Full Judgment Text
1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.626-627 OF 2008
A.N. Sachdeva (dead) by LRs. & Ors. ... Appellants
Vs.
Maharshi Dayanand University, Rohtak & Anr. ... Respondents
J U D G M E N T
ARUN MISHRA, J.
1. The question involved in the present appeals is whether services rendered
JUDGMENT
by the appellants in Kurukshetra University/Punjab University is qualifying
service for the purpose of pension and can be added to the services rendered by
them in the respondent no.1, i.e. Maharshi Dayanand University, Rohtak
(hereinafter called “M.D. University”).
2. The appellants are receiving pension after their retirement from M.D.
University, however, it is confined to the services rendered by them in the same
university. Deceased A.N. Sachdeva and Ram Parshad Saini were appointed in
Page 1
2
Punjab University. R.K. Tuteja, petitioner no.3 and Prem Kumar were appointed
as Lecturer and Clerk respectively. They were appointed without any break in
M.D. University.
3. A.N. Sachdeva, since deceased was appointed as Steno-Typist in Punjab
University on 7.8.1961, thereafter as Private Secretary to Vice-Chancellor in
M.D. University on 1.5.1976, promoted as Deputy Registrar in August, 1988
and retired from the service of M.D. University on 31.12.2000.
Ram Prashad Saini after rendering services from 16.11.1962 to 14.1.1975
in Punjab University was appointed as Asistant in Kurukshetra University on
15.1.1975 and served till 11.5.1977 and on 12.5.1977 he was appointed in M.D.
University and retired from service on 31.10.1999.
R.K. Tuteja was appointed as Lecturer in Kurukshetra University on
29.7.1964, served uninterruptedly till 20.8.1979 and was appointed on
JUDGMENT
21.8.1979 in the same capacity in M.D. University where he served till his
retirement on 31.12.2001.
Prem Kumar Naveen was appointed Clerk in Kurukshetra University on
7.8.1961 and served till 6.10.1976 and next day on 7.10.1976 he was appointed
in M.D. University. He retired on 28.2.2000.
4. The services of the said employees rendered by them in Punjab
University/Kurukshetra University have not been counted as qualifying service
Page 2
3
for the purpose of pension by the M.D. University. Hence, the writ petition was
filed by them in the High Court after rejection of their representation. The
appellants submitted that M.D. University had introduced pension scheme with
effect from 1.4.1995. The appellants had opted for the same. A memorandum
dated 24.12.2001 was issued by the Haryana Government for counting of
service rendered by employees of Punjab University/Kurukshetra
University/M.D. University as qualifying service for the purpose of pension.
5. Haryana Government issued a memorandum dated 7.1.2002 confining the
policy issued by it for the persons who retired after 7.1.2002, however, Finance
Department issued clarification dated 9.7.2003 that instructions contained in the
memorandum dated 7.1.2002 are not applicable to the employees of the
university because the pension schemes of the university are different. Before
that a clarification had been issued by the Government of Haryana on 5.6.2002
mentioning that the employees of the Punjab University were subsequently
JUDGMENT
allocated to Kurukshetra University, Rohtak and M.D. University, Rohtak
before its formation used to be regional centre of Kurukshetra University. That
being the situation, decision was taken to treat the services rendered in Punjab
University/Kurukshetra University as qualifying service for the purpose of
pension on retirement from M.D. University, Rohtak. It was also clarified that
as regards the services rendered by the employees elsewhere such as Central
Page 3
4
Government/ State Government/Autonomous Body, the same is not to be
counted towards qualifying service for the purpose of pension.
6. The stand of the respondents is that the retiral benefits of the employees
are governed by the provisions of M.D. University Pension Scheme, 1997
(hereinafter referred to as “Pension Scheme, 1997”). The past services could
not have been treated as qualifying service for pension in view of Rule 4(vii) of
the Pension Scheme, 1997 introduced with effect from 1.4.1995 in lieu of
Contributory Provident Fund. Option was given to the employees to opt for
the contributory provident scheme or for the pension scheme. In the pension
scheme 1997 there is no provision for counting previous service rendered by the
appellants in Punjab University/Kurukshetra University. Reliance had been
placed on the clarification dated 5.6.2002 to contend that the employees who
continued in the M.D. University on allocation/absorption with change of
employer were entitled to count their services for the purpose of pension. As
JUDGMENT
the appellants were directly appointed in the respondent university, they were
not entitled to count the service qualifying for pension.
7. The Division Bench of the High Court by way of impugned order has
dismissed the writ application on the ground that in view of Rule 4(vii) of the
Pension Scheme 1997, services rendered by the appellants in Punjab
University/Kurukshetra University cannot be counted. Reliance has also been
placed on the memorandum dated 7.1.2002. As the appellants had retired
Page 4
5
before 7.1.2002, they are not entitled to count the past service rendered by them
in the aforesaid universities as qualifying service for pension in M.D.
University. It has also been observed that pension scheme provides for
constitution of corpus fund by transferring the university contribution alongwith
interest. Even if memorandum dated 7.1.2002 is not applicable, as clarified by
the Finance Department, appellants cannot get the benefit as they had retired
prior to 7.1.2002.
8. It was submitted on behalf of the appellants that as per memorandum
dated 24.12.2001 and its clarification dated 5.6.2002, the appellants are entitled
to count the services rendered in Punjab University/Kurukshetra University as
qualifying service for the purpose of pension. It is only the service rendered in
other autonomous body etc. which is not to be counted towards the pensionary
benefits. The appellants were receiving pension and liberalised pension scheme
has to be applied to the employees who had retired earlier. It is not a new
JUDGMENT
scheme, but an upward revision of existing benefits. It is not a case of new
retiral benefits. Appellants have been discriminated vis-a-vis the other
employees who had been absorbed/allocated in the services of M.D. University
from Punjab University/Kurukshetra University, inasmuch as, their services
rendered in these universities have been counted as qualifying service for the
purpose of pension. Even the services of the employees who have rendered
their services in some other university have also been counted towards
Page 5
6
pensionable services. In one of such case of Dr. Jahan Singh , this Court did not
intervene in the special leave petition which was dismissed. Even otherwise,
the classification sought to be created by the respondents is not impermissible in
view of Articles 14 and 16 and the services rendered by the appellants in Punjab
University/Kurukshetra University deserve to be counted as qualifying service
for the purpose of pension as has been done in the case of employees who have
been absorbed/allocated to M.D. University.
9. Per contra, the respondents would contend that the admissible benefits
under Pension Scheme, 1997 have already been extended to the appellants. In
view of the clarification dated 5.6.2002, the services of the employees who had
been allocated/absorbed could have been counted, not the past services of the
employees who had been directly appointed in M.D. University, appellants
stood retired before 7.1.2002 as such they were not entitled for benefit of
counting of past services. The memorandum was not having retrospective
JUDGMENT
effect. Even if, memorandum dated 7.1.2002 is not applicable, the appellants
are not entitled for the benefit under the Pension Scheme, 1997. Other
employees who have been given the benefit for counting their past services,
namely, K.L. Pahuja, Yudhvir Singh Dahiya and Sunder Singh Dahiya had
retired on 30.9.2003, 31.5.2002 and 31.10.2002 respectively whereas appellants
stood retired before 7.1.2002. The decision in the case of Dr. Jahan Singh
cannot be applied to the appellants as while dismissing the special leave
Page 6
7
petition, this Court has left the question of law open. The employer’s share of
CPF has to be transferred to the pension fund. It was a case of a new scheme as
such its benefits could not have been extended retrospectively. The appellants
cannot claim equality and complain of discrimination.
10. It is not in dispute that the appellants had opted for pension under Pension
Scheme, 1997. Para 4(vii) of the Pension Scheme, 1997 as has been relied upon
by the respondents reads thus:-
“(vii) The period of service rendered by an employee in any
State Govt. or Govt. aided Private College or in any
University/autonomous body against aided post prior to
joining in the University shall not count as qualifying
service for pensionary benefits.”
However, it is not in dispute that vide memorandum dated 24.12.2001
issued by the Government of Haryana, the pension scheme was modified
JUDGMENT
inasmuch as the State Government has agreed for counting the services of the
employees of the Punjab University/Kurukshetra University on retirement from
M.D. University as qualifying service. The memorandum dated 24.12.2001 is
extracted hereunder:-
“From
Higher Education Commissioner,
Haryana Chandigarh.
Page 7
8
To
The Vice-Chancellor,
M.D. University
Rohtak.
Memo No.18/41-2001 UNP (1)
Dated : Chandigarh the 24.12.2001
Sub: Implementation of Pension Scheme in M.D.U. Rohtak.
The State Govt. has considered and agreed for counting of service
rendered by the employees of the University in Punjab
University/Kurukshetra University/M.D. University as qualifying
service for the purpose of pension subject to the following terms and
conditions :
1. The service rendered by the said employees in these institutions is
without any break and is continuous.
2. That the employer’s share of the CPF in respect of these
employees has been transferred to the pension fund even with
respect to the service rendered in Punjab University/Kurukshetra
University as required under the pension rules of the University.
Further, that all other requirement of the pension rules are
fulfilled in respect of these employees. Kindly take necessary
action accordingly.
JUDGMENT
Sd/- Deputy Director, College-I,
For Higher Education Commissioner,
Haryana, Chandigarh”.
Another memorandum dated 7.1.2002 was issued by the Government of
Haryana on the basis of which certain incorporation was made in the Pension
Scheme 1997. However, later on, the Finance Department on 9.7.2003 has
Page 8
9
clarified that memorandum dated 7.1.2002 is not applicable to the employees of
the University.
11. Yet another memorandum dated 5.6.2002 has been referred to with
respect to the counting of the services of the Punjab University/Kurukshetra
University into M.D. University as qualifying service for the purpose of
pension. Same is extracted hereunder :-
“From
Higher Education Commissioner, Haryana,
Chandigarh.
To
Registrar,
1. Kurukshetra University, Kurukshetra.
2. Maharshi Dayanand University, Rohtak.
Memo No.18/44-2001 UNP (1)
JUDGMENT
Dated : Chandigarh, the 6.6.2002
Subject: Clarification regarding counting of previous
service/foreign service towards Pension.
Kindly refer to the subject noted above.
(i) The advice issued vide letter No.18/44-2001 UNP (1) dated
24.12.2001 was in respect of service rendered by the employees of
Maharshi Dayanand University, Rohtak in Kurukshetra University,
Kurukshetra and Punjab University. It is as well as known that
initially, it was Kurukshetra University, Kurukshetra and what
constitutes Maharshi Dayanand University, Rohtak now was a
regional centre of Kurukshetra University, Kurukshetra earlier.
Similarly the employees also has rendered service in the Punjab
Page 9
10
University and were subsequently allocated to Kurukshetra
University, Rohtak. That being the situation the advice was with
regard to that service which the employees had rendered initially in
the Punjab University followed by Maharshi Dayanand University,
Rohtak. This pattern follows in the same manner as the employees
of the joining Punjab were allocated to Haryana Govt. at the time of
the creation of the Haryana State. Hence the service rendered by
these employees who continued to remain in suit but there was a
change of employer on account of division of jurisdiction after a
period of time. In their case, the previous service rendered was
agreed to be countable for the purpose of pension in Maharshi
Dayanand University, Rohtak.
(ii) To the extent the employees of Kurukshetra University, Kurukshetra
fall in the same category, their service may also be counted for the
purpose of pension at the time of retirement from Kurukshetra
University, Kurukshetra subject to fulfillment of the conditions
mentioned in letter dated 24.12.2001 (copy enclosed) in respect of
Maharshi Dayanand University, Rohtak.
(iii) As regards service rendered by the employees elsewhere such as
Central Govt./State Govt./Autonomous Body, the same is not
countable for the purpose of pensionary benefits as there is no
provision to this effect in the pension scheme of Kurukshetra
University, Kurukshetra. In case the Kurukshetra University,
Kurukshetra is keen to count such service for pensionary benefits,
they should be advised to first consider amendment in their pension
scheme for which a separate self-contained proposal should be
submitted for approval of the State Govt.
JUDGMENT
It is, therefore requested that the cases may be decided
accordingly.
Sd/- 5.6.02
Deputy Director Colleges-I,
For Higher Education Commissioner,
Haryana, Chandigarh.”
Page 10
11
12. It is apparent from the memorandum dated 24.12.2001 that the first
requirement to count the services rendered in Punjab University/Kurukshetra
University/M.D. University by the appellants were without break and
continuous. It is also not in dispute that after rendering the services in Punjab
University/Kurukshetra University, the aforesaid employees had been directly
appointed on the very next day in M.D. University. Earlier, the employees of
Punjab University were allocated to Kurukshetra University and it is not in
dispute that present M.D. University used to be the regional centre of
Kurukshetra University prior to its establishment as full-fledged University.
13. Second requirement of the memorandum dated 24.12.2001 is that the
employer’s share of the CPF has to be transferred to the pension fund with
respect to services rendered in Punjab University/Kurukshetra University. The
appellants had expressed their willingness in their representation to fulfil the
aforesaid requirement of the memorandum dated 24.12.2001 including all other
JUDGMENT
requirements of the pension scheme.
14. The question which arises for consideration is whether it is a case of
upward revision of existing benefits or a new scheme floated by the
respondents, while issuing the memorandum dated 24.12.2001.
The appellants have placed reliance on a Constitution Bench decision of
this Court in D.S. Nakara & Ors. v. Union of India [1983 (1) SCC 305] in which
this Court has laid down that reasonable classification is permissible. The
Page 11
12
classification must be founded on an intelligible differentia and that must have a
rational relation to the object sought to be achieved. This Court has laid down
that even though the scheme is prospective, the benefit of liberalised pension
scheme should be applied equally to all and they are required to be paid the
upward revision commencing from the specified date. No arrears would be
payable. This Court has laid down thus:-
“29. Summing up it can be said with confidence that
pension is not only compensation for loyal service rendered
in the past, but pension also has a broader significance, in
that it is a measure of socio-economic justice which inheres
economic security in the fall of life when physical and
mental prowess is ebbing corresponding to aging process
and, therefore, one is required to fall back on savings. One
such saving in kind is when you give your best in the
hey-day of life to your employer, in days of invalidity,
economic security by way of periodical payment is assured.
The term has been judicially defined as a stated allowance
or stipend made in consideration of past service or a
surrender of rights or emoluments to one retired from
service. Thus the pension payable to a government
employee is earned by rendering long and efficient service
and therefore can be said to be a deferred portion of the
compensation or for service rendered. In one sentence one
can say that the most practical raison d’etre for pension is
the inability to provide for oneself due to old age. One may
live and avoid unemployment but not senility and penury if
there is nothing to fall back upon.
JUDGMENT
x x x x x
42. If it appears to be undisputable, as it does to us that the
pensioners for the purpose of pension benefits form a class,
would its upward revision permit a homogeneous class to be
divided by arbitrarily fixing an eligibility criteria
unrelated to purpose of revision, and would such
Page 12
13
classification be founded on some rational principle? The
classification has to be based, as is well settled, on some
rational principle and the rational principle must have
nexus to the objects sought to be achieved. We have set out
the objects underlying the payment of pension. If the State
considered it necessary to liberalise the pension scheme, we
find no rational principle behind it for granting these
benefits only to those who retired subsequent to that date
simultaneously denying the same to those who retired prior
to that date. If the liberalisation was considered necessary
for augmenting social security in old age to government
servants then those who, retired earlier cannot be worst off
than those who retire later. Therefore, this division which
classified pensioners into two classes is not based on any
rational principle and if the rational principle is the one of
dividing pensioners with a view to giving something more to
persons otherwise equally placed, it would be
discriminatory. To illustrate, take two persons, one retired
just a day prior and another a day just succeeding the
specified date. Both were in the same pay bracket, the
average emolument was the same and both had put in equal
number of years of service. How does a fortuitous
circumstance of retiring a day earlier or a day later will
permit totally unequal treatment in the matter of pension?
One retiring a day earlier will have to be subject to ceiling
of Rs 8100 p.a. and average emolument to be worked out on
36 months’ salary while the other will have a ceiling of Rs
12,000 p.a. and average emolument will be computed on the
basis of last 10 months’ average. The artificial division
stares into face and is unrelated to any principle and
whatever principle, if there be any, has absolutely no nexus
to the objects sought to be achieved by liberalising the
pension scheme. In fact this arbitrary division has not only
no nexus to the liberalised pension scheme but it is
counter-productive and runs counter to the whole gamut of
pension scheme. The equal treatment guaranteed in Article
14 is wholly violated inasmuch as the pension rules being
statutory in character, since the specified date, the rules
accord differential and discriminatory treatment to equals
in the matter of commutation of pension. A 48 hours’
difference in matter of retirement would have a traumatic
effect. Division is thus both arbitrary and unprincipled.
JUDGMENT
Page 13
14
Therefore, the classification does not stand the test of
Article 14.
43. Further the classification is wholly arbitrary because
we do not find a single acceptable or persuasive reason for
this division. This arbitrary action violated the guarantee of
Article 14. The next question is what is the way out?
x x x x x
48. It was very seriously contended, remove the event
correlated to date and examine whether the scheme is
workable. We find no difficulty in implementing the scheme
omitting the event happening after the specified date
retaining the more humane formula for computation of
pension. It would apply to all existing pensioners and future
pensioners. In the case of existing pensioners, the pension
will have to be recomputed by applying the rule of average
emoluments as set out in Rule 34 and introducing the slab
system and the amount worked out within the floor and the
ceiling.
49. But we make it abundantly clear that arrears are not
required to be made because to that extent the scheme is
prospective. All pensioners whenever they retired would be
covered by the liberalised pension scheme, because the
scheme is a scheme for payment of pension to a pensioner
governed by 1972 Rules. The date of retirement is
irrelevant. But the revised scheme would be operative from
the date mentioned in the scheme and would bring under its
umbrella all existing pensioners and those who retired
subsequent to that date. In case of pensioners who retired
prior to the specified date, their pension would be computed
afresh and would be payable in future commencing from the
specified date. No arrears would be payable. And that
would take care of the grievance of retrospectivity. In our
opinion, it would make a marginal difference in the case of
past pensioners because the emoluments are not revised.
The last revision of emoluments was as per the
recommendation of the Third Pay Commission (Raghubar
Dayal Commission). If the emoluments remain the same, the
computation of average emoluments under amended Rule
JUDGMENT
Page 14
15
34 may raise the average emoluments, the period for
averaging being reduced from last 36 months to last 10
months. The slab will provide slightly higher pension and if
someone reaches the maximum the old lower ceiling will
not deny him what is otherwise justly due on computation.
The words “who were in service on March 31, 1979 and
retiring from service on or after that date” excluding the
date for commencement of revision are words of limitation
introducing the mischief and are vulnerable as denying
equality and introducing an arbitrary fortuitous
circumstance can be severed without impairing the formula.
Therefore, there is absolutely no difficulty in removing the
arbitrary and discriminatory portion of the scheme and it
can be easily severed”.
15. In M.C. Dhingra v. Union of India & Ors . [1996 (7) SCC 564], the
question arose with respect to the counting of the previous service for grant of
pension. The circular dated 31.3.1982 which came up for consideration
provided the benefit thereof only to the persons retiring on or after the date of
issuance of circular was held to be arbitrary. This Court has laid down thus:-
“4. It is seen that though the appellant had retired on
1-2-1973, since the question of tagging the previous service
rendered in the State Government on temporary basis and
the similar cases are pending, the Government had taken a
decision on 31-3-1982 to tag the previous service for
computation of the pension. Learned counsel appearing for
the respondents contended that clause 4 of the abovesaid
circular is one of the conditions which prescribes that it
would be applicable to the government servants who retired
from that date, namely, 31-3-1982. Since the appellant had
retired on 1-2-1973, he is not eligible. We find no force in
the contention. All the persons who rendered temporary
service prior to their joining the Government of India
Service have been given the benefit of fixation of the
pension payable by tagging the temporary service. The
cut-off date is arbitrary violating Article 14 of the
JUDGMENT
Page 15
16
Constitution of India. Having grouped all the similarly
circumstanced employees, fixing the cut-off date and giving
benefit to those who retired thereafter is obviously arbitrary.
In similar circumstances, following the ratio in D.S. Nakara
v. Union of India [1983 (1) SCC 305], this Court held in the
case of R.L. Marwaha v. Union of India [1987 (4) SCC 31
that such a restriction is arbitrary violating Article 14. On
the facts and circumstances, we find that the restriction
imposed in clause 4 of the circular is violative of Article 14.
It is, therefore, unconstitutional. However, the appellant will
be entitled to the pro rata pension from March 1982”.
16. In State of Punjab v. Justice S.S. Dewan (Retd.) & Ors . [1997 (4) SCC
569], this Court held that benefit extended was new one. However, this Court
has observed thus:-
“7. Therefore, what we have to consider is what is the
nature of the change made by the amendment. Is it by way
of upward revision of the existing pension scheme? Then
obviously the ratio of the decision in D.S. Nakara case
[1983 (1) SCC 305] would apply. If it is held to be a new
retiral benefit or a new scheme then the benefit of it cannot
be extended to those who retired earlier”.
JUDGMENT
17. In State of Rajasthan & Anr. v. Prem Raj [1997 (10) SCC 317], this Court
rejected the submission that decision in D.S. Nakara (supra) has given a
complete go-by. This Court has laid down thus:-
“12. In State of W.B. v. Ratan Behari Dey [1993 (4) SCC
62], this Court considered the question whether in
providing a pension scheme the State could fix up a
particular date and make it applicable to those who retired
on or after that date. The Court distinguished Nakara case
[1983 (1) SCC 305] by holding that in Nakara case an
Page 16
17
artificial date had been specified classifying the retirees
governed by the same rules and similarly situated into two
different classes depriving one such class of the benefit of
the liberalised pension rules and that was held to be bad.
Following the decision of the Court in Krishena Kumar
case [1990 (4) SCC 207] it was held that the State can
specify a date with effect from which the Regulations
framed or amended conferring the pensionary benefits shall
come into force but the only condition is that the State
cannot pick a date out of its hat and the date has to be
prescribed in a reasonable manner having regard to all the
facts and circumstances.
13. In State of Rajasthan v. Sevanivatra Karamchari Hitkari
[1995 (2) SCC 117]
Samiti the provisions contained in Rule
268-H of Rajasthan Service Rules came up for
consideration as to whether the aforesaid provisions
restructuring the rights of government servants in service
on 29-2-1964 can be held to be violative of Article 14. The
Court applied the principle in Krishena Kumar case and
Indian Ex-Services League case [1991 (2) SCC 104] and
held that the fixation of 29-2-1964 as the cut-off date with
effect from which the new liberalised pension scheme in
Chapter XXIII-A was introduced cannot be said to be
arbitrary or violative of Article 14 of the Constitution. As
has been stated earlier for deciding the present controversy
it is not necessary for us to further delve into the question
as to the extent to which the decision of this Court in
Nakara case has been followed or explained. But suffice it
to say that the contention of Mr Gupta, the learned counsel
for the appellant, that the decision of this Court in Nakara
case has been given a complete go-by cannot be
sustained”.
JUDGMENT
18. In Dhan Raj & Ors. v. State of J&K & Ors . [1998 (4) SCC 30], this Court
considered the case where the appellants who had retired from the services of
Corporation prior to 9.6.1981 claimed to be entitled to pensionary benefits by
virtue of G.O. dated 3.10.1986. The contention of the State that the benefit
Page 17
18
could not be extended to the appellants was rejected. The relevant portion is
extracted hereunder:-
“14. Even otherwise, we do not find any justifiable criteria
for the State Government to draw the line between those
who retired earlier and those who retired after 9-6-1981.
Both such set of employees were equally placed in the same
Undertaking/Corporation temporary in character and all
having served in the organisations for more than 20 years.
In fact, the appellants have served with the Government for
more than 30 to 40 years. The person serving for such a
long period earns his legitimate expectation. It is not
something which he seeks with a begging bowl. It is
inappropriate for a State Government to take up a stand to
get its own order to be held illegal, by giving restrictive
interpretation to deny benefit to its own employees who had
worked for such a long period. In fact, in the Constitution
Bench decision of this Court in D.S. Nakara v. Union of
India [1983 (1) SCC 305] this Court held that criterion of
date of enforcement of the revised scheme entitling benefits
of the revision to those retiring after specified date while
depriving the benefits to those retiring prior to that date
was violative of Article 14. Even otherwise, while
considering the question of grant of pensionary benefits the
State has to act to reach the constitutional goal of setting up
a socialist State as stated and the assurance as given in the
Directive Principles of State Policy. A pension is a part and
parcel of that goal, which secures to a person serving with
the State after retirement of his livelihood. To deny such a
right to such a person, without any sound reasoning or any
justifiable differentia would be against the spirit of the
Constitution. We find in the present case the stand taken by
the State Government to be contrary to the said spirit. In
the aforesaid D.S. Nakara this Court has very clearly
recorded the following:
JUDGMENT
“36. Having set out clearly the society which we
propose to set up, the direction in which the State
action must move, the welfare State which we
propose to build up, the constitutional goal of
Page 18
19
setting up a socialist State and the assurance in
the Directive Principles of State Policy especially
of security in old age at least to those who have
rendered useful service during their active years,
it is indisputable, nor was it questioned, that
pension as a retirement benefit is in consonance
with and in furtherance of the goals of the
Constitution. The goals for which pension is paid
themselves give a fillip and push to the policy of
setting up a welfare State because by pension the
socialist goal of security of cradle to grave is
assured at least when it is mostly needed and
least available, namely, in the fall of life.””
19. This Court in Union of India & Ors. v. K.G. Radhakrishna Panickar &
Ors . [1998 (5 SCC 111] again considered the question of classification and
differential treatment. It was held that conferment of new benefit from a
particular date cannot be held to be violative of Article 14. The benefit in
question was held to be a new benefit conferred on the casual labour. This
Court held that :-
12. In its judgment dated 8-2-1991 the Tribunal has held
that exclusion of period of service rendered as Project
Casual Labour before they were regularly absorbed prior to
1-1-1981 results in such employees being discriminated
against as compared to Project Casual Labour who were
employed subsequently and whose service as Project
Casual Labour prior to absorption is counted for the
purpose of qualifying service. The said finding of the
Tribunal is based on the decision of this Court in D.S.
Nakara [1983 (1) SCC 305]. In this regard, it may be stated
that the Tribunal was in error in invoking the principle laid
down in D.S. Nakara in the present case. The decision in
D.S. Nakara has been considered by this Court in
subsequent decisions and it has been laid down that the
principle laid down in D.S. Nakara can have application
JUDGMENT
Page 19
20
only in those cases where there is discrimination in the
matter of existing benefit between similar set of employees
and the said principle has no application where a new
benefit is being conferred with effect from a particular date.
In such a case the conferment of the benefit with effect from
a particular date cannot be held to be violative of Article 14
of the Constitution on the basis that such a benefit has been
conferred on certain categories of employees on the basis of
a particular date. (See: Krishena Kumar v. Union of India
[1990 (4) SCC 207]; State of W.B. v. Ratan Behari Dey
[1993 (4) SCC 62] and State of Rajasthan v. Sevanivatra
Karamchari Hitkari Samiti [1995 (2) SCC 117]) In the
present case, the benefit of counting of service prior to
regular employment as qualifying service was not available
to casual labour. The said benefit was granted to Open Line
Casual Labour for the first time under order dated
14-10-1980 since Open Line Casual Labour could be
treated as temporary on completion of six months’ period of
continuous service which period was subsequently reduced
to 120 days under para 2501(b)(i) of the Manual. As
regards Project Casual Labour this benefit of being treated
as temporary became available only with effect from
1-1-1981 under the scheme which was accepted by this
Court in Inder Pal Yadav [1985 (2) SCC 648]. Before the
acceptance of that scheme the benefit of temporary status
was not available to Project Casual Labour. It was thus a
new benefit which was conferred on Project Casual Labour
under the scheme as approved by this Court in Inder Pal
Yadav and on the basis of this new benefit Project Casual
Labour became entitled to count half of the service rendered
as Project Casual Labour on the basis of the order dated
14-10-1980 after being treated as temporary on the basis of
the scheme as accepted in Inder Pal Yadav. We are,
therefore, unable to uphold the judgment of the Tribunal
dated 8-2-1991 when it holds that service rendered as
Project Casual Labour by employees who were absorbed on
regular permanent/ temporary posts prior to 1-1-1981
should be counted for the purpose of retiral benefits and the
said judgment as well as the judgment in which the said
judgment has been followed have to be set aside. The
judgments in which the Tribunal has taken a contrary view
have to be affirmed.
JUDGMENT
Page 20
21
20. In V. Kasturi v. Managing Director, State Bank of India & Anr . [1998 (8)
SCC 30], this Court considered the prospective amendment and the question
whether earlier retirees were eligible for benefit of such amendment. It was
held that where the amendment enhanced the pension or provided for a new
formula of pension even the earlier retirees who at the time of retirement were
eligible for pension and survived till the amendment would be eligible for the
benefit from the date it came into effect, however, where the amendment
extended the benefit of the pension scheme to a new class of persons, the earlier
retirees at the time of retirement who were not eligible for pension cannot get
the benefit of amendment. This Court has laid down thus:-
“22. If the person retiring is eligible for pension at the time
of his retirement and if he survives till the time of
subsequent amendment of the relevant pension scheme, he
would become eligible to get enhanced pension or would
become eligible to get more pension as per the new formula
of computation of pension subsequently brought into force,
he would be entitled to get the benefit of the amended
pension provision from the date of such order as he would
be a member of the very same class of pensioners when the
additional benefit is being conferred on all of them. In such
a situation, the additional benefit available to the same
class of pensioners cannot be denied to him on the ground
that he had retired prior to the date on which the aforesaid
additional benefit was conferred on all the members of the
same class of pensioners who had survived by the time the
scheme granting additional benefit to these pensioners
came into force. The line of decisions tracing their roots to
the ratio of Nakara case [1983 (1) SCC 305] would cover
this category of cases”.
JUDGMENT
Page 21
22
21. In Subrata Sen & Ors. v. Union of India & Ors . [2001 (8) SCC 71], this
Court has laid down thus:-
“18. Further, in All India Reserve Bank Retired Officers
Assn. v. Union of India [1992 supp. (1) SCC 664], Ahmadi,
J. (as he then was), speaking for the Court in the aforesaid
decision highlighted the observations in Nakara case [1983
(1) SCC 305] found at SCC p. 333 para 46 to the following
effect:
“… the pension will have to be recomputed in the light of
the formula enacted in the liberalised pension scheme and
effective from the date the revised scheme comes into force.
And beware that it is not a new scheme, it is only a revision
of existing scheme. It is not a new retiral benefit. It is an
upward revision of an existing benefit. If it was a wholly
new concept, a new retiral benefit, one could have
appreciated an argument that those who had already retired
could not expect it.”
The Court further observed:
“It must be realised that in the case of an employee
governed by the CPF (Contributory Provident Fund)
Scheme his relations with the employer come to an end on
his retirement and receipt of the CPF amount but in the case
of an employee governed under the pension scheme his
relations with the employer merely undergo a change but do
not snap altogether. That is the reason why this Court in
Nakara case drew a distinction between liberalisation of an
existing benefit and introduction of a totally new scheme. In
the case of pensioners it is necessary to revise the pension
periodically as the continuous fall in the rupee value and
the rise in prices of essential commodities necessitates an
adjustment of the pension amount but that is not the case of
employees governed under the CPF Scheme, since they had
received the lump sum payment which they were at liberty to
invest in a manner that would yield optimum return which
would take care of the inflationary trends. This distinction
between those belonging to the pension scheme and those
JUDGMENT
Page 22
23
belonging to the CPF Scheme has been rightly emphasised
by this Court in Krishena case [1990 (4) SCC 207]”.
22. In John Vallamattom & Anr. v. Union of India [2003 (6) SCC 611], this
Court considered the decision in D.S. Nakara (supra) and has observed thus:-
“62. Article 14 of the Constitution states that the State shall
not deny to any person equality before the law or the equal
protection of the laws within the territory of India. The first
part of Article 14 of the Constitution of India is a
declaration of equality of civil rights for all purposes within
the territory of India and basic principles of republicanism
and there will be no discrimination. The guarantee of equal
protection embraces the entire realm of “State action”. It
would extend not only when an individual is discriminated
against in the matter of exercise of his right or in the matter
of imposing liabilities upon him, but also in the matter of
granting privileges etc. In all these cases, the principle is
the same, namely, that there should be no discrimination
between one person and another if as regards the
subject-matter of the legislation their position is the same.
In my view, all persons in similar circumstances shall be
treated alike both in privileges and liabilities imposed. The
classification should not be arbitrary; it should be
reasonable and it must be based on qualities and
characteristics and not any other who are left out, and those
qualities or characteristics must have reasonable relations
to the object of the legislation.
JUDGMENT
x x x x x
64. It has also been observed in the above judgment that in
the very nature of things, the society being composed of
unequals, a welfare State will have to strive by both
executive and legislative action to help the less fortunate in
the society to ameliorate their condition so that the social
and economic inequality in the society may be bridged and
in the absence of the doctrine of classification such
Page 23
24
legislation is likely to flounder on the bedrock of equality
enshrined in Article 14 of the Constitution”.
23. In State Bank of India v. L. Kannaiah & Ors . [2003 (10) SCC 499], this
Court considered fixation of cut-off date for applicability of pension scheme.
Minimum service was prescribed 20 years and cut-off date for such induction
was fixed as 1.1.1965. This Court held minimum qualifying service being the
essential consideration. There is no rationale to exclude employees confirmed
earlier who have put in more than 20 years of service. This Court has laid down
thus:-
“6. Para 5 of the circular stipulated that the age-limit (viz.
not being over 35 years) for admission to Pension Fund
shall continue. Thus the pensioned ex-service personnel
were admitted to pensionary benefits with effect from
1-1-1965 subject to the restriction of the age-limit of 35
years (which was later on enhanced to 38 years) on that
date. As the date of confirmation of the respondents was
much earlier to 1-1-1965, the crucial date for admission to
the Pension Fund would be 1-1-1965. On that date, the
confirmed employee of the Bank should not have exceeded
35 years of age. That is the combined effect of Staff Circular
No. 18 dated 8-4-1974 read with the Pension Fund Rules
referred to supra. The reason for prescribing the maximum
age-limit of 35 or 38, as the case may be, for the purpose of
induction into Pension Fund appears to be that the
employee would be able to render minimum service of 20
years as contemplated by Rule 22 of the Pension Fund
Rules. However, there does not appear to be any rationale
or discernible basis for fixing the cut-off date as 1-1-1965,
notwithstanding their earlier confirmation in bank service.
True, a new benefit has been conferred on the
ex-servicemen and therefore, a cut-off date could be fixed
for extending this new benefit, without offending the ratio of
JUDGMENT
Page 24
25
the decision in D.S. Nakara v. Union of India [1983 (1) SCC
305] but, there could be no arbitrariness or irrationality in
fixing such date. Minimum qualifying service being the
essential consideration, even according to the Bank, there is
no reason why the ex-servicemen like the respondents, who
from the date of their confirmation had put in more than
twenty years of service, even taking the retirement age as
58, should be excluded. No reason is forthcoming in the
counter-affidavit filed by the Bank for choosing the said
date. When it is decided to extend the pensionary benefits to
ex-servicemen drawing pension, the denial of the benefit to
some of the serving employees should be based on rational
and intelligible criterion. In substance, that is the view
taken by the High Court and we see no reason to differ with
that view”.
24. In Union of India & Anr. v. SPS Vains [2008 (9) SCC 125], decision of
this Court in D.S. Nakara has been followed. It was held that there could not be
disparity of pension within the same rank. It was held thus:-
“29. The Constitution Bench (in D.S. Nakara [1983 (1) SCC
305]) has discussed in detail the objects of granting pension
and we need not, therefore, dilate any further on the said
subject, but the decision in the aforesaid case has been
consistently referred to in various subsequent judgments of
this Court, to which we need not refer. In fact, all the
relevant judgments delivered on the subject prior to the
decision of the Constitution Bench have been considered
and dealt with in detail in the aforesaid case. The directions
ultimately given by the Constitution Bench in the said case
in order to resolve the dispute which had arisen, is of
relevance to resolve the dispute in this case also.
JUDGMENT
30. However, before we give such directions we must also
observe that the submissions advanced on behalf of the
Union of India cannot be accepted in view of the decision in
D.S. Nakara case. The object sought to be achieved was not
to create a class within a class, but to ensure that the
benefits of pension were made available to all persons of
Page 25
26
the same class equally. To hold otherwise would cause
violence to the provisions of Article 14 of the Constitution.
It could not also have been the intention of the authorities to
equate the pension payable to officers of two different ranks
by resorting to the step-up principle envisaged in the
fundamental rules in a manner where the other officers
belonging to the same cadre would be receiving a higher
pension” .
25. In K.J.S. Buttar v. Union of India & Anr . [2011 (11) SCC 429], this Court
considered the question when some new retiral benefits were introduced and
measurement to calculate disability was changed pursuant to recommendation
th
made by the 5 Pay Commission and same was implemented with effect from
1.1.1996. The appellant was denied retiral benefits on account of his retirement
in 1979. This Court held the treatment to be discriminatory and laid down that
restriction of benefit to only officers who were invalided out of service after
1.1.1996 is violative of Article 14 of the Constitution and hence illegal. In the
case of liberalisation of existing scheme all pensioners are to be treated equally.
JUDGMENT
The appellant was entitled to all retiral benefits with effect from 1.1.1996. This
Court has laid down thus:-
“11. In our opinion the appellant was entitled to the benefit
of Para 7.2 of the Instructions dated 31-1-2001 according
to which where the disability is assessed between 50% and
75% then the same should be treated as 75%, and it makes
no difference whether he was invalided from service before
or after 1-1-1996. Hence the appellant was entitled to the
said benefits with arrears from 1-1-1996, and interest at 8%
per annum on the same.
Page 26
27
12. It may be mentioned that the Government of India,
Ministry of Defence had been granting war injury pension
to pre-1996 retirees also in terms of Para 10.1 of the
Ministry’s Letter No. 1(5)/87/D(Pen-Ser) dated 30-10-1987
(p. 59, Para 8). The mode of calculation, however, was
changed by the Notification dated 31-1-2001 which was
restricted to post-1996 retirees. The appellant, therefore,
was entitled to the war injury pension even prior to
1-1-1996 and especially in view of the Instructions dated
31-1-2001 issued by the Government of India. The said
instruction was initially for persons retiring after 1-1-1996
but later on by virtue of the subsequent Notifications dated
16-5-2001 it was extended to pre-1996 retirees also on
rationalisation of the scheme”.
26. Reliance has been placed by the respondents on a decision in State of
Punjab & Anr. v. J.L. Gupta & Ors. [2000 (3) SCC 736] in which this Court
referring to the decision in State of Punjab & Ors. v. Boota Singh & Anr. [2000
(3) SCC 733] held that when financial implication is there, the benefit conferred
by notification dated 9.7.1985 can be claimed by those who retired after the date
of stipulation in the notification and those who have retired prior to the date of
stipulation, as the notifications are governed by different rules. It was a case of
JUDGMENT
pensionary benefits, i.e., pension, gratuity/DCRG, internal gratuity. Hence, the
decision is clearly distinguishable. Moreover, in the instant case, employees are
governed by same set of rules.
27. Considering the principles enunciated under Articles 14 and 16 of the
Constitution, and that the benefit is not an ex gratia payment but a payment in
recognition of past service, in our opinion, discrimination could not have been
Page 27
28
made between those employees who have been absorbed/allocated are entitled
to count their services as qualifying service for the purpose of pension and not
those who have been appointed directly. Fact remains that all these employees
have served in Punjab University/Kurukshetra University/MD. University
without any break. M.D. University, prior to its establishment, was the regional
centre of Kurukshetra University. Expectation had arisen to compute the period
of service rendered in Punjab University/Kurukshetra University which cannot
be unreasonably deprived of. Merely because a person has been appointed and
others have been absorbed/allocated makes no difference as to the service
rendered. Even otherwise, it is a case of upward revision of benefit and the
classification which is sought to be created by the aforesaid method of not
extending benefit to persons appointed directly and by fixing cut-off date cannot
be said to be intelligible one; same is discriminatory and thus, the appellants
would be entitled for the benefit from the date decision has been taken on
JUDGMENT
24.12.2001 to compute the previous service rendered in Punjab
University/Kurukshetra University as qualifying service. In other words, they
would be entitled for the benefit prospectively from the date of issuance of
memorandum dated 24.12.2001. The employees have expressed their
willingness to deposit/adjustment of the employer’s contribution of CPF as
required in the memorandum dated 24.12.2001.
Page 28
29
28. In yet another case of M.D. University v. Dr. Jahan , this Court did not
interfere in the decision of the High Court of Punjab and Haryana at Chandigarh
on 26.5.2009 in LPA No.27 of 2006, however, the question of law was kept
open. Hence, we have examined the case on merits and found the case of the
appellants on better footing as compared to Dr. Jahan and even otherwise the
appellants are entitled for the benefit.
29. In view of aforesaid discussion, the appellants are entitled for the benefit
of counting the services rendered in Punjab University/Kurukshetra University
as qualifying service for the purpose of pension subject to fulfilment of the
conditions specified in the memorandum dated 24.12.2001 etc. and in case the
amount payable by the appellants towards contributory provident fund is less
than the amount payable to them as pension, it would be adjusted by the
respondents without insisting for its refund from the amount payable to the
appellants. Let the exercise be completed within a period of three months from
JUDGMENT
today.
30. The appeals are allowed, impugned judgment is set aside. We leave the
parties to bear their own costs.
..........................................J.
(M.Y. Eqbal)
New Delhi; ..........................................J.
August 10, 2015. (Arun Mishra)
Page 29