Full Judgment Text
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CASE NO.:
Appeal (civil) 378 of 1999
PETITIONER:
STATE OF WEST BENGAL & ANR.
Vs.
RESPONDENT:
WEASSTSOBCEINAGTAILONGSOV&T.ORPSE.NSIONERS
DATE OF JUDGMENT: 07/01/2002
BENCH:
G.B. Pattanaik & Ruma Pal
JUDGMENT:
RUMA PAL, J.
The issue to be decided in this appeal is whether the decision
of this Court in D.S.Nakara V. Union of India obliges the
appellant to pay pension calculated on the revised scales of pay
under the West Bengal Services (Revision of Pay and Allowances)
Rules, 1990, to all the erstwhile employees of the State
Government irrespective of their date of retirement.
The West Bengal Services (Revision of Pay & Allowances)
Rules, 1990 (referred to hereafter as the 1990 ’ROPA Rules’),
inter-alia, revised the pay scales of State Government employees
w.e.f. 1st January 1986. It covered those employees who were in
service on 1.1.86 even though such employees may have retired
before the 1990 ROPA Rules were in fact published. As far as
these retired employees were concerned, their pay could only be
revised notionally and a memorandum was issued on 25th April
1990 giving them pensionary benefits calculated on the basis of
such notionally revised scales of pay.
The notification was challenged by the respondent-
association, the members of which are all pre-1986 retirees. They
filed a writ petition before the Calcutta High Court claiming that
they too were entitled to the same benefits as the post 1986
retirees. The petition was disposed of by a learned Single Judge by
directing the Secretary of the Finance Department to consider the
claim of the association in the light of the judgment in D.S.
Nakara after giving the association a chance of being heard and by
passing a speaking order.
In compliance with the directive of the High Court, the
Secretary, Finance Department heard the members of the
association. By an order dated 26th April, 1993, the Finance
Secretary held that D.S. Nakara’s decision only directed parity in
the principle of calculation of pension and not parity in the actual
quantum of pension payable. It was held that the State
Government had adopted the same formula for computation of
pension of all the pensioners irrespective of the date of retirement,
namely, 50% of last pay drawn by the incumbent before the
retirement. Since those who had retired prior to the date of
revision of the pay scales could not avail themselves of the revised
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pay scales, the Fourth Central Pay Commission evolved a formula
to give the pre-1986 retirees Dearness Allowance on the basis of
the 608 point consumer price index (CPI). The order noted that the
revised pay scales were also on the basis of 608 point CPI being
merged with un-revised pay . According to the Finance Secretary,
the State Government had issued a notification 7532-F dated 6th
April 1988 by which the State Government, had suitably removed
the disparity and discrimination among all classes of pensioners
irrespective of their date of retirement. The claim of the
association for calculation of pension payable to pre-1.1.86
retirees on the basis of the revised pay scales was accordingly
rejected.
Impugning the decision of the Finance Secretary the
respondent-association filed a second writ application before the
High Court in which it was, inter-alia, claimed that the Finance
Secretary’s order should be quashed and the State-respondents
should be directed to give equal pension and pensionary benefits
to all pensioners irrespective of their date of retirement.
By reason of promulgation of the Administrative Tribunals
Act 1985, the second writ petition was transferred to the West
Bengal Administrative Tribunal. The Tribunal rejected the
application of the association. The Tribunal’s order was
challenged by the respondent association before the Division
Bench of the High Court by a third application under Article 226
of the Constitution. This writ application was decided in favour of
the association by an order dated 13th May 1998. It was held by
the High Court that in keeping with the decision in D.S.Nakara’s
case, the members of the association were entitled to the
pensionary benefits as were paid to post-1986 retirees. The
decision of the High Court has now been impugned before us by
the State Government.
According to the appellant, the pre-1986 retirees were not
entitled to re-calculation of pension on the basis of the revised pay
scales. It was stated that there was no revision of the pay of
employees who had retired prior to 1.1.86 notionally or otherwise.
It was submitted that in keeping with the Nakara principle the
formula for calculation for pre-1.1.86 and for post 1.1.86 retirees,
namely, 50% of the last pay drawn was the same. Additionally, all
retirees were getting Dearness Allowance commensurate with the
consumer price index. It was also contended that after the West
Bengal Services (Revision of Pay and Allowances) Rules, 1998
came into force all pensioners whether pre or post-1986 were
entitled to revision of their pension based upon a notional fixation
of pay as on 1.1.86 by adopting the same formula as for the serving
employees but with effect from 1.1.96. In other words, the pre-
1.1.86 pensioners stood at par with post 1.1.86 pensioners but with
effect from 1.1.96. Therefore, the dispute in the appeal before us is
confined to the formula applied to the period 1.1.86 to 31.12.95
when the ROPA rules, 1990 were in operation.
Learned counsel appearing on behalf of the respondent-
association admitted that the dispute was limited to the period
when the ROPA Rules, 1990 were in operation as the reliefs which
had been claimed by the association before the Calcutta High
Court had in fact been granted by the Fourth State Pay
Commission but for a subsequent period. It was however argued
that there was no rationale for distinguishing between the
pensioners who had retired prior to 1.1.86 and the post 1.1.86
retirees as far as quantum of pension was concerned for the period
1986 to 1995. It is said that the quantum of pension forms part of
the formula for computation of pension and that Nakara’s case
clearly forbade any distinction between pensioners inter-se.
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Both sides have contended that the decision in Nakara
supported their respective contentions. Neither disputes that
Nakara blazed a trail in service law which brought substantial
relief to pensioners who were otherwise isolated from the retiral
benefits which were being conferred on persons who had retired
after them. The dispute is as to the extent of the relief. It is,
therefore, necessary to briefly recapitulate the facts of Nakara’s
case.
The subject matter of decision in that case was an Office
Memorandum dated 25.5.1979 by which the Ministry of Finance,
Government of India propounded a liberalised formula for
computation of pension and made it applicable to Government
servants who were in service on 31.3.1979 and retired from service
on or after that date. Pre-1979 retirees were being paid pension on
the basis of average emoluments of 36 months’ salary which
preceded the date of retirement. The liberalised formula provided
for i) average emoluments with reference to the last 10 months of
service; ii) a higher minimum ceiling on the pension payable and
iii) introduced a slab system for computation of pension. After an
exhaustive review of decisions relating to Article 14 of the
Constitution, the Court held that pension was not only
compensation for loyal service rendered in the past but was a
measure of socio economic justice, and that there was no reason
given for choosing 1.4.1979 as a cut-off date for applying the
formula. In coming to the conclusion that the cut off date was
invalid and must be struck down and that the liberalised formula
must be made available to all pensioners, the Court noted that it
was not a case of contributable scheme or a pension fund from
which alone the pension was to be disbursed neither was it a new
retiral benefit but it was an "upward revision of an existing
benefit". The argument of the Government regarding the non-
availability of funds was found unacceptable since, it was said,
that application of the same pension formula to all pensioners
would only make a marginal difference in the case of past
pensioners because the emoluments were not revised and all that
the old pensioners would get by reason of computation on the
liberalised formula would be a slightly higher pension.
By several pronouncements of this Court the principles laid
down in Nakara have been defined and their limits restated.
Krishena Kumar V. Union of India and Others was a
decision of the Constitution Bench in which it was held that the
notification setting a cut off date for exercising an option to either
be covered by the Provident Fund scheme or the pension scheme
could not be struck down by applying the ratio of Nakara. The
reasons for distinguishing Nakara were broadly two fold, namely,
that the fixation of the cut off date was based on a rational
principle and that the persons covered by the Provident Fund
Scheme and those covered by the Pension Scheme did not form a
homogeneous class so that the basis for applying Article 14
between the two groups was not there. This decision highlighted
the fact that a cut off date for granting service benefits may not
necessarily tantamount to a violation of Article 14 and will be
upheld by the Courts if there is some reasonable explanation in
support of that date.
Similarly in Union of India V. P.N. Menon and Others ,
an Office Memorandum introduced a scheme to treat a portion of
the dearness allowance as pay in respect of government servants,
who retired on or after 30.9.1977. This was challenged as being
discriminatory via-a-vis those who had retired prior to 30.9.77.
The challenge was negatived because:
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" fixing 30.9.1997 as the cut-off-date, which
date was fixed when the price index level
was 272, cannot be held to be arbitrary. The
decision to merge a part of the dearness
allowance with pay, when the price index
level was at 272, appears to have been taken
on the basis of the recommendation of the
Third Pay Commission. As such it cannot
be held that the cut-off date has been
selected in an arbitrary manner. Not only in
matters of revising the pensionary benefits,
but even in respect of revision of scales of
pay, a cut-off date on some rational or
reasonable basis, has to be fixed for
extending the benefits."
Illustrative of another aspect of the Nakara principle, is the
decision in Commander Head Quarter, Calcutta and Others V.
Capt Biplabendra Chanda. which said that the requirement of
equality prescribed by Nakara did not extend to a new retiral
benefit but was limited only to an upward revision of an existing
benefit. It was held therefore that a person who was not entitled to
receive pension on the date of his retirement could not claim a
grant of pension because of a subsequent change in the criteria of
eligibility for such grant. [See also Union of India and Others
V. Dr. Vijaypurapu Subbayama 2000 (7) SCC 662 and
V.N.Kasturi V. Managing Director, State Bank of India,
Bombay and another 1988 (8) SCC 30.]
Conversely when there is no new scheme of payment for
pension but only revision of the existing pension scheme, for
example calculation of pension on the basis of 40 per cent of the
average last 10 months salary instead of 40 per cent of the average
annual basis salary for the last 5 years of service, it would be a
benefit grantable to all pensioners irrespective of the date of their
retirement in accordance with Nakara principle.
The respondents’ case is based upon a failure to distinguish
between the pension scheme on the one hand and the revised pay
scales on the other. Pension Schemes are based on the West
Bengal Services (Death-cum-Retirement) Rules 1971 (hereinafter
referred to as the ’1971 Rules’) which were framed under Article
309. These Rules apply to all State Government employees
barring a few exceptions which are not relevant for our purposes.
These Rules provide that a Government servant’s claim to pension
is regulated by the rules in force at the time the Government
servant resigns or is discharged from service on retirement or
otherwise. Rule 67 deals with the amount of pension which is
fixed on the emoluments which in terms of the definition of the
word under Section 7 (1)(d) means the ’pay’ as defined in Rule 5
(28) of the West Bengal Service Rules, Part I which the officer
was receiving immediately before his retirement. Sub-clause (1)
of Rule 5 (28) of the West Bengal Service Rules, Part I has
defined pay as:
"Pay means the amount monthly drawn by a
Government servant as pay other than special
pay or pay granted in view of personal
qualification which has been sanctioned for a
post held by him substantially or in an
officiating capacity or to which he is entitled
by reason of his position in a cadre."
Therefore unless there is a change in the emoluments as
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defined in the 1971 Rules, the pension will continue to be pegged
to the pay drawn by the employee immediately before his
retirement. This has not been done as far as the pre-1986 retirees
are concerned by the 1990 ROPA Rules.
The ROPA Rules, 1990 were based upon the
recommendation of the Third State Pay Commission. The Third
State Pay Commission, was constituted by the State Government
by Finance Department resolution No. 805-F dated 30th January
1987, inter-alia, to examine the structure of pay and conditions of
service of the specified categories of State Government employees
keeping in view the recommendations of the Fourth Central Pay
Commission and the decision of the Government of India. The
Third State Pay Commission revised the pay scales and other
benefits of those employees in terms of the reference and also
recommended that the Pay Commission’s report on pay,
allowances and conditions of service should be made effective
from 1.1.86 because that was the date from which the Central
Government employees and the employees of a large majority of
other States had got the benefit of revised emoluments. Keeping
in view the financial resources of the State, the Third Pay
Commission also recommended that there should be notional
effectiveness from 1.1.86 and the arrears due on the basis thereof
should be paid to the employees only for the period from 1.1.88
onwards. It was further recommended that pensioners retiring
after 1.1.86 should be allowed the benefit of pay fixation in the
revised scales and allowance of computation of their pension
which may be revised where necessary.
The State Government accepted the recommendations of the
Third Pay Commission and in exercise of the powers conferred
under Article 309 published the ROPA Rules on 12th January 1990.
Consequent upon the revision of the pay scales with effect from
1.1.86 the pensionary benefits in respect of those State
Government employees whose pay had been fixed under the
ROPA Rules, 1990 were also re-calculated. In respect of those
employees who had retired after 1.1.86, their pensionary benefits
were revised notionally on the basis of the revised pay, also fixed
notionally, in terms of the ROPA Rules, 1990 by Memorandum
No. 4056-F dated 25th April, 1990.
What is noticeable is that the definition of the word
’emoluments’ in the 1971 Rules was not amended. As such
pension continued to be calculated on the basis of emoluments as
defined in the 1971 Rules namely the last pay drawn immediately
prior to retirement. The pay of the pre 1986 pensioners was not
revised. The Third Pay Commission had given a reason for
choosing 1.1.86, as the cut off date. As held in Krishena Kumar
v. Union of India (supra) and Union of India v. P.N. Menon
(supra) merely because a cut off date is fixed would not make the
exercise invalid all though persons in the service immediately
before the cut off date would be deprived of the benefit of the
revised scales of pay. It would depend upon the relevancy of the
consideration underlying the choice of such date. The reason
stated by the Third Pay Commission cannot be said to be arbitrary
or irrelevant.
Because the scales of pay had been revised from 1.1.86, the
re-computation of pension for such employees as had been granted
the revised scales of necessity was limited to the same cut off date.
All that the impugned Memorandum No. 4056-F dated 25th April
1990 did was to re-compute the benefits in favour of post 1.1.86
retirees according to the existing formula as provided by the
Memorandum No. 7530-F and No. 7531-F both dated 6th July
1988. The same formula continues to be applied to the pre 1986
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retirees. The difference between pre-1986 pensioners and the
post-1986 pensioners is only on account of the revision of pay
scales and not account of failure of State Government to equitably
apply the liberalised pension scheme formula. The quantum of the
emoluments formed no part of the formula for grant of pension
during 1986 to 1995.
Nakara’s decision did not direct the payment of an equal
amount of pension to all pensioners. This is clear from the
following passage where the Court discusses the financial impact
of the formula on the resources of the Government:
"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 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 some
reaches the maximum the old lower ceiling
will not deny him what is otherwise justly
due on computation."
This was affirmed in the Indian Ex-Services League and
Others V. Union of India. In that case, the petitioner claimed
that the pre-April 1979 retirees of the Armed Forces were entitled
to the same amount of pension for each rank. The prayers were
substantially the same as those made by the respondent-association
before us. The claim for the same amount of pension to be paid to
all pre-April 1979 retirees of the Armed Forces as to the post-April
1979 retirees was rejected holding, inter-alia:
"Nakara decision is one of limited
application and there is no scope for
enlarging the ambit of that decision to cover
all claims made by the pension retirees or a
demand for an identical amount of pension
to every retiree from the same rank
irrespective of the date of retirement, even
though the reckonable emoluments for the
purpose of computation of their pension be
different."
Again in K.L. Rathee V. Union of India & Others the case
of the petitioner was that following Nakara case he had to be given
the same amount of pension as other employees of his rank
irrespective of the date of retirement. The Court noted that Nakara
did not strike down the definition of ’emoluments’ and held that:
"Nakara case does not lay down that the
same amount of pension must be paid to all
persons retiring from government service
irrespective of the date of
retirement.Even if pension is
calculated on the basis of the same formula
the basis of calculation has to be the
average of the last ten months’ emoluments.
This principle of adopting last ten months’
emoluments as the basis for calculating of
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pension must be uniformly applied to all
persons drawing pension from the Central
Government. This was all that was laid
down in Nakara case. It, however, did not
lay down that the quantum of emoluments
drawn during the last ten months of service
of each government employee must be
taken to be the same for this purpose.The
emoluments have to be calculated
according to the government rules in force
at the time of retirement of the employees."
(Emphasis supplied)
Consequently in the present case for the period in question,
namely, pre -1.1.86 to 31.12.95 when the definition of
’emoluments’ was not amended and pension continued to be
calculated on the basis of the unrevised emoluments of the pre
1986 pensioners, no parity in the amount of pension can be
granted.
We, accordingly, allow this appeal and set aside the decision
of the High Court but without any order as to costs.
..J.
( G.B. Pattanaik )
J.
(Ruma Pal)
January 7, 2002