
servicemen who had been in the employment of Life Insurance
Corporation prior to 1.1.1988 The example which is appended
to Paragraph 4 also deals with a case of an servicemen
employed long prior to 1.1.1988.
Paragraph 5 makes this position amply clear by setting
out that ex-servicemen who are appointed after 1.1.1988
shall be fitter from shall be fitted as per formula given
in Paragraph 3.1 above either from 1.1.1988 or the date of
appointment which ever is later. Paragraph 7 again clarifies
this position by saying that the fitment of salary of all
ex-servicemen appointed in the industry henceforth shall be
governed by these instructions. The use of the past tense in
referring to the employment of ex-servicemen by Life
Insurance Corporation in Paragraphs 3.7 and 3.8 is also
indicative of the fact that it refers to ex-servicemen who
were employed in the Life Insurance Corporation prior to the
coming into force of the new scheme.
The reason for giving the benefit of Paragraph 3.8 to
ex-servicemen who were employed by the Life Insurance
Corporation prior to 1.1.1988 is referred to in the counter-
affidavit filed on behalf of respondents 1 and 2 in the writ
petition as also in the affidavit filed on behalf of the
respondents in the appeal. Normally, whenever a person is
re-employed in Government service or public service, when
the process of fixation of his pay is undertaken, the
component of pension which is received by the employee from
his earlier employer is always deducted and adjusted in the
salary which he gets on re-employment. This was being done
in the case of ex-servicemen re-employment by Life Insurance
Corporation prior prior at to the coming into operation of
the new scheme. The Life Insurance Corporation decided to
treat its ex-servicemen employees more liberally by
providing under the new scheme in Paragraph 3.6 that the
component of pension will not be considered for pay
fixation. The appellants herein as also all ex-servicemen
who have been employed after 1.1.1988 have thus been allowed
to retain their pension from Defence Services. The pay which
they are getting in Life Insurance Corporation on the basis
of the Formula fixed under Paragraph 3.1 is in addition to
the pension which they are vetting. This benefit. however.
was apparently not available to existing reemployed
servicemen prior to 1.1.1988. As a result of negotiations
which took place between the Life Insurance Corporation and
the employees. it was decided to compensate the existing re-
employed ex-servicemen who had lost the benefit of service
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in Life Insurance Corporation for a period exceeding three
years after their discharge by giving them a notional
fitment in the Life Insurance Corporation pay scales in the
manner set out in Paragraph 3.8. There was no question of
giving such a benefit to ex-servicemen employed after 1.1.
19.88.
Dr. Dhawan, learned counsel appearing for the ex-
servicemen has emphasized the fact that an option-cum-
consent letter under Paragraph 6 was also taken from ex-
servicemen employed after 1.1.1988. This is disputed by the
respondents. However. Paragraph 6 itself quite clearly
provides that the option-cumconsent letter has to be
obtained from each existing ex-serviceman employee opting
fitment of salary as per those instructions. It is.
therefore. quite clear that the option is to be exercised
only by existing ex-servicemen employees of Life Insurance
Corporation, thus reinforcing the contention of the
respondents that fitment as per Paragraph 3.8 is not
available to ex-servicemen re-employed in Life Insurance
Corporation after 1.1.1988. The respondents have admitted
their mistake in asking for such consent letter if they have
done so. They have also admitted that they made a mistake in
granting to the three appellants before us the benefit of
Paragraph 3.8 although they were engaged after 1.1.1988.
They have sought to correct this mistake by their letter of
16.1.1991 by recalculating their salary from 1991. They are
entitled to reduce the pay of the appellants on the basis of
the correct fitment to be given to the appellants in the
light of the instructions of 2nd of June, 1989. The High
Court was, therefore right in rejecting the contentions of
the appellants. The High Court has also directed that for
recovery of excess amount so paid reasonable instalments
should be given to the appellants so that undue hardship is
not caused to them.
In these circumstances. we see no reason to interfere
with the findings given by the Kerala High Court. The appeal
and the petition are. therefore, dismissed. However. there
will be no order as to costs.