G. Suresh vs Telangana State Police Housing

The petitioners were employees of A.P. State Police Housing Corporation Limited, which had been constituted in the Composite State of Andhra

Pradesh. The 1st petitioner had retired from service as Assistant General Manager on 31.07.2013 and the 2nd petitioner had retired from service as a

Senior Accountant on 28.02.2014.

The background facts

According to the petitioners, a Group Superannuation Scheme for 182 regular employees of the above Corporation was approved by it’s Board

of Directors in a meeting held on 14.12.2012. As per a Resolution passed in the said Board meeting, 90% share of the employer and 10% share of the

employees, amounting to Rs.18.71 Crores was paid to the Life Insurance Corporation of India Ltd (5th respondent) as a single payment for creation of

Corpus Fund so as to enable the beneficiaries to get retirement annuity benefit/pension @ 40% of the last basic pay drawn on the date of their

superannuation.

A Trust Deed was executed on 18.01.2013 by the A.P. State Police Housing Corporation Limited, and five persons for establishment of an

irrevocable Trust by name ‘A.P. State Police Housing Corporation Ltd Employees Group Superannuation Scheme Trust’. This Trust was

created to set up the contributory superannuation/ annuity scheme called ‘A.P. State Police Housing Corporation Employees Superannuation

Scheme’ for providing pension benefits; that the trustees shall enter into a scheme of insurance with the 5th respondent, for which premiums

payable would be provided by contributions to be made by the said Corporation.

The Scheme came into effect on 1.1.2013 and contemplated that the Corporation would make contributions to the trustees as provided in the Rules

and the trustees would utilize the same for paying premium to the 5th respondent and the 5th respondent would provide a Master Policy.

A Circular dt.25.02.2013 was issued to the employees of the said Corporation informing about the formation of the ‘A.P. State Police Housing

Corporation Superannuation Scheme Trust’ as per the decision taken by the Board of Directors in the meeting held on 14.12.2012, and asking

each employee to give consent letter for joining the Scheme as a beneficiary by paying 10% share by way of recovery from his salary. As per the said

circular, employees who have rendered a minimum of 20 years of permanent service would be eligible to be covered by the Scheme.

The 5th respondent also issued Master Policy No.GSCAB517091 on 30.08.2013 after receiving proposal from the trustees of the above Trust for a

Group Superannuation Policy for providing pension benefits after receiving Rs.18,37,70,093/- being the incremental investment of Group

Superannuation Fund.

Under the terms of this policy, all permanent employees, who are aged not less than 18 years and not more than 58 years, were made eligible to

receive benefits, and as soon as a member or beneficiary becomes entitled to receive the benefits under the Scheme, the 4th respondent would send

the relevant particulars through the Trustees to the 5th respondent and the Corporation would then pay to the grantees appropriate benefits.

After the petitioners retired from service, the 5th respondent fixed their pension benefits as per the pay scales which were existing on the

respective dates of their retirement as advised by the Trustees.

There was also bifurcation of the Composite State of Andhra Pradesh into the new State of Telangana and the Residuary State of Andhra Pradesh

w.e.f. 02.06.2014 under the A.P. Reorganization Act, 2014 (for short ‘the Act’).

Post bifurcation of the State, the State of Telangana incorporated the Telangana State Police Housing Corporation Limited (respondent No.1) and

also constituted the Telangana State Police Housing Corporation Limited Employees Group Superannuation Scheme Trust (Respondent No.3).

The A.P. State Police Housing Corporation Limited and the A.P. State Police Housing Corporation Limited Employees Group Superannuation

Scheme Trust, however continued to exist with activities restricted to the residuary State of A.P. They are respondents 2 and 4 in the Writ Petition.

Petitioners are not allocated to either respondent no.1 or respondent no.2 Corporation

Admittedly, employees in service of the erstwhile A.P. State Police Housing Corporation Limited, who were in service on 2.06.2014, the notified

date under the Act, were allocated between the Telangana State Police Housing Corporation Limited (respondent No.1) and the A.P. State Police

Housing Corporation Limited (respondent No.2). This is clear from the certificate dt.27.2.2018 issued jointly by the Managing Directors of respondent

no.s 1 and 2 filed by the respondent no.4.

But since both the petitioners had superannuated from the erstwhile A.P. State Police Housing Corporation Limited prior to 2.06.2014, they were

not allocated to either of these Corporations as per the guidelines framed under the Act. It is not even the case of any of the respondents that

petitioners were allocated under the Act to either respondent no.1 or respondent no.2 corporations after 2.6.2014.

The bifurcation of the pooled fund contributed for operating the Group Superannuation scheme

There is no dispute that in a meeting of the Trust held on 20.09.2018, it was resolved to bifurcate the pooled fund of Rs.18,90,73,331/- available as

on 31.03.2018 between respondents 1 and 2 as per the final employees bifurcation list dt.27.08.2018 and to transfer the share of the respondent no.3

of Rs.4,52,27,845/- into the new Telangana State Police Housing Corporation Group Superannuation Scheme Policy. This indicates that there was no

agreement between respondent No.s 1 or 3 on the one hand and respondent No.2 or 4 with regard to petitioners who had retired prior to 02.06.2014

and who were not mentioned in the final employees bifurcation list dt.27.08.2018.

The demerger of the erstwhile A.P. State Police Housing Corporation Limited

There was also a demerger plan of the erstwhile A.P. State Police Housing Corporation Limited dt.25.07.2015 bifurcating the assets and liabilities

between the respondents 1 and 2, which was also approved by the Expert Committee headed by Smt.Sheela Bhide, I.A.S (Retd.) constituted for

division of assets and liabilities of Government Corporations and Companies as per the Act and vide G.O.Ms.no.1 dt.1.1.2021, the State of A.P. had

approved the demerger proposal w.r.t. assets and liabilities of the erstwhile A.P. State Police Housing Corporation Ltd.

Counsel for respondents did not bring to our notice any provision of the demerger scheme making specific allocation of liability in regard to

pension/annuity obligations incurred in respect of employees like the petitioners who retired prior to 02.06.2014, specifically in regard to the

annuity/pension payments under the Common Group Superannuation Scheme Fund under the Master Policy taken by the erstwhile Corporation with

the 5th respondent.

Contentions of petitioners, respondents and their consideration

Petitioners contend that there was a revision of pay of the petitioners with effect from 01.07.2013 by implementing Revised Master Scales of

Revised Pay Scales, 2015; that after petitioners’ retirement, the Pay Revision was affected, and the pay of the petitioners was also revised w.e.f.

01.07.2013 as per the Revised Pay Scales of 2015 with retrospective effect on 07.10.2015 and 9.05.2019 respectively notionally; as on 1.7.2013, they

were both in the service of the erstwhile A.P. State Police Housing Corporation Limited; an so on the basis of the Revised Pay Scales-2015, there has

to be a revision of the annuity/pension payable to them, but the respondents are not giving it to them, though they are giving it to everybody else.

The 1st petitioner had made representations to the 2nd respondent demanding for increased annuity on the basis of the Revised Pay Scales-2015 in

August, 2018, 15.10.2019, 05.12.2019, 09.01.2020, 06.02.2020, and the 2nd petitioner had made similar representations to 2nd respondent on

22.10.2019, 15.10.2019, 16.12.2020, 09.01.2020, 12.02.2020 and 09.03.2020.

The stand of 2nd respondent

The 2nd respondent rejected the request of both petitioners by separate proceedings dt.12.05.2020 on the ground that their name was not found in

the employees approved List of Andhra Pradesh i.e., final bifurcation approved by the Combined Board.

Petitioners contend that this stand of the 2nd respondent is arbitrary and illegal, because their names would not be placed in the final bifurcation list

of employees because such list will consist only of employees of the erstwhile A.P. State Police Housing Corporation Limited who were in service as

on 02.06.2014, the notified date under the Act; and since the petitioners had retired prior to the said date, their names cannot be expected to be found

in the said list. They contend that this stand of the 2nd respondent is arbitrary, illegal and unsustainable.

Finding regarding the rejection of petitioners’ case by 2nd respondent

We accept this plea of the petitioners because it is not the case of the 2nd respondent that persons who had retired before 2.6.2014 had been

allocated between respondent no.s 1 and 2 and no evidence is placed before us to show to which Corporation, the 1st respondent or the 2nd

respondent, were allocated. Because they were never allocated, the respondent no.2 cannot wash it’s hands off it’s obligation to make

payment of annuity/pension or increase thereof on the basis of Revised Pay Scales, 2015, if it is otherwise liable.

The stand of the 1st respondent

The request of the 1st petitioner dt.30.05.2020 made to the 1st respondent was replied by the said respondent on 24.09.2020 stating that he belongs

to APSPHCL i.e., the 2nd respondent, that his fund is transferred to the 4th respondent, and that he is eligible for annuity as per the Revised Pay

Scales-2015.

It is also admitted in the counter affidavit filed by respondents 1 and 3 that representation dt.30.05.2020 of the petitioners made to the 3rd

respondent was forwarded to the Chairman of the 4th respondent-Trust, that nativity of both petitioners lies in the State of A.P., that the petitioners

cannot come under the 3rd respondent, and only the respondents 2 and 4 have to take care of the petitioners. It is also contended that the 3rd

respondent had transferred funds to the 4th respondent as per the Expert Committee proposals, that petitioners also stated that their names were there

in the funds bifurcation list of Andhra Pradesh, and so they belong to the Andhra Pradesh entity i.e., 2nd respondent and 4th respondent only.

Petitioners contend that on the basis of their nativity (being allegedly in the residuary State of Andhra Pradesh), it is not open to respondent nos.1

and 3 to contend that they have no responsibility towards payment of increased annuity to the petitioners on the basis of the Revised Pay Scales, 2015,

and that such a stand violates Articles 14 and 16 (2) of the Constitution of India and also the provisions of the Act.

Finding regarding the rejection of petitioners’ case by 1st respondent

In Telangana Judges Association and another Vs. Union of India and others 2019 (1) ALD 7 (SC), the Supreme Court declared :

“51. The nativity for public employment runs counter to the fundamental right guaranteed Under Article 16(2) except when it is provided by a

Parliamentary Law as per exception carved out in Article 16(3) of the Constitution of India. No Parliamentary Law is relied by the Petitioner, which

provides residence as an eligibility to the employment in Judicial Service. In Act, 2014, there is no provision, which expressly provides for allotment of

the State on the basis of place of birth or residence. Sections 77, 78 and 79 of the Act do not refer to allotment on the basis of place of birth. When for

entering into Judicial Service, no condition can be put regarding residence of particular area for allocation of a State, consequent to Act, 2014, nativity

cannot be sole basis, as is contended by the Petitioner. It is true that the State of Telangana stand formed to realise the democratic aspirations of the

people of Telangana. We have noticed the Statement of Objects and Reasons of Act, 2014, which clearly establish that the creation of a separate

State of Telangana is for the betterment of the social, economic, political and other aspirations of the people of that region, which contemplated

allocation of separate State of Telangana. The entire Statement of Objects and Reasons does not indicate that with respect to public employment,

nativity is to play a dominant role. It is true that Judicial Officers belonging to Telangana territorial area may have desired or expectation to choose or

to opt for their cadre in Telangana area, which is a legitimate aspiration, but giving pre-dominance to nativity only is not spelled from any statutory

provision or scheme.â€​(emphasis supplied)

In view of this decision, we agree with this plea of petitioners that concept of nativity cannot come into play in regard to terms and conditions of

service of permanent employees of the erstwhile A.P. State Police Housing Corporation Ltd since it violates Art.16(2) of the Constitution of India

which prohibits discrimination on the basis of place of birth, descent or residence. So even the respondent no.s 1 and 3 cannot wash their hands off the

possible liability for payment of increased pension to petitioners who had retired prior to 2.6.2014 on basis of Revised Pay Scales, 2015, if they are

otherwise liable.

Other pleas of petitioners

Petitioners also contend that when respondent nos.1 and 3 stated that some employees who retired from service after petitioners retired from

service got the benefit under the Group Superannuation Scheme under the Revised Pay Scales, 2015, the petitioners cannot be discriminated against;

that as per the Scheme and the Master policy issued by the 5th respondent, the annuity has to be fixed on the basis of last pay drawn by them, and

once such last pay drawn came to be revised w.e.f. 01.07.2013, and both petitioners were in service on that day, they cannot be denied the benefit in

increase in annuity. We find considerable force in this submission too.

It is not in dispute that the composite A.P. State Police Housing Corporation Limited Employees’ Group Superannuation Scheme Trust (which

was not bifurcated at that time) had addressed a letter dt.30.04.2016 to 5th respondent requesting for furnishing of details of the amounts that needs to

be paid to the 5th respondent for the purpose of implementation of Revised Pay Scales, 2015 to the employees under the Group Superannuation

Scheme, that to the said letter was enclosed a list of employees which included the petitioners; that in reply to the said letter, the 5th respondent wrote

vide letter dt.24.09.2016 stating that a sum of Rs.53.87 crores would be the total value of the Trust that is to be created for implementing the Revised

Pay Scales, 2013 to the beneficiaries of Group Superannuation Scheme; that as on 31.03.2016, only Rs.19.64 crores was available, and so the 4th

respondent should pay balance of Rs.34.23 crores for conferring the benefit of the Revised Pay Scales, 2015 to the beneficiaries of the Group

Superannuation Scheme. However, the said letter dt.24.09.2016 clarified that the said balance can be paid in installments in a phased manner based on

availability of funds.

It is also not disputed that the respondent nos.1 and 2 deposited Rs.5 crores and Rs.5.25 crores respectively with 5th respondent, that later the 2nd

respondent deposited a further amount of Rs.3 crores with the 5th respondent for the benefit of applying Revised Pay Scales, 2015 to be given to the

beneficiaries of the Group Superannuation Scheme.

Petitioners allege that basing on the said deposits made by respondent nos.1 and 2 claim forms were forwarded to the 5th respondent by the said

respondents for revision of pension, and the 5th respondent had extended the benefit of Revised Pension Scales, 2015 for payment of annuity to all

beneficiaries except the petitioners.

The effect of the A.P. Reorganisation Act, 2014 on the claims of the parties

We may point out that respondent nos.1 to 4 in their respective counter-affidavits deliberately omitted to refer to the relevant provisions of the Act

which deal with division of assets and liabilities or bifurcation of employees of Schedule IX Government Companies / Corporations like the erstwhile

A.P. State Police Housing Corporation Ltd., which is at Serial No.12 in the said Schedule.

Under Sub-Section (2) of Section 68 of the Act, the assets, rights and liabilities of such Corporations have to be apportioned between the

successor States in the manner provided in Section 53 of the Act; and under proviso (b) to Sub-Section (1) of Section 53, assets and liabilities of

headquarters of such Corporations have to be apportioned between the two successor States on the basis of population ratio of 58.32 : 41.68. Under

Section 82, there has to be bifurcation of employees of such Corporation between the two successor States on the basis of modalities determined by

the corporate body for their distribution.

The term ‘successor States’ occurring in Sec.53 and Sec.82 has been interpreted to refer to the successor Corporations of both States by a

Division Bench of this Court in G. Rama Mohan Rao and another vs. Government of Andhra Pradesh and another 2017 (6) ALD 103 (DB)T. he

Division Bench held that in para no.148 as under :

“148. When read in the context of Section 82, the modalities for distributing the personnel between the two successor States can only mean the

modalities for distributing the personnel between the two successor State Public Sector Undertakings, Corporations and Autonomous Bodies, and not

distribution of such personnel between the respective State Governments, as that would make employees of such Corporations / Undertakings /

Companies, etc., employees of the Governments of the two successors States. … … …â€​

How such apportionment is to be made is the question to be considered.

In regard to employees of the composite State of Andhra Pradesh, who retired prior to 2.6.2014, the notified date under the Act ( on which date

the composite State of Andhra Pradesh was bifurcated into the new State of Telangana and the residuary State of Andhra Pradesh), Sec.59 of the

Act states:

“ Sec.59. Pensions:

The liability of the existing State of Andhra Pradesh in respect of pensions shall pass to, or be apportioned between, the successor States of Andhra

Pradesh and Telangana in accordance with the provisions contained in the Eighth schedule to this Act.â€​

Para 3 of the Eighth schedule says that the total representing the liability of the existing State of Andhra Pradesh in respect of pensions and other

retirement benefits shall be apportioned between the successor States on the basis of population ratio.

This provides a clue even with regard to apportionment of pension liability of Schedule IX Corporations like the erstwhile A.P. State Police

Housing Corporation Ltd.

Finding re: liability of respondent no.s 1 and 2 to meet the liability towards the claim for increased annuity made by petitioners

The liability to pay increased annuity/pension to the petitioners is the liability of the ‘headquarters’ of the erstwhile A.P. State Police

Housing Corporation Ltd.

So such a liability of headquarters of such Corporations, as per Proviso (b) to sub-Section (1) of Sec.53 of the Act, also has to be apportioned

between the two successor States on the basis of population ratio of 58.32 : 41.68.

Re: maintainability of this writ Petition in this Court

A plea is raised in para 2 of the counter affidavit of 2nd respondent that this Writ Petition seeking relief against the Andhra Pradesh State Police

Housing Corporation and the 4th respondent, its entity, is not maintainable before this Court which is the High Court of Judicature for the State of

Telangana and that the petitioners can only approach the Supreme Court of India.

We may point out that between 2.6.2014 (the notified date as per the Act bifurcating the composite State of Andhra Pradesh into the new State of

Telangana and the residuary State of Andhra Pradesh) and 1.1.2019 (the come into operation of the new High Court for the State of Andhra Pradesh

at Amaravati), the High Court at Hyderabad had functioned as a common High Court for both the new state of Telangana and the residuary State of

Andhra Pradesh. Only from 1.1.2019, the separate High Courts for the State of Telangana and the State of Andhra Pradesh started functioning. This

Writ Petition had been filed in the year 2020.

We are unable to agree with the contention of the respondent no.2 regarding it’s plea of lack of jurisdiction of this High court to entertain and

decide this Writ Petition because both the petitioners had retired from service prior to 02.06.2014, but their claim to payment of increased annuity

benefits is on the basis of Revised Pay Scales 2015 which were brought into effect from 01.07.2013; and their claim is relatable to Clause 7(ii) of the

Rules framed by the erstwhile A.P. State Police Housing Corporation Limited which states:

“7. Scheme of Insurance:

(i) ….

(ii) If the Corporation with the sole intention of granting relief to the Members/Beneficiaries who are already drawing the pension decides to grant

increases in the quantum of pension. Such Members/Beneficiaries shall be eligible for the said increase in the Pension from such date and in such

form as may be allowed by the Corporation. The future benefits if any arises on account of Superannuation / Annuity Fund will be implied to this

Scheme.â€​

These Rules had been framed under the Trust Deed dt.18.01.2013 creating the A.P. State Police Housing Corporation Employees Superannuation

Scheme; and the right to get such increase is under the Master Policy issued by the 5th respondent on 30.08.2013.

Demerger proposal was submitted by the Managing Directors of the erstwhile A.P. State Police Housing Corporation only on 25.07.2015 and the

same was approved vide G.O.Ms.No.1, Home (Legal.II) Department, dt.01.01.2021.

In our opinion, the cause of action for institution of this Writ Petition accrued to the petitioners when the Revision in Pay Scales was done in 2015

with effect from 01.07.2013 within the territorial jurisdiction of the common High Court at Hyderabad because the registered office of the erstwhile

A.P. State Police Housing Corporation Limited was located in Hyderabad as on 02.06.2014 and continued to be in Hyderabad even till 2018.

Therefore, under Article 226(2) of the Constitution of India, this High Court, being the successor to the common High Court at Hyderabad for both

States, has territorial jurisdiction to deal with this matter as the cause of action stood crystallized at that point of time itself.

This is also the view expressed by a Full bench of this Court in Letter dt.6.1.2019 sent by the Andhra Pradesh High Court Advocates’

association rep. by it’s President, Amaravathi, Guntur District v. Union of India and others 2019 (2) ALD 151 (FB).

The Full bench held:

“14. At this stage, it would be appropriate to deal with another issue raised by Sri D.V. Sitharam Murthy, learned Senior Counsel. He would argue

that Section 40(3) of the Act of 2014 is in conflict with Article 226(2) of the Constitution. It is his contention that after constitution of the High Court

for the present State of Andhra Pradesh, the Hyderabad High Court has no jurisdiction over the territories which fall within the jurisdiction of the

newly constituted High Court. He would therefore assert that even writ appeals which come within the scope of Section 40(3) cannot be dealt with by

the Hyderabad High Court after constitution of a separate High Court for the present State of Andhra Pradesh, as it no longer has jurisdiction over

cases which relate to the territories of that State, as per Article 226(2).

Having given our earnest consideration to this aspect, we find the argument to be specious.

Article 226(2) provides that the power to issue directions, orders or writs under Article 226(1) may be exercised by any High Court having

jurisdiction over the territories within which the cause of action, wholly or in part, arises. The argument of the learned Senior Counsel loses sight of the

fact that Section 40(3) of the Act of 2014 deals with cases which arise out of or pertain to cases which were instituted before the common High Court

at Hyderabad at a point of time when it did have territorial jurisdiction over both the States and on the strength of the cause of action which arose

within its territories. As the cause of action for institution of such cases arose within the territorial jurisdiction of the common High Court at

Hyderabad, the jurisdiction to deal with those cases stood crystallised at that point of time itself. Section 40(3) of the Act of 2014 merely retains and

saves such jurisdiction in the Hyderabad High Court to continue to deal with the limited matters arising out of such cases which were dealt with by the

common High Court at Hyderabad at a point of time when it had jurisdiction to deal with them, notwithstanding the constitution of a separate High

Court for the present State of Andhra Pradesh. There is therefore no conflict between Section 40(3) of the Act of 2014 and Article 226(2) of the

Constitution.

As stated supra, all that Section 40(3) postulates is that the cause of action in relation to the cases covered thereby would remain frozen and the

Hyderabad High Court would have sole jurisdiction to entertain, hear and dispose of appeals, reviews and other cases which are linked to the orders

passed by the common High Court at Hyderabad.

…

Needless to state, cases in which the State of Telangana figures as a party would not come within the ambit of Section 40(3) of the Act of 2014.

Section 40 essentially deals with proceedings which are liable to be transferred from the Hyderabad High Court to the newly constituted High Court of

Andhra Pradesh, owing to its jurisdiction being denuded under Section 40(1) of the Act of 2014. All matters involving the present State of Andhra

Pradesh and also the State of Telangana would necessarily have to be dealt with on a case to case basis and cannot be brought within the sweep of

the administrative power vesting in the Chief Justice under the proviso to Section 40(3) of the Act of 2014. This would include service disputes

pertaining to both the States and all such other matters where both the States figure as parties.

Be in noted that all the learned Counsel appearing before us broadly indicated their agreement with the opinion expressed by the Bench on the

above lines during the hearing.

On the above analysis, we hold that though the Hyderabad High Court has the sole jurisdiction to continue to deal with the writ appeals on hand

and all such other matters which would come within the ambit of Section 40(3) of the Act of 2014, it would be well within the administrative power of

the Chief Justice of the Hyderabad High Court under the proviso to Section 40(3) of the Act of 2014 and given the circumstances, it would perhaps be

advisable, to transfer these writ appeals and all such cases akin thereto, including contempt cases, review petitions and applications seeking leave to

approach the Supreme Court in relation to the orders passed by the erstwhile common High Court at Hyderabad, to the newly constituted High Court

for the State of Andhra Pradesh at Amaravathi.â€​

(emphasis supplied)

We respectfully follow the said decision and hold that since the cause of action to file this Writ Petition accrued to the petitioners when the Revision in

Pay Scales was done in 2015 with effect from 01.07.2013 within the territorial jurisdiction of the common High Court at Hyderabad because the

registered office of the erstwhile A.P. State Police Housing Corporation Limited was located in Hyderabad as on 02.06.2014 and continued to be in

Hyderabad even till 2018 ; and this happened prior to 1.1.2019, when the separate High Court for the State of Andhra Pradesh was constituted at

Amaravathi; and since we have given a finding that both respondents 1 and 2 have responsibility and liability to meet the claim of the petitioners in the

ratio 41.68: 58.32, we hold that this High Court alone has jurisdiction to entertain this Writ Petition.

Re: plea of respondent no.2 about it’s non-liability to do anything as regards the petitioners because they retired prior to 2.6.2014

In para 6 of his counter affidavit, the 2nd respondent stated that as per the norms of the Scheme, once an employee retires, his application is

forwarded to the 5th respondent for release of superannuation benefits and the fund automatically detaches from the common fund and the

superannuation benefit will be paid by creating a Master Policy on his/her name with the 5th respondent; and as both petitioners retired before

02.06.2014, they were in the common fund as on 02.06.2014; and they do not have any right to ask from and out of the existing fund.

No provision of the Scheme/Master Policy is cited by the 2nd respondent in support of this plea.

Moreover this plea runs contrary to Clause 7(ii) of the Rules referred to above which clearly contemplate increase in quantum of pension under

the Master Policy.

Having given this benefit to everybody who was in service as on 02.06.2014 but who retired thereafter, the petitioners alone cannot be

discriminated against on the pretext that they retired prior to 2. 06.2014. In the event any funds are payable to confer benefit of increased annuity on

the petitioners, then such liability is to be shared both by respondent No.s 1 and 2 in the population ratio of 41.68 :58. 32.

It was not open to respondents 1 and 2 to contend that they topped up the Group Superannuation Scheme as per Revised Pay Scales of 2015 for

only employees who were in service on 02.06.2014 to extend superannuation annuity benefit as per the said Revised Pay Scales.

They ought to have also topped up and paid to 5th respondent any further amounts payable for extending the increased superannuation annuity

benefits as per Revised Pay Scales 2015 to the petitioners as well notwithstanding the fact that they retired prior to 02.06.2014. More so since the 1st

respondent had even issued Letter dt.24.09.2020 to the 2nd respondent that the 1st petitioner is eligible for annuity as per Revised Pay Scales 2015.

Even the 2nd respondent admits that the Group Superannuation Scheme is a welfare scheme which is in the nature of bonus/incentive to the

employee to boost their morale for improvement of the output of the Corporation. It is undoubtedly a service benefit akin to pension; and it is devised

as a retirement benefit not payable by the Corporation but payable through the 5th respondent through an insurance policy offered by the latter.

When the petitioners are admittedly covered by the Scheme and the Rules made thereunder which contemplate under Clause 7(ii) even an

increase in quantum of pension at the discretion of the Corporation, the respondents cannot play favorites by preferring to confer benefit only on

retirees post 02.06.2014 and excluding persons like the petitioners who retired prior to 02.06.2014.

The Supreme Court in D.S.Nakara Vs. Union of India AIR 1983 SC 130h eld that Article 14 no doubt permits reasonable classification for the

purpose of legislation, but to pass the test of permissible classification, two conditions must be fulfilled i.e. (i) that the classification must be founded on

a intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group; and (ii) that the

differentia must have a rational relation to the objects sought to be achieved by the statute in question. It emphasized that there ought to be a nexus i.e.

causal connection between the basis of classification and the object of the statute under consideration.

It held that the burden of proof is on the State and it would have to affirmatively satisfy the Court that the twin tests have been satisfied; and that it

can only be satisfied if the State establishes not only the rational principle on which the classification is founded but correlates it to the objects sought

to be achieved.

It declared that pension is a right and its payment does not depend upon the discretion of the Government, that it is not a bounty or a gratuitous

payment depending upon the sweet will or the grace of the employer; that it is earned by rendering long and efficient service and is in the nature of a

deferred portion of the compensation for the service rendered; that persons holding identical posts while in service cannot be treated differently in the

matter of their pay merely because they belong to different departments and afortiorari even after their retirement. If 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.

It declared that the impugned memoranda issued by the Government did not spell out the raison d’etre for liberalizing the pension formula; and that

it did not find justification for arbitrarily selecting the criteria for eligibility for the benefits of the scheme dividing the pensioners all of whom would be

retirees but falling on one or other side of the specified date. It held:

“…….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. Therefore, the classification does not stand the test of Article 14â€​

This principle was reiterated in Kallakkurichi Taluk Retired Officials Assn. v. State of T.N (2013) 2 SCC 772. in the following terms:

“33. … …A valid classification is based on a just objective. The result to be achieved by the just objective presupposes, the choice of some for

differential consideration/treatment, over others. A classification to be valid must necessarily satisfy two tests. Firstly, the distinguishing rationale has

to be based on a just objective. And secondly, the choice of differentiating one set of persons from another, must have a reasonable nexus to the

objective sought to be achieved. Legalistically, the test for a valid classification may be summarised as a distinction based on a classification founded

on an intelligible differentia, which has a rational relationship with the object sought to be achieved. Whenever a cut-off date (as in the present

controversy) is fixed to categorise one set of pensioners for favourable consideration over others, the twin test for valid classification (or valid

discrimination) must necessarily be satisfied.â€​

We hold that, in the instant case, there is no just objective shown by the respondents to exclude the petitioners from getting increased

annuity/pension when the Revised Pay Scales, 2015 came into effect from 1.7.2013, and both petitioners were in service on the said day and

admittedly they were covered by the Master policy taken by the erstwhile A.P. State Police Housing Corporation Ltd; and no nexus/rationale is shown

to exclude them from the said benefit. The fixing of cut off date as 2.6.2014 for conferring the benefit of increased annuity/pension does not pass the

test of valid classification prescribed in the above decisions. That too, for the sole purpose of depriving only these two petitioners out of 182 persons

who are covered by the said Master Policy issued by the 5th respondent. It cannot be said that any small extra expenditure to be incurred by the

respondent nos.1 and 2 to be paid to the 5th respondent for extending the benefit of increased annuity / pension to the petitioners, would be a valid

consideration to deny them this benefit.

So, merely because the A.P. Reorganisation Act, 2014 came into operation bifurcating the composite State of Andhra Pradesh into the new State

of Telangana and the residuary State of Andhra Pradesh from that date, the said date could not have been adopted for denying the petitioners the

benefit of increased annuity/pension.

A feeble plea is raised by counsel for respondent no. 2 that fixing of the cut off date is a ‘policy decision’ and it is immune from challenge.

This plea is without any basis because the Supreme Court had, time and again, held that courts do not lack jurisdiction in conducting a judicial

review of executive policy. In DDA v. Joint Action Committee, Allottee of SFS Flats (2008) 2 SCC 672, at page 697, the Supreme Court declared:

“ 64. An executive order termed as a policy decision is not beyond the pale of judicial review. Whereas the superior courts may not interfere with

the nitty-gritty of the policy, or substitute one by the other but it will not be correct to contend that the court shall lay its judicial hands off, when a plea

is raised that the impugned decision is a policy decision. Interference therewith on the part of the superior court would not be without jurisdiction as it

is subject to judicial review.

Broadly, a policy decision is subject to judicial review on the following grounds:

(a) if it is unconstitutional;

(b) if it is dehors the provisions of the Act and the regulations;

(c) if the delegatee has acted beyond its power of delegation;

(d) if the executive policy is contrary to the statutory or a larger policy.â€​

This was also recently reiterated in the order dt.31.5.2021 passed by a 3 Judge Bench of the Supreme Court in RE: Distribution of Essential Supplies

and Services during Pandemic Suo Motu Writ Petition (Civil) No.3 of 2021 wherein the Court declared:

“14. … Our Constitution does not envisage courts to be silent spectators when constitutional rights of the citizens are infringed by executive

policies….â€​

In our considered opinion, the so-called Policy adopted by the respondents is violative of Article 14 of the Constitution of India and is

unconstitutional. It cannot therefore be sustained.

Accordingly, the Writ Petition is allowed; the action of the respondent in not revising annuity payable to the petitioners as per Revised Pay Scales,

2015 is declared as arbitrary, illegal and violative of Articles 14 and 16 of the Constitution of India; the respondent nos.1 and 2 are directed to pay

within four (04)weeks from today in the ratio 41.68 : 58.32 to the 5th respondent any further sums necessary to be paid to it for the purpose of

conferring the benefit of increased annuity / pension on the petitioners under the Group Superannuation Scheme covered by the Master Policy taken

by them with the 5th respondent when the A.P. State Police Housing Corporation was existing in the composite State of Andhra Pradesh; three (03)

weeks after receipt of such payment, the 5th respondent shall make payment of the increased annuity / pension to the petitioners in the same manner

as is being done to the other beneficiaries of the said superannuation scheme. No order as to costs.

As a sequel, miscellaneous petitions pending if any in this Writ Petition, shall stand closed.