Trans Yamuna Pensioners Association and Others vs Union of India (UOI) and Others

Vipin Sanghi, J.—Petitioner No. 1 is an Association, comprising of retired government servants who have all retired prior to 1.1.1986. Petitioner No. 2/Sh. J.N. Kohli is the President of this association. Petitioners assail the order passed by the Principal Bench of the Central Administrative Tribunal, New Delhi, (The Tribunal) in O.A No. 1981/89 on 30-10-1998. Their claim for arrears of pension/family pension, on grounds of parity with pensioners who retired on or after 1.1.1986 in the manner of fixation/calculation of pension, was rejected by the Tribunal.

The IVth Central Pay Commission, prescribed different manner of refixation of family pension for those who retired before 1.1.1986, (herein referred to the pre 1986 retirees) and those who retired on or after the said date (herein referred to as post 1985 retirees). This was carried out and given effect to vide OM''s No. 2/1/87-PIC-H dated 14-4-1987 and OM No. 2/1/87-PIC-I dated 16-4-1987 issued by the Department of Pension and Pension Welfare of Ministry of Personnel, Public Grievances & Pensions of the Government of India. While the former OM prescribed the rules governing the fixation/calculation of pension/family pension of the post 1985 retirees, the later dealt with the pre 1986 retirees. Broadly speaking, in the case of pre 1986 retirees, family pension was fixed at a lesser percentage of the average emoluments, when compared to the post 1985 retirees. For both, the pre 1986 retirees and the post 1985 retirees, pension was to be calculated at 50% of the average emoluments. Average emoluments are the average of emoluments drawn in the last ten months of service prior to retirement. Since the revised Pay scales as per the recommendations of the IVth Pay Commission were to come into effect from 1.1.1986, the post 1985 retirees had the advantage of having their pension/family pension fixed as a percentage of the higher/revised average emoluments when compared to the pre 1986 retirees, who continued to get pension/family pension as a percentage of the average emoluments that they drew, which were well below the revised pay scales fixed under the IVth Pay Commission recommendations. These recommendations were brought into force w.e.f 1.1.1986.

Members of the Petitioner Association i.e. the pre 1986 retirees represented against being given differential treatment and when that did not succeed, the petitioner and Association filed OA No. 1981/1989 in the year 1989 before the Tribunal.

During the pendency of the O.A., the respondent Department dished out O.M bearing F. No. 45/86/97-P & PW (A)-Part III dated 10.2.1998, in order to give effect to some of the recommendations made by the Vth Central Pay Commission. The said O.M. restored the parity between the pre 1986 retirees pensioners/family pensioners and the post 1985 retirees regarding the manner of fixation/calculation of pension. Not only the same yardstick was adopted for computation of family pension as was applicable to post 1985 retirees, the said O.M. also granted notional fixation of pay on the corresponding scales of pay under the IVth Central Pay Commission for the purpose of calculation of average emoluments, pension and family pension. However, it was stated in para 6 of the said OM that "No arrears on account of revision of Pension/Family pension on notional fixation of pay will be admissible for the period prior to 1.1.1996."

Admittedly, the claim for treating the petitioners at par with post-1985 retirees in relation to the manner of fixation of pension/family pension was more than redressed by the said OM. The only issue that remained outstanding was regarding the claim for arrears of pension/family pension for the period 1.1.1986 to 1.1.1996.

The Tribunal took the view that the petitioners were bound to challenge the virus of para 6 of the said OM of 10.2.1998 and specifically pray for the grant of arrears admissible for the period prior to 1.1.1996 by amending the Original Application appropriately in the light of these changed circumstances. According to the Tribunal, though the petitioners were specifically asked to consider the necessity of amending the Original Application to challenge para 6 of the OM of 10.2.1998, the petitioners did not choose to do so. In the face of Clause 6 of OM dated 10.2.1998, which was not challenged, the petitioners could not be granted arrears from 1.1.1986. The Tribunal also took the view that there was nothing arbitrary or illegal in confining the grant of arrears of pension/family pension from 1.1.1996 onwards, and even if the anomaly arose as a result of respondents decision based on the recommendations of the IVth Central Pay Commission with effect from 1.1.1986, it does not give the petitioners an enforceable legal right to claim arrears from the date the anomaly arose. The Tribunal held that the Respondent had given the benefit with reasonable retrospectivity i.e. with effect from 1.1.1996 while issuing OM dated 10.2.1998.

Shri Rajiv Shakdhar learned Sr. Counsel for the petitioner assails the Tribunal''s order by submitting that the Tribunal fell in error in its reasoning and conclusions on all counts. Once it was admitted that there was an anomaly which existed since 1.1.1986, which was being agitated before the Tribunal since 1989, merely because the Government had subsequently decided to remedy the said anomaly with effect from 1.1.1996 it did not preclude the Tribunal from removing the anomaly from the date of its occurrence by a judicial order. He also submits that it was not necessary for the petitioners to amend the Original Application to impugn para 6 of the OM dated 10.2.1998 since their Original Application, claiming the same relief from 1.1.1986 was pending since 1989. He submitted that the petitioners should have been granted arrears of pension/family pension at least from 1.1.1989 on the basis that their Original Application was pending from the year 1989 onwards by applying the principle of reasonable retrospectivity.

He referred to Para 137.22, 137.23, 137.24 of the report of the Vth CPC which were reproduced in the Counter affidavit filed by the petitioner before the Tribunal.

He submitted that the Vth Central Pay Commission consciously did not make any recommendations for the period prior to 1.1.1996 and had left the anomalies to be resolved by the Government. It is clear from the above referred paragraphs that there were disparities between the pre 1986 retirees and post 1985 retirees, which ought to have been resolved by applying the rule of reasonable retrospectively. He submitted that the recommendation of the Vth Central Pay Commission did not preclude the Tribunal from remedying the anomaly from 1.1.86, or at least from 1.1.89 onwards. He relied upon the judgments of the Hon''ble Supreme Court in D.S. Nakara and Others Vs. Union of India (UOI), and in P.N. Veerarathinam and Ors. v. Union of India 1998 (1) SCC 235.

In reply, learned Counsel for the respondent apart from supporting the judgment of the Tribunal, also submitted that the pre 1986 retirees formed a class distinct from the post 1985 retirees and that the cut off date 1.1.1986 fixed for meeting out differential treatment to the pre 1986 retirees and post 1985 retirees had a rationale basis. It was based on the recommendation of the IVth Central Pay Commission, which was accepted and brought into force from 1.1.86 onwards. He also submitted that merely because the Vth Central Pay Commission had again recommended restoration of parity between the pre 1986 retirees and the post 1985 retirees by adopting the same formula for fixation of pension/family pension, it did not mean that the differentiation earlier made between the two classes was arbitrary or discriminatory. He also submitted that it was for the Government and not for the Courts to decide from which date the arrears ought to be paid since such decisions have financial repercussions on the states exchequer. He submitted that Nakara (Supra) had no application to the facts of this case and relied upon State of W.B. Vs. Monotosh Roy and Another, wherein the Supreme Court had in respect of the same OM dated 16.4.1987 held that the decision in Nakara (supra) cannot be applied to grant the same benefit to the pre 1986 retirees as was granted to the post 1985 retirees.

Having heard the parties and given due consideration to all the submissions, we are of the opinion that the reasoning adopted by the Tribunal is erroneous and not sustainable, and its decision in rejecting the claim of the petitioners so far as their claim for adoption of the same formula for computation of family pension is concerned, calls for interference.

The Tribunal in our view fell in error in rejecting the claim on the ground that the petitioners had failed to amend the Original Application to impugn para 6 of the O.M dated 10.2.1998 whereby the Government had decided not to pay arrears on account of revision of pension/family pension on notional fixation of pay for the period prior to 1.1.1996. The petitioners had approached the Tribunal in the year 1989 when their representations against the anomaly introduced with the implementation of the IVth Central Pay Commission recommendations were rejected by the respondent vide communication dated 22.9.1988. The claim made by the petitioners before the Tribunal was primarily to seek parity with the post 1985 retirees w.e.f.1.1.1986. During the pendency of the Original Application the Government decided to remove the anomaly w.e.f. 1.1.1996 vide O.M dated 10.2.1998. In these circumstances merely because the petitioners chose not to amend the Original Application to impugn that part of the decision whereby the Government had decided to limit the grant of arrears of pension/family pension only from 1.1.1996 onwards, they could not be denied the said benefit, if they were otherwise entitled to it in law.

The petitioners had sought a larger relief since they had been completely denied any relief by the Government while rejecting their representations vide communication dated 22.9.1988. If the government subsequently decided to grant partial relief, thereby narrowing down the scope of the lis before the Tribunal, the remaining lis ought to have been decided on its merits without insisting upon amendment of the Original Application to challenge the limited scope of the concession made by the Government during the pendency of the Original Application. It is well settled that Courts can take note of subsequent events which occur during the pendency of a lis to prevent miscarriage of justice and to ensure that parties do not suffer due to the acts of their opponents during the pendency of the lis. The rights and obligations of the parties are adjudicated upon as they obtain at the commencement of the lis. But this is subject to an exception. Wherever subsequent events of fact or law which have a material bearing on the entitlement of the parties to relief or on aspects which bear on the moulding of the relief occur, the court is not precluded from taking a `cautious cognizance'' of the subsequent changes of fact and law to mould the relief. Ramesh Kumar Vs. Kesho Ram,

We are of the view that the petitioners were entitled to prosecute their Original Application as it existed, and if in law they were entitled to the grant of arrears of pension/family pension from 1.1.1986 onwards the same could not have been denied to them merely because, by a subsequent development, the Government itself had decided to grant them arrears of pension/family pension w.e.f. 1.1.1996 onwards. We also find merit in the submission of the petitioners that the Vth Central Pay Commission had limited the grant of arrears of pension w.e.f. 1.1.1996 since it was concerned with the period after 1.1.1996 for the purpose of making its recommendations. This is evident from a plain reading of paras 137.22 to 137.24 of the Pay Commission''s report. The issue that the Tribunal should have addressed, in view of the limited scope of the dispute surviving before it, was whether the classification and differential treatment to retirees on the basis of the cut off date of 1.1.1986 was legal or not.

The ratio of Nakara (supra) is that the Government cannot apply different yardstick/formula for the purpose of computation of pension by fixing an arbitrarily and irrationally fixed cut off date since all pensioners form one class and they cannot be sub-classified by adopting different yardstick or formula for fixing of pension/family pension.

In Nakara (supra), the Supreme Court found as a matter of fact that the cut off date fixed by the Government for dividing pensioners into two different classes for the purpose of meeting out differential treatment on the basis of their date of retirement was arbitrary and that it bore no reasonable nexus with the object of the classification.

In the case in hand, the differentiation between the two classes of retirees created by the Government i.e. pre 1986 retirees and post 1985 retirees was based on the recommendations of the IVth Central Pay Commission. For the post 1985 retirees, pension benefits have been fixed on the basis of the revised pay structure of those members who are in service on 1.1.1986. In Monotosh Roy (supra) the pre 1986 retirees had sought parity with those who had retired on or after 1.1.1986. i.e. the post 1985 retirees. The Supreme Court was concerned with the same O.M. No. 2/1/87-P.I.C dated 16.4.1987 with which we too are concerned in the present case. The Supreme Court, while dealing with the submission based on Nakara held that the principle laid down in Nakara cannot apply in a case where the pension benefits have been fixed on the basis of the revised pay structure for those members who are in service on 1-1-1986. By referring to All India Reserve Bank Retired Officers Association and others Vs. Union of India and others, , it was held that it is for the Government to fix a cut-off date when introducing a new pension scheme. The Court negatived the claim of the persons who had retired prior to the cut-off date and had collected their retiral benefits from the employer. In State of Rajasthan and anothers etc. Vs. Amrit Lal Gandhi and others etc., , the Supreme Court held that in matters of revising pensionary benefits, and even in respect of revision of scales of pay, a cut-off date on some rational or reasonable basis has to be fixed for extending the benefits.

In State of U.P. and Another Vs. Jogendra Singh and Another, , the Supreme Court held that liberalised provisions introduced after an employee''s retirement with regard to retiral benefits cannot be availed of by such an employee. In that case the employee retired voluntarily on 12-4-1976. Later on, the statutory rules were amended by Notification dated 18-11-1976 granting benefit of additional qualifying service in case of voluntary retirement. The Court held that the employee was not entitled to get the benefit of the liberalised provision which came into existence after his retirement. A similar ruling was rendered in V. Kasturi Vs. Managing Director, State Bank of India, Bombay and Another, .

In State of West Bengal and Others Vs. Ratan Behari Dey and Others, , the Supreme Court held that it was open to the State to change the conditions of service unilaterally. Terminal benefits as well as pensionary benefits constitute conditions of service. The employer has the undoubted power to revise the salaries and/or the pay scales as also terminal benefits/pensioner benefits. The power to specify a date from which the revision of pay scales or terminal benefits/pensioner benefits, as the case may be, shall take effect is a concomitant of the said power. The State can specify a date with effect from which the Regulations framed, or amended, as the case may be, shall come into force. It was within the power of the State to enforce the Regulations either prospectively or with retrospective effect from such date as it might specify. Only condition is that in such cases the State cannot pick a date arbitrarily. So long as such date is specified in a reasonable manner, i.e. without bringing about a discrimination between similarly situated persons, no interference is called for by the Court in that behalf on ground of discrimination.

In our view the date 1.1.1986 cannot be said to be arbitrary, since it is the date from which the revised pay scales were made applicable to those in service as on that date. Those who retire after 1.1.1986 would be entitled to pay revision as per the revised pay scales. Their pension/family pension upon retirement would be governed by the O.M dated 14.4.1987. The pre 1986 retirees were obviously not entitled, as a matter of right, to any pay revision, since the pay revision is effective from 1.1.1986. The benefit that the pre 1986 retirees got by virtue of the O.M. dated 10.2.1998 regarding grant of notional pay fixation under the IVth Central Pay Commission with effect from 1.1.1996 onwards (for purposes of fixation of their pension/family pension) could not be claimed as a matter of right by the petitioners with effect from 1.1.1986 or any other later date. The petitioners have to be content with the grant of such benefit with effect from 1.1.1996 onwards as per O.M. dated 10.2.1998.

However, the grievance of the petitioners with regard to the rates of calculation of family pension for the pre 1986 retirees as being discriminatory appears to be justified and in the teeth of the decision of the Supreme Court in Nakara (Supra).

The Supreme Court in Nakara (Supra), inter alia, has held as follows:

42...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.... The artificial division stares into face and is unrelated to any principle and whatever principle, if there by any, has absolutely no nexus to the objects sought to be achieved by liberlisting 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 14.

46... Revised pay scales are introduced from a certain date. All existing employees are brought on to the revised scales by adopting a theory of fitments and increments for past service. In other words, benefit of revised scale is not limited to those who enter service subsequent to the date fixed for introducing revised scales but the benefit is extended to all those in service prior to that date. This is just and fair. Now if pension as we view it, is some kind of retirement wages for past service, can it be denied to those who retired earlier, revised retirement benefits being available to future retirees only. Therefore, there is no substance in the contention that the Court by its approach would be making the scheme retroactive, because it is implicit in theory of wages.

Reliance placed on the judgment of the Supreme Court in Jeevarathinam (supra) by the petitioner appears to be well placed so far as the claim for parity in the formula/manner of fixation of family pension with post 1985 retirees is concerned. As the petitioners have been agitating their cause since 1989, before a judicial forum, in our opinion the heirs of members of the petitioner association would be entitled to receive family pension by applying the same formula/manner of calculation as was applicable for the post 1985 retirees with effect from 1.1.89 onwards. As it is, family pension in the case of pre 1986 retirees stood revised from 1.1.986 onwards at the same rate and by application of the same formula as was applicable to the cases of post 1985 retirees. As the differentiation made between the pre 1986 retirees and the post 1985 retirees in the matter of fixation of family pension is arbitrary and irrational, the decisions relied upon by the Respondents in Monotosh Roy (supra) and Ratan Behari Dey (Supra) do not come in the way of grant of this limited relief.

Consequently, we set aside the impugned order and allow the present petition by directing the respondents to pay to the eligible members/heirs of members of the petitioner association family pension computed by application of the same formula, as was applicable to those who retired after 1.1.1986. This benefit would be given for the period 1.1.1989 to 1.1.1996, since post 1.1.1996, the Vth Central Pay Commission restored the parity in the manner of fixation of family pension between the pre 1986 and post 1985 retirees. The respondents are granted three months to compute the family pension as aforesaid and, after adjustment of the amounts already disbursed towards family pension, the difference be paid to the members/heirs of members of the petitioner association within five months from the date of this judgment, along with simple interest calculated @ 6% per annum.

Parties are left to bear their respective costs.