Full Judgment Text
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PETITIONER:
V. KASTURI
Vs.
RESPONDENT:
MANAGING DIRECTOR, STATE BANK OF INDIA, BOMBAY & ANR.
DATE OF JUDGMENT: 09/10/1998
BENCH:
S.B. MAJUMDAR, M JAGANNADHA RAO.
ACT:
HEADNOTE:
JUDGMENT:
JUDGMENT
S.B. Majamudar, J.
Leave granted
We have heard learned counsel for the parties finally
in this appeal. The short question involved in this appeal
is: whether the appellant - original writ petitioner before
the High Court was entitled to get the benefit of pension
scheme available to the State Bank employees under the State
Bank of India Employees Pension Fund Rules (for short the
Rules). The learned Single Judge of the High Court held that
the appellant was so entitled. The Division Bench set aside
the said decision and rejected the claim of the appellant.
In order to highlight the grievance of the appellant in this
appeal, it is necessary to note background skeletal facts.
BACKGROUND SKELETAL FACTS:
-------------------------
The appellant joined the respondent State Bank of
India as an officer on 22.10.1963. In the year 1979 the
respondent Bank framed the pension scheme under Regulation 45
of the State Bank of India Officer (Determination of Terms
and Conditions of Service) Order of 1979. The State Bank of
India also had framed State Bank of India Employees Pension
Fund Rules in exercise of powers conferred by Section 50 of
the State Bank of India Act. The appellant became a member
of the said Fund as required of him while joining the service
of the Bank. He resigned from the Bank service on 31St July,
1984. By that time he had completed 20 years and 9 months of
pensionable service. At the time of his resignation which
was treated as voluntary retirement, he was not entitled to
get pension under the aforesaid Rules as the eligibility
requirement for earning pension as per Rule 22(1)(c) of the
said Rules was to the effect that the employee should have
retired from Bank service after 25 years of pensionable
service. However, on account of various representations from
the Bank employees the said eligibility condition was relaxed
with effect from 20th September, 1986 whereby the original
clause (c) rule 22(1) was replaced by another clause (c)
which provided that an employee retiring after completion of
20 years of pensionable service irrespective of the age could
get benefit of the pension scheme by his request in writing.
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The appellant’s contention before the respondent authorities
was that though he had resigned on 31st July, 1984 as he had
already completed 20 years of pensionable service by that
time the benefit of the amended provision of Clause (c) of
rule 22(1) of the Rules could be available to him at least
prospectively from 20th September, 1986 i.e. from the date
on which amended provision came into force. The said request
was rejected by the respondent Bank authorities on the ground
that the said amended provision which introduced anew pension
scheme for covering the additional class of retiring employee
on completion of 20 years of pensionable service, instead of
earlier requirement of 25 years of pensionable service, could
not retrospectively apply in the case of the appellant who
had resigned and ceased to be a Bank employee more than two
years prior to coming into force of this amended pension
scheme. The appellant thereafter carried the matter by way
of a writ in the High Court of Judicature at Madras. The
learned Single Judge who heard the writ petition, following
the Constitution Bench judgment of this Court in the case of
D S Nakara & Ors. Vs. Union of India, 1983 (1) SCC 305,
held that the appellant was entitled to the benefit of
amended provision of rule 22(1)(c) from the date of coming
into operation of the said provision as he was a member of
the employees pension fund at the time when he ceased to be a
Bank employee and he had already completed the requisite 20
years of pensionable service by that time. the Division
Bench of the High Court in Writ Appeal moved by the
respondent Bank took a contrary view and came to the
conclusion that the amended provision of the rule introduced
a new scheme for covering entirely a district class of
erstwhile employees who had retired from Bank service and the
said provision could not have any retrospective effect and
could not cover the case of the appellant who had retired
more than two years prior to the coming into force of the
amended scheme of pension. That is how the appellant is
before us in these proceedings.
RIVAL CONTENTIONS:
Learned counsel for the appellant, Shri N.G.R.
Prasad, placing reliance on a number of decisions of this
Court and especially the constitution Bench decision of this
court in Nakara’s case (Supra) vehemently contended that the
appellant who had completed 20 years of pensionable service
at the time be retired after his resignation, formed the very
same class of Bank employees who retired after completing 20
years pensionable service and hence they had all to be
treated uniformly; that pension was not a bounty but was a
reward for meritorious past service and once the eligibility
for earning the said pension after completion of 20 years of
pensionable service became available to an employee, whether
he retired at one point of time or other would not make any
difference. All such employees formed the same class.
Hence, it was not open to the respondent authorities to deny
the appellant pensionary benefit only on the ground that when
be retired in 1984 after his resignation, even though he had
completed 20 years of pensionable service by then, the then
existing pension rules did not render him eligible to earn
pension, when subsequently the said rules were relaxed for
this very class of employees with effect from September,
1986. In this connection it was submitted that the appellant
was not claiming any pension for the period from 1st August,
1984 till 19th September, 1986 but at least from the date of
which the amended provision came into force as the appellant
was alive by then he was entitled to proportionate pension at
least from that date onwards to the extent of the pensionable
service put in by him. The denial of the said benefit to the
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appellant was purely arbitrary and unreasonable and was not
justified on the touchstone of Article 14 of the Constitution
of India. He made it clear that he was not challenging the
cut off date fixed by the respondent authorities while
amending sub-clause (c) of Rule 22(1) of the pension rules.
All that he submitted was that as the appellant falls in the
same class of other Bank employees who had completed 20 years
of pensionable service by the time of retirement the
appellant was entitled to earn pension from 20th September,
1986 as he had survived on that date, his earlier retirement
notwithstanding.
Learned senior counsel Shri Anil B. Divan for the
respondent Bank authorities on the other hand submitted
placing reliance on a number of decisions of this Court that
thee Constitution Bench Judgment of this Court in Nakara’s
case (supra) did not apply to the facts of the present case
as the appellant was not a pensioner within the scheme of the
pension when he resigned from Bank job on 31st July, 1984.
Consequently subsequent amendment of the rule after his
retirement which extended the net of coverage of eligible
pensioner could not apply to him as he was outside the said
sweep of the amended provision when it came into force in
September, 1986. That the appellant cannot be said to be
forming the same class of eligible pensioners who had
completed 20 years of pensionable service on 20th September,
1986. By his own violation he had opted out from the Bank
service two years prior thereto. That the amended provision
would apply only to those Bank employees who had completed 20
years of pensionable service by 20th September, 1986 when the
amended provision applied. Consequently, the claim of the
appellant was rightly rejected by the Division Bench of the
High Court.
Point for consideration:
-----------------------
In view of the aforesaid rival contentions, the
following solitary point arise for our consideration:
(1)Whether the appellant was entitled to get the benefit
of amended Rule 22(1) (c) of the Rules from 20th September,
1986 onwards?
We shall examine this solitary point for determination in the
light of the rival contentions placed before us by learned
counsel for the respective parties based on a number of
decisions of this Court to which we will make reference at an
appropriate place in the latter part of this judgment.
The Pension Scheme before 20.09.1986:
-----------------------------------
Before we proceed to examine the rival contentions
centering round this point, it will be necessary to note the
salient features of the pension scheme applicable to Bank
employees at the relevant time when the appellant resigned
from Bank service on 31st July, 1984 and also the change
brought about in the said scheme with effect from 20th
September, 1986.
The respondent Bank, as noted earlier, in exercise of
its powers conferred under Section 50 of the State Bank of
India Act (23 of 1955), the Central Board of the State Bank
of India, after consultation with the reserve Bank of India
and with the previous sanction of the Central Government,
framed regulations for providing for establishment and
maintenance of pension fund for the benefit of its employees.
The said pension fund was created in pursuance of clause (o)
of sub-section (2) of Section 50 of the State Bank of India
Act, 1955. The regulations so framed were styled as the
’State Bank of India Employees’ Pension Fund Rules" which are
being referred to by us in this judgment as "the Rules’.
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Rule 1 thereof provided for constitution of a fund called
"THE STATE BANK OF INDIA EMPLOYEES’ PENSION FUND". The said
fund was deemed to have come into existence on 1st July,
1955. It is not in dispute between the parties that the
appellant when he joined the Bank service became a member of
the said fund. the term "Member" is defined in Rule 2 to
mean:
"any person in the service of the Bank who has been
admitted to the membership of the fund".
Rule 7 of the Rule provide that:
" every permanent employee in the service of the
Bank who is entitled to pension benefits under the
terms & conditions of his service shall become a
member of the Fund from (a) the date from which he
is confirmed in the service of the Bank or (b) the
date from which he may be required to become a
member of the Fund under the terms and conditions of
his service."
It is not in dispute between the parties that the
appellant being a confirmed permanent employee became a
member of the said Fund and he continued to be so till the
date of his resignation from the Bank service. Rule 3 of the
Rules provide that:
"That trustees of the fund shall be the Director of the Bank
for the time being and at every meeting of such trustees the
Chairman of the Bank shall be the Chairman of the meeting
and in his absence one of the Directors not being an
executive officer shall be elected Chairman of the meeting."
Rule 8 lays down the criteria for ruling out employees from
membership of the pension fund, the excluded categories of
employees are mentioned in sub-clauses (a) to (d) of Rule 8
who were not eligible to become members of the fund. The
appellant did not fall in any of these excluded categories.
He, therefore, by the thrust of rule 7 became a member of
the pension fund. rule 9 sub-rule (1) lays down that:
"Subject as hereinafter provided every employee
shall, as from the date of his admission to the
fund, contribute to the fund every month an amount
equal to five per cent of his salary subject to a
maximum provided therein".
Sub-rule (2) thereof entitles the powers of the trustees at
their discretion to suspend the operation of sub-rule (1) or
reduce the percentage of the members’ contribution at any
time in the case of any class or category of employees and
for such period as they shall think necessary and to
reimpose the contribution should they consider it necessary
but without retrospective effect. As per sub-rule (3) of
rule 9:
"Each employee’s contributions to the fund under
sub-rule (1) shall be credited in the books of the
fund to an account in his name and a statement of
the account shall be supplied to him half-yearly".
Sub-rule (5) of Rule 9 provided that:
"In the event of member retiring from the Bank’s
service, or in the event of a member dying, in each
case before such member has qualified for a pension
there shall be payable to him or, in the event of
his death, to the persons and in the manner named in
sub-rule (7) hereof, the amount of such member’s own
contributions with interest accused thereon".
Amended Rule 10 days down that:
"The Bank will subscribe monthly to the fund a sum
equal to ten per cent of the salary payable by the
Bank in respect of all employees who are members of
the fund. However, when an employee ceases to be in
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pensionable service in terms of Rule 20, no
subscription will be made by the Bank for the period
of such service. No amount subscribed by the Bank
shall be credited to the individual account of any
member".
By rule 13 the trustees were given powers to invest the
moneys of the fund or any portion thereof in stock, funds
and securities in which a trustee is authorized to invest
trust money by any law for the time being in force. Rule 15
provided that:
"...the retirement of all other employees of the
Bank shall be subject to the sanction of the
Executive Committee or the Local Board concerned
with employment...".
It also lay down that
"....any officer or other employee who shall leave
the service without sanction as required by this
rule shall forfeit all claims upon the funds for
pension".
Rule 17 lays down that:
"Pensions shall begin to accrue on the first day
succeeding that of retirement and shall be payable
monthly to the beneficiary personally or to his
order...".
As per rule 18:
"Pensions shall in each case be debited to the
member’s account in the fund until the balance
thereof is exhausted and thereafter to the general
balance of the fund".
We may also in this connection refer to rule 26
which provides that:
"Every employee when joining the fund shall
subscribe an agreement in the following form:-
I hereby declare that I have read and understood
the Rules of the State Bank of India Employees,
Pension Fund and I hereby subscribe and agree to be
bound by the said Rules.
Name in full.........
Date of Birth..............
Name of appointment.....................
Date of joining service..................
The next relevant rule is rule 22 which is required to be
extracted hereunder in the form in which it existed at the
time when the appellant ceased to be a Bank employee on his
resignation from Bank service on 31st July, 1984. Rule 22(1)
sub-Rules (a) to (c) read as follows:
"22 (1) A member shall be entitled to a pension
under these Rules on retiring from the Bank’s
service-
(a) after having completed twenty years’
pensionable service provided that he has attained
the age of fifty years;
(b) after having completed twenty years’ pensionable
service, irrespective of the age he shall have
attained, if he shall satisfy the authority
competent to sanction his retirement by approved
medical certificate or otherwise that he is
incapacitated for further active service;
(c) after twenty-five years pensionable service."
CHANGES IN THE SCHEME AFTER 20.09.1986:
--------------------------------------
Sub-rule (2) of Rule 22 is not relevant for our present
purpose. Rule 22 sub-rule (1)(c) underwent a change and the
revised form thereof with effect from 20th September, 1986
read as under:
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"(c) After having completed twenty years
pensionable service, irrespective of the age, he
shall have attained, at his request in writing.
(d) After twenty five years pensionable service.
22(3) A member who has been permitted to retire
under clause 1(c) above shall be entitled to
proportionate pension."
In other words, in clause (c), the period of twenty five
years stood reduced to twenty years w.e.f. 20th September,
1986.
Now a mere look at the aforesaid relevant provisions of the
rules shows that even though the appellant was a member of
the pension Fund, when he ceased to be a Bank employee after
31st July, 1984 on his resignation from the Bank service, he
was not entitled to pension as none of the conditions of
rule 22(1) sub-Rules (a) to (c) then existing applied in his
case. Even though he had completed 20 years of pensionable
service at that time he had not attained the age of 50
years. He was only 44 years of age. Hence rule 22(1)(a)
did not apply in his case. Rule 22(1)(b) also was out of
picture for him as he had not retired because of any
incapacity. He was in good health but for his own personal
reasons he walked out of the Bank service at the age of 44
years. Then remains only clause (c) of Rule 22(1) as then
existing which laid down that if a member of the fund who
retired from bank service after 25 years of pensionable
service could get entitlement for full pension to be charged
on the said fund. Thus as rule 22(1) stood in those days
when the appellant resigned from Bank service he was not
eligible to earn any pension at all. Once that happened, he
could invoke the benefit of only Rule 9 sub-rule (5) and
claim the amount of his own contributions remaining to the
credit of his account in the fund with the interest accrued
thereon. It is not in dispute that he did receive the said
amount of his personal contribution with interest accrued
thereon. As the situation then existed no further relief
could have been given or was available to the appellant and
he could not have claimed anymore amount from the fund.
However, the appellant stakes his case for pension under the
said scheme only on the basis of the amended rule 22(1) by
insertion of a new sub-rule (c) with effect from 20th
September, 1986. It is also not in dispute between the
parties that the said amended sub-clause (c) became
operative only from 20th September, 1986 and that it had no
retrospective effect. The short question is whether the
appellant could stake his claim for pension on the ground
that he had completed 20 years of pensionable service by the
time he ceased to be a Bank employee in 1984, when he had
survived till the amended clause (c) rule 22(1) came into
force.
For supporting the aforesaid claim of the appellant,
learned counsel for the appellant vehemently contended that
all the Bank employees who had completed 20 years of
meritorious pensionable service by the time of retirement or
resignation from Bank service, would form one class and if
that is so, the moment rule 22(1)(c) get amended the pension
scheme which had already applied in the case of appellant
being a member of the said scheme from the inception of his
bank service can be said to be not a new scheme but it can
be said to be conferment of an additional advantage
available to all the members of the very same scheme and if
all such pensioners similarly situated being members of the
same class namely, employees retiring after having completed
20 years pensionable service, were treated differently on
the specious plea that only those who retire after the
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cut-off date of 20th September, 1986 would get pension and
not those who retired earlier though having completed 20
years of pensionable service, a clear case of hostile
discrimination would result. Thee employees like the
appellant who had retired earlier can be said to be
arbitrarily being denied the benefit of the pension scheme
which got further amended for the benefit of the very same
class of employees. This action on the part of the Bank
would therefore, remain violative of Article 14 of the
constitution of India.
On a close look of the relevant provisions of the
Rules in is not possible to agree with this contention. The
appellant, in order to earn pension under rule 22(1)
sub-clause (c) as amended in 1986 has to satisfy the
following twin conditions:
i)At the time when the amended sub-clause (c)
applied i.e. from 22nd September, 1986, he should be a
member of the pension fund:
ii)He should have by then completed 20 years of
pensionable service, and should have pout forward his
requisition in writing for availing the benefit of the said
provision.
Unless both these conditions are satisfied the amended
clause (c) of rule 22(1) cannot apply in his case. We have
to note that the service bio-data of the appellant contra
indicates the applicability of those two conditions. He was
not a member of the fund on 21st September, 1986. He had
ceased to be a member of the fund on his retirement in 1984.
As laid down in the definition of the term "member" the
concerned employee should be in service of the Bank and he
should have been admitted to the membership of the fund. So
far as the admission into the membership of the fund is
concerned, the appellant has not satisfied the requirement
inasmuch as he was a member of the fund but the second
requisition of the definition was not fulfilled by him in
1986 as he was not in service of the Bank on 20th September,
1986 when clause 22(1)(c) as amended came into force.
Consequently the first condition for applicability of the
amended clause (c) of rule 22(1) did not apply to the facts
of the present case. Consequently, the question of
compliance of the second condition that he should have
completed 20 years of pensionable service would pale into
insignificance as even though he had completed 20 years of
pensionable service when he ceased to be a Bank employee in
1984 he did not come within the the beneficial sweep of rule
22(1) clause (c) as amended, as he was not a member of the
pension fund in 1986 as he had ceased to be a member of the
fund after 31st July, 1984. He was, therefore, out of the
sweep of the pension fund scheme on 20th September, 1986
when rule 22(1)(c) got amended. The very opening part of
rule 22(1) lay down that a member should be entitled to
pension under the Rules if he satisfies the conditions laid
down in the said Rule but if he is not a member on the
relevant date, the question of his being covered by any of
the clauses of the said rule would not survive at all. Thus
on the very scheme of the Rules and the amended provision of
sub-rule (c) of rule 22(1) the appellant’s case would fail
and consequently he would not be entitled to claim any
benefit from the aforesaid amended provision even
prospectively from 20th September, 1986 as he was not at all
covered by the said provision on that date.
We may also note that the second requirement for the
applicability of rule 22(1)(c) as amended in that after
having completed 20 years of pensionable service the
concerned member of the fund irrespective of age i.e. even
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being less than 50 years of age can invoke the benefit of
the said provision by making a request in writing for
getting propertionate pension. Even if such request is made
it is in the hands of the Executive Committee of the Central
Board of the Bank to accept such a request or not as seen
from rule 15. Any officer who leaves the service without
such sanction would forfeit all the claims under the fund
for pension. Consequently occasion for an employee who is a
member of the fund to make a request in writing to the Bank
for getting the benefit of pension scheme as per rule
22(1)(c) as amended would arise provided such an employee
has completed 20 years of pensionable service and has
obtained the right under the amended sub-clause (c) of rule
22(1) to make his request in writing. Thus, even the second
condition for applicability of rule 22(1) sub-clause (c) as
amended would presuppose that the concerned member of the
fund having completed 20 years of service must be in a
position at the time of retirement to make his request in
writing for getting the benefit of the said provision such
an mentality would arise only on and from the date on which
the said amended provision came into force. Meaning thereby
those employees like the appellant who had ceased to be
members prior to the said date and who might have completed
20 years of service in past will not be able to invoke the
amended cause (c) rule 22(1) at any time after their earlier
retirement. Thus even the second condition of giving a
requisition in writing would not be available to such
employees like the appellant. It is also axiomatic that
when the appellant resigned on 31st July, 1984 at the age of
44 years there was no occasion for him to give any such
written request for proportionate pension as in those days
clause (c) in amended form was not available for being
invoked by him. The second condition for applicability of
the amended clause (c) of rule 22(1) must of necessity
therefore, mean that only those employees who were even less
than 50 years of age and who retired on and after 20th
September, 1986 having then completed 20 years of
pensionable service could invoke the said amended provision
by requesting in writing. The appellant did not and could
not comply with this second condition for invoking amended
clause (c) of Rule 22(1).
We must also keep in view rule 26 of the pension
Rules which clearly shows that when a person enters the Bank
service, he becomes a member of the fund and agrees to be
governed by the Rules of the scheme. He becomes the
beneficiary of the trust fund if he satisfies all the
requisite conditions of the pension fund. If he is not a
beneficiary of the fund at the time when he retires, as it
happened in the case of the appellant in 1984, no benefit
under the said scheme of the fund would be available to him
subsequently as he will be out of the class of
beneficiaries. Consequently, no question of his being given
any discriminatory treatment vis-a-vis other existing
beneficiaries under the scheme of the fund that were already
in Bank service as members of the fund on 20th September,
1986 when the beneficial provisions of the amended rule
22(1)(c) came into force, would at all survive for
consideration.
For all these reasons, the solitary point for
consideration has to be answered against the appellant.
However, as learned counsel for the parties invited
our attention to number of decisions of this Court in
support of their respective cases, we deem it fit to refer
to them and consider their sweep.
Learned counsel for the appellant, at the outset,
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invited our attention to the Constitution Bench decision of
this Court in D.S.Nakara (supra). The Constitution Bench in
the aforesaid case, speaking through D.A.Desai, J, had to
consider the question of a cut-off date found in the pension
scheme which was uniformly applicable to all the Central
Government employees who had formed one class at the time of
retirement and who were entitled to pension. The question
was whether amount of pension which was computed for them in
the light of available formula could have been further
enhanced on the basis of a subsequent more beneficial
formula and whether it could be denied only on the ground
that they had retired prior to the date on which such
enhanced computation of pension was made available to the
pensioners. In the light of the aforesaid fact situation it
was observed that all employees governed by the pension
scheme and had become eligible to earn pension at the time
of their retirement formed one class. It was held that such
a cut off date for granting additional benefits to only some
of the pensioners in the same class of employees could not
be countenanced on the touchstone of Article 14 of the
Constitution of India. In para 8 of the report it was noted
that the:
"Primary contention is that the pensioners of the
Central Government form a class for the purpose of
pensionary benefits and there could not be
miniclassification within the class designated as
pensioners...."
A question was posed in para 9 of the report that can this
class of pensioners further be divisible for the purpose of
entitlement’ and ’payment’ of pension into those who retired
by certain date and those who retired after that date. The
aforesaid decision cannot be of any assistance to learned
counsel for the appellant on the facts of the present case.
In nakara’s case admittedly all the Central Government
servants were governed by pension scheme and were eligible
to draw pension on retirement. They therefore, formed one
class. In the facts of the present case, it is difficult to
appreciate how the appellant can be said to be forming the
same class of employees who came to be later on governed for
the first time in 1986 by the pension scheme by being
conferred the benefit of newly introduced pension
eligibility as per amended clause (c) of rule 22(1). The
new class of employees covered by it was consisting of all
the then existing members of the fund who had completed 20
years of pensionable service and who could be below the age
of 50 years at the time of their retirement as the earlier
restriction of age of 55 years as found in clause (a) of
rule 22(1) was revised by re-enacting clause (c). It is
also to be noted that earlier clause (a) gave retirees at
the age of 50 years full pension. And clause (c) sought to
give retirees below 50 years only proportionate pension for
the first time after September, 1986. This new class of
employees were for the first time made eligible to get the
benefit of pension scheme under rule 22(1). Such pensionary
benefit was not available to them prior to the amendment of
clause (c) of rule 22(1). Hence, it was certainly a new
pension scheme for them & not old wine in a new bottle. for
such class of employees there was no question of any
miniclassification as for the entire class of such employees
for the first time the benefit of pension scheme was made
available by the amendment. The decision of the
Constitution Bench in Nakara’s case therefore, cannot
advance the case of learned counsel for the appellant. We
may also mention that the ratio of Nakara’s case was
distinguished by two later Constitution Bench decisions of
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this Court. In the case of India Ex-Services League and
Ors. Vs. Union of India & Ors. 1991(2) SCC 104, a later
Constitution Bench, speaking through Verma, J, (as he then
was) made the following pertinent observations in para 12 of
the report:
"The liberalised pension scheme in the context of
which the decision was rendered in Nakara provided
for computation of pension according to a more
liberal formula under which "average emoluments"
were determined with reference to the last ten
months’ salary instead of 36 months’ salary provided
earlier yielding a higher average, coupled with a
slab system and raising the ceiling limit for
pension. This Court held that where the mode of
computation of pension is liberalised from a
specified date, its benefit must be given not nearly
to retirees subsequent to the date but also to
earlier existing retirees irrespective of their date
of retirement even though the earlier retirees would
not be entitled to any arrears prior to the
specified date on the basis of the revised
computation made according to the liberalised
formula. For the purpose of such a scheme all
existing retirees irrespective of the date of their
retirement, were held to constitute one class, any
further division within that class being
impermissible. According to that decision, the
pension of all earlier retirees was to be recomputed
as on the specified date in accordance with the
liberalised formula of computation on the basis of
the average emoluments of each retiree payable on
his date of retirement. For this purpose there was
no revision of the emoluments of the earlier
retirees under the scheme. It was clearly stated
that if the pensioners form a class, their
computation cannot be by different formula affording
unequal treatment solely on the ground that some
retired earlier and some retired later’. This
according to us is the decision in Nakara and no
more".
In yet another later Constitution Bench judgment of
this Court in the case of Krishena Kumar etc. etc. Vs.
Union of India & Ors. 1990 (4) SCC 207, K.N.Saikia, J.,
speaking for the Constitution Bench distinguished Nakara’s
case by holding that:
"In Nakara the Court treated the pension retirees
only as a homogeneous class. It was never held that
both the pension retirees and the PF retirees formed
a homogeneous class and that any further
classification among them would be violative of
Article 14. On the other hand the court clearly
observed that it was not dealing with the problem of
a "fund....."
It has to be kept in view that in the present case we are
concerned with the pension fund and so far as the pension
fund is concerned Nakara’s judgment by itself would not
apply as clearly mentioned in the very same judgment in para
45 of the ruling in Nakara’s case (supra). In para 45, it
has been observed that:
"Let us clear one misconception. The pension scheme
including the liberalised scheme available to the
government employees in non-contributory in
character. It was not pointed out that there is
something like a pension fund...... The payment of
pension is a statutory liability undertaken by the
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Government and whatever becomes due and payable is
budgeted for. One could have appreciated this line
of reasoning where there is a contributory scheme
and a pension fund from which alone pension is
disbursed. That being not the case, there is no
question of pensioners dividing the pension fund
which, if more persons are admitted to the scheme,
would pro rata affect the share....".
It becomes therefore, obvious that nakara’s judgement cannot
be effectively pressed in service by learned counsel for the
appellant on the facts of the present case. It is also to
be kept in view that in the present case we are also
concerned with pension fund while in Nakara’s observations
is out of the sweep of that decision. Our attention was
then invited by learned counsel for the appellant to two
later decisions of this Court. In the case of All India
reserve Bank retired Officers Association & Ors. Vs. Union
of India & Anr., 1992 Supp. (1) SCC 664, A.M. Ahmadi, J
(as he then was), spoke for the Division Bench of two
learned Judges. The case before this Court in the aforesaid
decision was whether the cut-off date fixed for bringing
into force the pension scheme which earlier did not exist
for the Bank employees could be said to be discriminatory
from any angle. The Court while distinguishing Nakara’s
ratio held that:
"Employees of the Reserve Bank of India were, prior
to the introduction of the pension scheme, enjoying
superannuation benefits comprising (i) CPF and (ii)
gratuity.....".
The pension scheme was being introduced for
the first time from the cut-off date. In these
circumstances, the employees who had retired earlier
when pension scheme was not available could not make
effective grievance in connection with those of a
few other categories who retire latter when pension
scheme had already come into force. Ahmadi, J.,
speaking for the Court in the aforesaid decision
highlighted the observations in Nakara’s case found
at page 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 retrial benefit.
It is an upward revision of an existing benefit. If
it was a wholly new concept, a new retrial benefit,
one could have appreciated an argument that those
who had already retired could not expect it."
The portion mentioned in Nakara’s case clearly
indicated that all the employees in Nakara’s case were
governed by the existing scheme and were the recipients of
retrial benefits. It was an upward revision of the existing
benefit that would in normal course be made available to all
such beneficiaries of existing retrial benefits. On the
facts of the present case, as seen earlier, employees like
the appellant who had retired prior to the amendment of
clause (c) of rule 22(1) were not recipients of any existing
benefit of pension. They were in fact out of the pension
scheme whatsoever being employees who had not completed 50
years of age even though they had completed 20 years
pensionable service. For such employees there was no
retrial benefit till appropriate amendment of clause (c) of
rule 22(1). Consequently, the amended clause (c) must be
held to be conferring a new retrial benefit and not
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enhancing the existing benefit for such employees. The
aforesaid decision of this Court in the All India Reserve
Bank Retired Officers Association case (supra) therefore,
also could not be effectively distinguished by learned
counsel for the appellant on the ground that in that case
there was no pension scheme while in this case there was an
existing pension scheme. He then invited our attention to a
decision of this Court in State of Punjab Vs. Justice S.S
Dewan (Retired Chief Justice) & Ors. 1997(4) SCC 569. In
that case a three Judge Bench of this Court, speaking
through Nanavati, J., had to examine the question whether
the pension scheme as amended on 22.2.1990 available to
introduction of a new retrial benefit or it only liberalised
an existing retrial benefit. In that case the question of
computation of pension of judicial officers governed by
pension scheme came up for consideration. Before an
amendment of the said scheme on 22.2.1990, the retiring
judicial officer was not entitled for computation of his
pension to club the period of practice at the bar before
joining the judiciary with judicial service thereafter. But
by the amendment dated 22.2.90 the period of practice at the
bar up to 10 years was thereafter permitted to be treated as
part of qualifying service for computation of pension of
judicial officers. This amendment was considered to be
conferring a new retrial benefit and was not held to be a
liberalisation of an existing benefit. The ratio of
Nakara’s decision was distinguished for coming to the
aforesaid conclusion. It was held that:
"Conceptually, pension is a reward for past service.
It is determined on the basis of length of service
and last pay drawn. Length of service is
determinative of eligibility and the quantum of
pension. The Formula adopted for determining last
average emoluments drawn has an impact on the
quantum of pension. D.S.Nakara case involved the
change of formula for determining average emoluments
and it was treated as liberalisation or upward
revision of the existing pension scheme. On parity
of reasoning it can be said that any modification
with respect to the other determinative factor,
namely, qualifying service made with a view to make
it more beneficial in terms of quantum of pension
can also be regarded as liberalisation or upward
revision of the existing pension scheme. If,
however, the change is not confined to the period of
service but extends or relates to a period anterior
to the joining of service, then it would assume a
different character. The it is not liberalisation
of the existing scheme but introduction of a new
retrial benefit".
The aforesaid observations which were strongly relied upon
by learned counsel for the appellant cannot be of any real
assistance to him Reason is obvious. If an employee is
already covered by an existing scheme and the main
determinative factor for computation of his pension, at the
time of his retirement, undergoes any modification with
respect to the other determinative factor, namely,
qualifying service then such a modification can be treated
as elongation of the already accrued retirral benefit. On
the facts of the present case, the said observations cannot
be of any avail to the learned counsel for the appellant for
the simple reason that when the appellant retired in 1984,
no right had accrued to him to get pension from the fund as
per rule 22(1)(c) as existing then. He was not a pensioner
at all when he retired. Consequently, any subsequent
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amendment in the said pension scheme by which a new class of
pensioners was brought in cannot be said to be enhancement
of a prior existing retrial benefit already earned by the
concerned employee. Effort made by learned counsel for the
appellant by submitting that in the present case the
question is of in service experience and hence observations
in the aforesaid case help him cannot be of any avail as
apart from the question of the consideration of in service
experience only or clubbing it with pre-service experience,
the first requirement for earning the said benefit of
clubbing would be to postulate that the concerned employee
becomes a pensioner at the time of his retirement. If he
was to a pensioner then he is out of the arena of contest
for getting any enhanced rate of pension subsequently. For
him there is no retiring pension at all. Hence the further
question of enhancing the said rates in further does not
survive for him.
Learned counsel for the appellant then invited our
attention to a decision of this Court in Dhanraj & Ors. Vs.
State of J & K & Ors. 1998(4) SCC 30. In the said case the
question for consideration before the Bench of two learned
Judges of this Court was as to whether the employees of
erstwhile State of Jammu & Kashmir who were later on
absorbed by Jammu & Kashmir State Road Transport Corporation
were entitled to pensionary benefits in terms of GO dated
3.10.86 when they retired from the service of the
Corporation prior to 9.6.81. Relying on the strength of the
said Govt. Order it was held by this Court that all
erstwhile State employees would form one class and were
entitled to get the benefit of the Govt. Order dated
3.10.86 even though they might have retired prior to 9.6.81
which was the date on which Article 177 of J & K Civil
Services Regulations was rendered in the peculiar
circumstances of its own case and is based on the clear
wordings of the Govt. Order dated 3.10.86 by which it was
mandate to give uniform treatment to all the retirees from
Corporation who were earlier State Govt. servants. They
formed one and same class. It is in the light of the
aforesaid fact situation examined by this Court in that
Judgment that we have to appreciate the reasoning found in
para 14 of the report on which strong reliance was placed by
learned counsel for the appellant. It has been observed
therein that even otherwise there was no justifiable
criteria for the State Government to draw the line between
those who retired earlier and those who retired after
9.6.81. 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. These observations are to be appreciated in the
light of the facts examined by this Court in this decision.
The State of Jammu & Kashmir was dealing with the very same
class of employees who were all ex-employees of the State
Govt. who had subsequently been absorbed by the Corporation
and thereafter had retired. As all of them formed the same
class, the same treatment was required to be given to them
in connection with the pensionary benefits made available by
the State Govt. The said decision cannot be of any avail to
learned counsel for the appellant as in the present case the
question is whether any uniform treatment can be given to
non-pensioners like the appellant as is given to the
pensioners who retired after the amendment of Rule 22(1)(c)
which came into force from 20th September, 1986. The next
decision on which reliance was placed by learned counsel for
the appellant is in the case of R.L.Marwaha Vs. Union of
India & Ors. 1987(4) SCC 31. In this case a Bench of two
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learned Judges of this Court speaking through
E.S.Venkataramaiah, J., (as he then was) had to consider the
question whether the ex-government servants who were holding
pensionable posts when absorbed by autonomous bodies could
be treated differently while granting benefit of counting
their period of government service as part of qualifying
service for computing pension when they retired from the
autonomous body. It was held on the facts of this case that
the benefit of Govt. Order should be extended to all
pensioners who had rendered service earlier in the Central
Government and extra benefits given to the pensioners from
the date of the OM could not be denied to those pensioners
who had retired prior to the corning into operation of the
said OM. The aforesaid decision clearly indicates that once
all the ex-government servants who were pensioners formed
the same class, then if extra benefit has to be given to
these pensioners by subsequent Om then all such pensioners
who were alive and available to receive the benefit of the
Om prospectively could not be denied the same only on the
ground that some of them had retired earlier to the OM and
others retired thereafter. this decision also proceeds on
the admitted factual position that all the erstwhile
government servants were pensioners and were forming the
same class and hence the were entitled to equal treatment
when at the time of coming into operation of the Govt.
Order they were available to receive the benefit of the said
Govt. Order. the ratio of the decision of the Constitution
Bench in Nakara’s case would squarely get attracted to the
fact situation examined by this court in the aforesaid case
but it cannot be of any avail to the appellant who was not
included in the very same class of pensioners who had
retired from Bank service. In the case of T.S.
Thiruvengadam Vs. Secretary to Government of India,
Ministry of Finance, Department of expenditure, New Delhi &
Ors. 1993(2) SCC 174, on which reliance was placed by
learned counsel for the appellant, the fact situation was
almost similar to the one which was examined by this Court
in R.L.Marwaha case (supra). In that case also the
ex-Central Govt. servants were already having pensionary
benefits and were subsequently absorbed into public
undertakings. The question was whether any restriction on
the applicability of the revised pensionary benefits to the
very same class of employees from a given date could be
sustained as fair and reasonable. In this connection it was
held by Kuldip Singh, J, speaking for the Division Bench of
two Judges of this Court that:
"The object of bringing into existence the revised
terms and conditions in the memorandum dated June
16, 1967 was to protect the pensionary benefits
which the Central Government servants had earned
before their absorption into the public
undertakings. Restricting the applicability of the
revised memorandum only to those who are absorbed
after the coming into force of the said memorandum,
would be defeating the very object and purpose of
the revised defeating the very object and purpose of
the revised memorandum and contrary to fair play and
justice".
Thus, the aforesaid decision shows that once all the
ex-government servants were forming the same class of
pensioners having already earned pensionary benefits,
whenever additional pensionary benefits were to be made
available to the same class it should be made available to
all the members forming the same class whether they had
retired earlier to 16th June, 1967 or subsequent thereto.
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This judgment also falls in line with the ratio of the
decision in Nakara’s case which on the facts of the present
case, as noted earlier, cannot be pressed in service by the
appellant. learned counsel for the appellant then invited
our attention to a Judgment of two Judge Bench of this Court
in M.C.Dhingra Vs. Union of India & Ors. 1996(7) SCC 564.
This Court in the said decision examined a similar fact
situation as was found in T. S. Thiruvengadam case
(supra). In that case an employee who was serving in the
State service was subsequently selected as an employee of
the Ministry in the Central government service. The
question was whether while computing the quantum of pension
to be payable to him his earlier service in the State could
be clubbed or not. The Circular issued by the Central
Government conferring the benefit of such State service to
only retirees after the date of issuance of the circular,
and not to the appellant before this Court who had retired
earlier to the issuance of this circular, was held to be
discriminatory if so interpreted. It was held that as the
appellant was already fanning a part of the same class of
pensioners additional benefit for computation of pension on
the basis of the subsequent circular could not be denied to
him as such denial would be arbitrary and fall foul on the
touchstone of Article 14 of the Constitution of India. The
ratio of Nakara’s case (supra) was pressed in service for
coming to the said conclusion. It becomes at once clear
that the decision in the aforesaid case was rendered in the
light of the fact situation wherein the appellant was
already a pensioner who had retired from service and when he
had survived during the time the said beneficial circular
came into force, he had to be given the said benefit even
though he had retired prior to the date of the circular
otherwise equals would be treated in-equally. As already
seen earlier such is not the fact situation in the present
case.
We may now turn to two decisions of this Court which
have a direct bearing on the result of these proceedings.
In the case of Commander, Head Quarter, Calcutta & Ors. vs.
Capt. Biplabendra Chanda, 1997(1)SCC 208, a two Judge Bench
of this Court had to examine the new/revised Rules which had
reduced the requisite minimum qualifying service for earning
pension while considering the case of a person who had
retired earlier and was ineligible to get pension under the
Rules in force then. This Court held that he could not be
given eligibility for pension by victual of the amended
Rule. In the said case, the Bench examined the fact
situation wherein the claimant was a Commissioned Officer.
He retired on 18.5.1982. On the date of his retirement only
2/3rd of pre-commissioned service was allowed to be counted
towards qualifying service for earning pensionary benefits.
The pension Rules were amended with effect from 1.1.1986 and
the full commissioned service was directed to be taken into
account for working out the qualifying service. While the
High Court allowed the writ petition based on Nakara’s case
(supra) this Court held that Nakara’s case has no
application as the claimant was ineligible for grant of
pension because on the date of his retirement he did not
possess the qualifying service as per the Rules then
existing. It becomes obvious, therefore, that when the
person earlier retiring from service is not eligible to get
pension as per the Rules, then if by subsequent prospective
amendment of the Rules such class of persons are brought
within the sweep of pension provisions, these provisions
have to be treated as a new scheme of pension which cannot
apply to those employees who retired prior to the advent of
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such a new pension scheme. The fact situation in the
present case is almost parallel. We do not see any reason
why the ratio of the said decision cannot be applied to the
present case.
Shri Divan, learned senior counsel for the
respondent also invited our attention to another decision of
this Court in Govt. of T.N. & Anr. Vs. K.Jayaraman 1997
(9) SCC 606, wherein a Bench of two Judges of this Court
presided over by K.Ramaswamy, J, had to examine a similar
question. In that case the respondent at the time of his
retirement was not eligible to get the benefit of pension
scheme. The pension Rules were subsequently amended after
his retirement and as he had survived after the amendment of
these pension Rules he put forward his claim for pension at
least from that date. The Central Administrative Tribunal,
Madras accepted this request of the respondent. While
up-turning the decision of the Tribunal, this Court held
that:
" As per the pre-existing Rules, the government
servant was required to put in 30 years of
qualifying service for pensionary benefits. The
Rules came to be amended by GOMs No. 1537 which came
to be effective from 13-11-1972. It was stated
therein that the Government, may by giving him
notice of not less than three months in writing or
three months’ pay and allowances in lieu of such
notice, after he has attained the age of fifty years
or after he has compeleted twenty-five years of
qualifying service retire any government servant.
Any government servant who has attained the age of
50 years or who has completed 25 years of qualifying
service may also likewise retire from service by
giving notice of not less than three months in
writing to the appropriate authority. This rule has
come into force, as stated earlier, w.e.f.
13-11-1972...."
It was held that the respondent who had voluntarily
retired prior thereto was not entitled to the benefit of the
said rule. The fact situation in the present case also in
parallel to the one examined by this Court in the aforesaid
decision. We may also lastly refer to a decision of two
Judge Bench of this Court in Union of India & Ors. vs.
Lieut (Mrs.) E.Lacts, 1997(7) SCC 334. Sujata Manohar, J,
in that case examined liberalised pension scheme by which
the group of employees who were earlier not covered by the
pension scheme were conferred benefit from a given date. As
the respondent before the Court had already retired prior to
that date, he was held not entitled to benefits of
liberalised pension scheme. It was held that such a
respondent could not claim of discriminatory treatment in
the grant of pension because there was no provision for
grant of pension in the terms and conditions of her
appointment which she had herself accepted. The appellant’s
case also falls in the same category of cases which were
examined in the aforesaid decision by this Court. This
decision also, therefore, goes in favour of the respondent
and against the appellant.
It is now time for us to take stock of the
situation. From the aforesaid resume of relevant decisions
of this Court spread over years to which our attention was
invited by learned counsel for the respective parties, the
following legal position clearly get projected.
Category I
---------
If the person retiring is eligible for pension at
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the time of his retirement and if he survives till the time
by 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’s case (supra) would
cover this category of cases.
Category II:
-----------
However, if an employee at the time of his
retirement is not eligible for earning pension and stands
outside the class of pensioners, if subsequently by
amendment of relevant pension Rules any beneficial umbrella
of pension scheme is extended to cover a new class of
pensioners and when such a subsequent scheme comes into
force the erstwhile non-pensioner might have survived, then
only if such extension of pension scheme to erstwhile
non-pensioners is expressly made retrospective by the
authorities promulgating such scheme; the erstwhile
non-pensioner who has retired prior to the advent of such
extended pension scheme can claim benefit of such a new
extended pension scheme. If such new scheme is prospective
only, old retirees non-pensioners cannot get the benefit of
such a scheme even if they survive such new scheme. They
will remain outside its sweep. the decisions of this Court
covering such second category of cases are: Commander, Head
Quarter, Calcutta & Ors. Vs. Capt. Biplabendra Chanda,
1997(1) SCC 208 (supra 606 (supra) and others to which we
have made a reference earlier. If the claimant for pension
benefits satisfactorily brings his case within the first
category of cases he would be entitled to get the additional
benefits of pension computation even if he might have
retired prior to enforcement of such additional beneficial
provisions. But if on the other hand the case of a retired
employee falls in the second category, the fact that he
retired prior to the relevant date of coming into operation
of the new scheme, would disentitle him from getting such a
new benefit.
The appellant falls in the second category of cases,
Consequently, no fault can be found with the judgment of the
Division Bench of the High Court non-suiting the appellant.
In the result, this appeal fails and is dismissed.
In the facts and circumstances of the case, there will be no
order as to costs.
[S.B.MAJMUDAR]
[M.JAGANNADHA RAO]
NEW DELHI.
October 9, 1998.