Holding

The 1981 Rules are prospective; they do not have retrospective operation and therefore do not apply to the appellant who retired before their commencement.

Summary

Hari Ram Gupta retired in 1980, before the Uttar Pradesh Palika (Centralised) Service Retirement Benefits Rules, 1981 came into force. He filed a writ petition seeking a pension under the 1981 Rules, contending that Rule 3(2) and (3) gave the Rules retrospective effect and that the phrase "finally withdrawn" allowed him to switch from the provident fund to the pension scheme. The Supreme Court examined the language of Rule 3 and the relevant Pension and General Provident Fund Regulations, holding that "finally withdrawn" refers to withdrawals made while the employee is still in service, not to post‑retirement withdrawals, and that the Rules contain no express provision for retrospective operation. The Court further rejected the reliance on D.S. Nakara and related cases, observing that pension retirees and provident‑fund retirees are not a homogeneous class and that a cut‑off date is permissible under Article 14. Consequently, the appellant was not entitled to the pension, and the appeal was dismissed.

Issues considered

The applicability of Rule 3 of the U.P. Palika (Centralised) Service Retirement Benefits Rules, 1981 to employees who retired before the Rules came into force.
The interpretation of the phrase "finally withdrawn" in Rule 3(3).
Whether the precedent set in D.S. Nakara v. Union of India and its progeny extends pension benefits to pre‑retirement retirees.
The relevance of Shakuntala Mehrishi v. New Delhi Municipal Committee to the present case.
The constitutionality of a cut‑off date for the pension scheme under Article 14 of the Constitution.

Legislation cited

Constitution of Indias. Art. 14

Subjects

Service lawPension schemeRetrospective applicationRule interpretationArticle 14Cut‑off dateProvident fundRetirement benefits

Judgment

A HARi RAM GUPTA (DEAD) THROUGH L.R.
KASTURI DEVI
v.
STATE OF UTTAR PRADESH

JULY 22, 1998
B
[SUJATA V. MANOHAR AND G.B. PATTANAIK, JJ.]

Service Law :

C UP. Pa/ika (Centralised) Service Retirement Benefits Rules, 1981
Rule 3.

Retirement Benefits-Pension Provident Fund Scheme to Pension
Scheme- Switchover from-Availability of-To employees who had already
retired from service-Held : Rules do not have retrospective operation-
D Hence, those employees who had retired before the Rules had come into
force, not entitled to pension-UP. Palika (Centralised) Service Rules, 1966.

Retirement Benefits-Cut-off date-Pension-Revised scheme-
Employees who had already retired- Employee retired after Rules came into
force-Rules provided for switchover from Provident Fund Scheme to Pension
E Scheme-Automatic applicability of Rules-Held : Pension retirees and
provident fond retirees do not form one homogenous class-Hence, contention
based on Nakara's case that all retirees formed one homogenous class and
entitled to benefits of revised scheme, rejected-Constitution of India, 1950,
Art. 14.

Words and Phrases :
F
"Finally withdrawn "-Meaning of-Jn the context of R. 3 of UP. Palika
(Centralised) Service Retirement Benefits Rules, 1981.

The appellant filed a writ petition before the High Court claiming that
he was entitled for pension under the U.P. Palika (Centralised) Service
G Retirement Benefits Rules, 1981 which came into fm:ce one year after the
appellant had retired from service on superannuation. The High Court
dismissed the petition. Hence this appeal.

On behalf of the appellant it was contended that the Rules applied
retrospectively and that the appellant was entitled in terms of Rule 3(2) and
H (3) to exercise option for switching over from provident fund scheme fo
854
H.R. GUPTA (DEAD) THROUGH L.R. KASTURI DEVI v. STATE 855
pension scheme because it was provided in Rule 3 (3) that "if an officer A
opting for these Rules has finally withdrawn the amounts of the Palika 's
contribution and bonus deposited in his provident fund account, the same
shall have to be deposited by him into the pension fund .....along with interest".

On behalf of the respondent it was contended that under Clause 5-C
(1) of the Pension and General Provident Fund Regulations an employee was B
entitled to finally withdraw from the provident fund after renderingJS years
or when he had less than 8 years of service to attain the age of superannuation
and, therefore, the expression "finally withdrawn" in Rule 3(3) did not mean
that the Rules h_ad a retrospective operation.

Dismissing the appeal, tlils Court c
HELD : 1. The expression "finally withdrawn" as envisaged in Rule
3(3) of the U.P. Palika (Centralised) Service Retirement Benefit Rules, 1981
would mean those final withdrawals made by an employee while continuing
in service for the purposes mentioned in Clause S-C(2) of the Pension and D
General Provident Fund Regulations. Consequently, the argument that a
combined reading of Rules 3(2) and (3) indicates that the Rules have
retrospective application is devoid of any force and the same accordingly
stands rejected. (860-E)

Shakuntala Mehrishi v. New Delhi Municipal Commitee, (1990) 3 SCC E
521, held inapplicable.

2.1. Nakara 's case considered in a subsequent Constitution Bench
judgement in Krishana Kumar's case wherein it was explained that the
pension retirees and provident fund retirees do not form one homogeneous
class and on the other hand the Rules governing the provident fund and its F
contribution and entirely different form the Rules governing pension and,
therefore, it would not be reasonable to argue that what is applicable to the
pension retirees must also equally be applicable to Provident Fund retirees.
It was further held in Krishna Kumar's case that the rights of each individual
retire finally crystallised on his retirement where after no continuing G
obligation remained in case of those who are governed by Provident Fund
Rules whereas in case of Pension retirees the obligation continues till the
death of the employee. This Court categorically held that Naka~a's case
could not be an authority for the decision in Krishna kumar 's case. In
subsequent decisions also this Court held that whenever the Government or
an authority frames a scheme for persons who have superannuated from H
856 SUPREME COURT REPORTS [1998] 3 S.C.R.

A service, due to many constraints, it is not always possible to extend same .-
benefits to one and all, irrespective of the dates of superannuation. As such
any revised scheme in respect of post-retirement benefits, if implemented
with a cut-off date, which can be held to be reasonable and rational in the
light of Article 14 of the constitution, need not be held to be invalid. Whenever
a revision takes place; a cut-off date becomes imperative because the benefit
B has to be allowed within the financial resources available with the Government.

(861-A-H]
2.2. Therefore, the appellant having superannuated prior to the Rules
coming into force cannot claim the right to pension under the Rules with
C the help of the decision of this Court in Nakara 's case and further in view
of the conclusion that the Rules do not have any retrospective operation the
relief sought for by the appellant to get pension under the Rules cannot be
granted. (862-C]

Krishna Kumar v. Union of India, [1990] 4 SCC 207, Union of India
0 v.P.N Menon, (1994] 4 SCC 68; Indian Ex-services League v. Union ofIndia,
(1991] 2 SCC 104 and All India Reserve Bank Retired Officers Association
v. Union of India, (1992] Supp. 1 SCC 664, relied on.

D.S. Nakara v. Union of India, [1983] I SCC 305, held inapplicable.

E CIVIL AP PELLA TE JURISDICTION : Civil Appeal No. 3433 of
1998..

From the Judgment and Order dated 13.11.95 of the Allahabad High
Court in W.P. No. 557of1987.

F K.K. Dubey and Ms. N. Annapoorani for the Appellant.

A.K. Goel, Additional General, Ms. Niti Dikshit and Pradeep Misra for
the Respondent.

The Judgment of the Court was delivered by
G
PATTANAIK, J. Leave granted.

This appeal by grant of special leave is directed against the judgment
dated 13th of November, 1995 of the Allahabad High Court in Civil
Miscellaneous Petition No. 557 of 1987. Hari Ram Gupta, husband of the
H present appellant, had filed the writ petition seeking a mandamus from the
.1 ~. GGPTA (DEAD) THROUGH L R KASTURI DEVI r. STA TE [PA TT ANAIK,J] 857
court to the appropriate authorities to give him the benefits of the Uttar A
Pradesh Palika (Centralised) Service Retirement Benefit Rules, 1981 (hereinafter
referred to as 'the Rules'). But said Hari Ram Gupta had retired from service
on superannuation in the year 1980. He, however, claimed that he would ·be
entitled to pension under the Rules as the Rules are intended to apply
retrospectively and at any rate following the principle of the judgment of this
Court in D.S. Nakara and others v. Union of India, [1983] 1 SCC 305, the B
court should grant him the relief. The High Court by the impugned judgment
came to hold that the Rules have no retrospective operation, and therefore,
-. the applicant was not entitled to claim pension under the Rules. Soon after
the judgment of the Allahabad High Court, the husband of the appellant
having died, the widow filed the special leave application out of which this C
appeal arises. The sole question for consideration is whether the Rules can
be said to have any retrospective application and are applicable to those
employees belonging to the Palika (Centralised) Service, who retired from
service prior to the coming into force of the Rules. It is not disputed that
before the Rules came into operation there was no rules providing pension
for the employees of the centralised services. D
The learned counsel for the appellant strenuously contended that a
conjoint reading of sub-rules (2) and (3) of Rule 3 would make it crystal clear
that the Rule is applicable even to those employees who have retired from
service on the date the Rules came into operation, provided they exercise their
option in accordance with the Rules within the stipulated period of 90 days E
from the enforcement of the Rules and they deposit the amount finally
withdrawn from Palika's contribution and bonus deposited in his Provident
Fund Account into the pension fund established under Part VI of the Rules.
According to the learned counsel unless such an interpretation is given, the
provision of sub-rule (3) would become otiose inasmuch as an officer is
.... entitled to finally withdraw the amount from the Provident Fund on super F
annuation and not while he continues to be in service. The learned counsel
further contended that under identical circumstances an employee of a school
under New Delhi Municipal Committee had approached this Court in the case
of Shakuntala Mehrishi, New Delhi v. New Delhi Municipal Committee and
others, [ 1990] 3 sec 521 and this Court had granted the retiral benefits to the G
employee. The aforesaid decision, contends the learned counsel for the
appellant, should apply with full force to the case in hand. The learned
counsel further urged that the Rules in question providing for pension, if is
held to apply to only those·employees who retired subsequent to the coming
into force of the Rules and not to those to have already retired, then it would
be violative of the law laid down by this Court in the case of D.S. Nakara H
858 SUPREME COURT REPORTS [1998) 3 S.C.R.

A (supra) inasmuch as pension paid is not a bounty nor an ex-gratia payment
for past services rendered and is a social welfare measure rendering socio-
economic justice to those who in the hey-day of their life ceaselessly toiled
for the employer on an assurance that in their old age they would not be left
in lurch.

B Learned counsel for the respondent, on the other hand contended that
there is no ambiguity in the Rules and nowhere the Rules indicate that it
would apply retrospectively on certain conditions being fulfilled. He further
contended that under the provisions of the Regulation for payment of Provident
Fund made by Nagar Palika, Jhansi an employee is entitled to finally withdraw
C after rendering 25 years of service or when such employee has less than 8
years of service to attain the age of superannuation, and therefore. it is not
correct that final withdrawal is permissible only on the date of superannuation.
In that view of the matter the expression 'final withdrawal' in sub-rule (3) of
Rule 3 of the Rules cannot be interpreted to mean that the Rules have a
retrospective operation. The learned counsel also urged that the rules
D determining the service conditions of an employee under the service
jurisprudence is usually prospective in nature unless there is anything in the
Rules which indicate the legislative intent of making the rule retrospective or
the rule is expressly made retrospective. Since neither of these conditions are
satisfied in the case in hand, the rules must be held to be prospective, and
E therefore, would not govern the case of those who retired prior to the coming
into force of the Rules. On the question of applicability of the decision of this
Court in Shakuntala Mehrishi case, the learned counsel contended that the
ratio laid down in that case has no application and the said decision is no
guidance for deciding the question as to whether the Rules in the present
case has any retrospective operation. On the question of the applicability of
F the ratio in D.S. Nakara's case, the learned counsel for the respondent urged
that the appellant has not challenged validity of the Rules and on the other
hand seek relief on the basis of the said Rule, therefore, the Rule cannot be
struck down. He further contended that the decision of this Court in D.S.
Nakara has been watered down by this Court in several subsequent cases and
G it is the settled position now that the employees retiring on a particular date
would be governed by the benefits of the rules then existing and cannot
complain of if at a subsequent stage certai11 other rules confer some additional
benefits. Thus, judged the principles enunciated by this Court in Nakara have
no application to the case in hand.

H In view of the rival submission, the first question that arises for
r GUPTA (DEAD) THROUGH L.R KASTOR! DEVI v. STATE [PATTANAIK, J] 859
·~

.....
consioeration is whether the Rules can be said to have any retrospective A
operation?

We have examined the Rules carefully and there is no express provision
in the Rules giving it retrospective operation. The question then arises as to
whether from any of the provisions contained in the Rules is it possible to
infer that the Rules have been given retrospective operation. The argument B
of the learned counsel appearing for the appellant in this context is based
upon the language used in sub-rule (2) and sub-rule (3) of Rule 3. For better
•.... appreciation of the point in issue sub-rules (I), (2) and (3) of Rule 3 are quoted
hereinbelow in extenso:-

"3. Application of the rules.- (1) These rules shall apply compulsorily c
to all those officers who were appointed on or after July 9, 1966 under
clause (I) of Rule 21 of the Uttar Pradesh Palika (Centralised) Services
Rules, I 966 and would become permanent on any post in the Centralised
Services.
D
(2) The officers who were finally absorbed on any post in Centralised
Services under clause (2) of Rule 6 of the Uttar Pradesh Palika
(Centralised) Services Rules, 1966 will have an option to elect whether
they would be governed by the existing Pension/Provident Fund
Rules of the Palika as hitherto or ·would like to be governed by those
rules. This option shall be exercised within ninety days from the E
enforcement of these rules and the option once exercised shall be
final.

(3) If an officer opting these rules has finally withdrawn the amounts

... of Palika's contribution and bonus deposited in his Provident Fund
Account, the same shall have to be deposited by him into the pension
fund established under Part VI of these Rules along with interest at
F

the rates fixed from time to time by the Reserve Bank of India."

Sub-rule (I) of Rule 3 clearly indicates that Rule should apply to those
officers who were appointed on or after July 1966 under clause I of Rule 21
G
of the Centralised Services Rules of 1966 and would become permanent in the
Centralised services. This sub-rule obviously has no application. The learned
.... counsel appearing for the appellant, however, urged that if sub-rules (2) and
(3) of Rule 3 are read together it unequivocally indicates that the Rules do
apply to those persons who have already retired. In as much as sub-rule (3)
gives an option to officers to exercise option to be governed by the Rules H
860 SUPREME COURT REPORTS [1998) 3 S.C.R.

A and if they have finally withdrawn the amounts of Palika's contribution and
bonus deposited in Provident Fund Account the same will have to be deposited
into the pension fund. It is contended by the learned counsel that an employee
can finally withdraw the amount from the Provident Fund only on his
superannuation and not at any earlier point of time while he continues to be
in service and, therefore, this sub-rule clearly indicates that the Rules apply
B to those who have already superannuated on the d'!te the Rule came into
force. But on examining the provisions contained in Pension and General
Provident Fund Regulations or Rules which governed the case of employees •
of Palika, more particularly the provisions of Clause 5 - C( 1) we find that final
withdrawals under the Regulation is permitted in the case of Municipal servants
C who have either rendered 25 years service or have less than 8 years to attain
the age of superannuation. The purpose for which such final withdrawal is
permissible is enumerated in other sub-clauses of said Clause 5 - C. In this
view of the matter the argument of the learned counsel appearing for the
appellant that final withdrawal is permissible only on the date of
superannuation cannot be sustained and the expression 'final withdrawal' as
D envisaged under sub-rule (3) of Rule 3 would mean those final withdrawals
made by an employee while continuing in service for the purposes mentioned
in sub-clause (2) of Clause 5-C. Consequently, the argument that a combined
reading of sub-clause (3) and sub-clause (2) of Rule 3 indicates that the Rules
have retrospective application is devoid of any force and the same accordingly
E stands rejected.

The next question that arises for consideration is whether the judgment
of this Court in Shakuntala Mehrishi v. New Delhi Municipal Committee and
others, [ 1990] 3 sec 521, any way helps the appellant in getting the relief
sought for? In the aforesaid case the teacher of a recognised aided school
F opted for pension and gratuity within stipulated period in prescribed proforma
as desired by statutory notification. But notwithstanding his superannuation
he did not receive the benefits as the modalities about contribution towards
pension fund and approval of Government of India had not been obtained.
This Court held that payments to the employee cannot be deferred on such
G grounds over which the employee has no control and accordingly directed
that the necessary payments be made. We fail to understand how the aforesaid
decision is in any way applicable to the case in hand for deciding the
question as to whether the Rules providing for pension would retrospectively
apply to the case of an employee who had already retired before the Rules
came into operation. In our considered opinion the aforesaid decision of this
H Court does not help the appellant in any manner.
H.R GUPTA (DEAD) THROUGH L.R. KASTURI DEVI v. STATE [PA TTANAIK, J.) 861
The only other question that survives for our consideration is whether A
... the ratio in Nakara's case will assist the appellant in getting the relief sought
for? In D.S. Nakara and others v. Union of India, [1983] I SCC, 305 the
question for consideration before this Court was whether on the basis of date
of retirement the retirees can be classified into different groups and thereupon
make provision granting some benefits to one group denying the others? In
the aforesaid case the provisions for pension was applicable to all retirees B
and, therefore, pensioners form a class as a whole. But when Liberalised
Pension Scheme was introduced the said Scheme was made applicable to a
•
.... group of pensioners and not to all and therefore, it was held by this Court
that pensioners form a class as a whole and cannot be micro-classified by an
arbitrary, unprincipled and unreasonable eligibility criteria. It is to be noted c
that the aforesaid judgment was considered by this Court in the subsequent
Constitution Bench judgment of Krishna Kumar v. Union of India, [1990] 4
SCC, 207 wherein the decision ofNakara (supra) was explained and it was held
that the pension retirees and provident fund retirees do not form one
homogeneous class on the other hand the Rules governing the provident
fund and its contribution are entirely different from the Rules governing D
pension and, therefore, it would not be reasonable to argue what is applicable
to the pension retirees must also equally be applicable to Provident Fund
retirees. It was further held in the aforesaid case that the rights of each
individual retired finally crystallised on his retirement where after no continuing
obligation remained in case of those who are governed by Provident Fund E
Rules whereas in case of Pension retirees the obligation continues till the
death of the employee. This Court categorically held that Nakara (supra)
cannot be an authority for the decision in Krishna Kumar (supra). In Union
of India v. B. P.N. Menon, [1994] 4 SCC 68 a similar question came up for
consideration and distinguishing Nakara and following Krishna Kuma,r and
•. other similar cases the Court held that whenever the Government or an F
authority, which can be held to be a State within the meaning of Article 12
of the Constitution, frames a scheme for persons who have superannuated
from service, due to many constraints, it is not always possible to extend the
same benefits to one and all, irrespective of the dates of superannuation. As
such any revised scheme in respect of post-retirement benefits, if implemented
G
with a cut-off date, whiCh can be held to be reasonable and rational in the
light of Article 14 of the Constitution, need not be held to be invalid. Whenever
... ~
a revision takes place, a cut-off date becomes imperative because the benefit
has to be allowed within the financial resources available with the Government.
When the Army personnel claimed the same pension irrespective of their date
of retirement this Court in the Constitution Bench case of the Indian ex- H
862 SUPREME COURT REPORTS (1998] 3 S.C.R.

A services League v. Union ofIndia, (1991] 2 sec 104, the Court considered the
grievance of ex-servicemen who had laid the claim on the basis of Nakara
(supra) but ultimately negatived the same and followed Krishna Kumar (supra).
In All India Reserve Bank Retired Officers Association v. Union of India,
(1992] Suppl. I SCC 664, when the validity of the introduction of Pensions
scheme in lieu of Contributory Provident Fund Scheme was challenged on the
(
B ground that Bank employees who retired prior to 1.1.1986 have not been given
the benefit of the said scheme it was held by this Court that there is no
arbitrariness in the same.

This being the position the appellant having superannuated prior to the
C Rule corning into force cannot claim the right to pension under the Rules with
the help of the decision of this Court in Nakara (supra) and further in view
of our conclusion that the Rules do not have any retrospective operation the
relief sought for by the appellant to get pension under the Rules cannot be
granted.

D In the premises, as aforesaid, the appeal fails and is dismissed. But in
the circumstances there will no order as to costs.

v.s.s. Appeal dismissed.