Supreme Court of India
KALLAKKURICHI TALUK RETIRED OFFICIAL ASSOCIATION, TAMILNADU, ETC.versusSTATE OF TAMILNADU
- Citation
- 2013 INSC 40
- Decided
- 17 January 2013
- Disposal
- Appeal(s) allowed
- Bench
- D K JAIN
Holding
The classification distinguishing pensioners retiring before and after 1 June 1988 in the 9 August 1989 order is arbitrary, discriminatory and violative of Articles 14 and 16, and is set aside.
Summary
The Kallakkurichi Taluk Retired Officials Association challenged a Tamil Nadu Government Order dated 9 August 1989 that treated the component of dearness allowance as dearness pay for pension calculation differently for employees retiring before and after 1 June 1988, resulting in a lower pension for the latter group. The High Court had set aside the order, but the Division Bench later reinstated it, prompting the present appeal. The Supreme Court examined whether the cut‑off date constituted a valid classification under Articles 14 and 16 of the Constitution. It held that the classification lacked any intelligible differentia or rational nexus to a legitimate objective, rendering it arbitrary and discriminatory. Consequently, the order was struck down. The Court emphasized that the quantum of loss is irrelevant to a challenge based on arbitrariness and that the State had not disclosed any objective for the distinction.
Issues considered
- The classification of pensioners based on the retirement date of 1 June 1988 in the 1989 Government Order is arbitrary and violative of Articles 14 and 16.
- Whether the State Government disclosed any legitimate objective justifying the differential treatment of pensioners.
- Whether the quantum of benefit loss is relevant to a challenge under Article 14.
Legislation cited
- Constitution of Indias. 14, s. 16
- Tamil Nadu Pension Rules, 1976s. 30
- Tamil Nadu Pension Rules, 1978s. 30
Subjects
pensiondearness allowancedearness payclassificationequalityArticles 14Article 16discriminationservice lawgovernment orderTamil Nadu
Judgment
(2013] 4 S.C.R. 883
KALLAKKURICHI TALUK RETIRED OFFICIAL A
ASSOCIATION, TAMILNADU, ETC.
v.
STATE OF TAMILNADU
(Civil Appeal Nos. 8848-8849 of 2012)
JANUARY 17, 2013
B
[D.K. JAIN AND JAGDISH SINGH KHEHAR, JJ.]
Service Law:
c
Pension - Calculation of - Government order - While
calculating pension, classified the employees retiring before
and after 1.6.1988 - Lower component of 'dearness pay' was
extended to the employees retiring after 1.6.1988 vis-a-vis the
employees who retired prior thereto - Held: Such classification 0
is arbitrary and discriminatory and is liable to be set aside as
violative of Articles 14 and 16 of the Constitution - Constitution
of India, 1950 - Articles 14 and 16 - Tami/nadu Pension
Rules, 1976 - r.30.
Constitution of India, 1950 - Articles 14 and 16 - Valid E
classification - A classification to be valid, must be based on
just objective and differentiation must have reasonable nexus
to the objective sought to be achieved - Any classification
without reference to the object sought to be achieved, would
be arbitrary and violative of the protection offered under Art. 14 F
and also discriminatory and violative of protection offered
under Art.16 - Quantum of discrimination is irrelevant to a
challenge based on a plea of arbitrariness.
Words and Phrases - 'Dearness Pay' - Meaning of.
G
The employees of the State Government who retired
on or after ~ .6.1988 challenged the Government Order
dated 9.8.1989, whereby the pensionary benefits of an
883 H
884 SUPREME COURT REPORTS [2013] 4 S.C.R.
A employee retired/retiring on or after 1.6.1988 were
required to be computed by adding 'dearness allowance'
to 'dearness pay' at a fixed percentage. By virtue of he
said determination, the employees retiring on or after
1.6.1988 were at disadvantage as compared to the
B employees who had retired prior thereto. High Court
allowed the petition holding that the order dated 9.8.1989
was unsustainable. Division Bench of High Court set
aside the order of Single Judge. Hence the present
appeals.
c Allowing the appeals, the Court
HELD: 1. The Constitution of India ensures to all,
equality before the law and equal protection of the laws.
These rights flow to an individual under Articles 14 and
D 16 of the Constitution. The extent of benefit or loss in
such a determination is irrelevant and inconsequential.
The extent to which a benefit or loss actually affects the
person concerned, cannot ever be a valid justification for
a court in either granting or denying the claim raised on
E these counts. The rejection of the claim of the appellants
by the High Court, merely on account of the belief that
the carry home pension for employees who would retire
after 1.6.1988, would be trivially lower than those retiring
prior thereto, amounts to bagging the issue pressed
F before the High Court. In the instant case, in a given
situation, an employee retiring on or after 1.6.1988 could
suffer a substantial loss, in comparison to an employee
retiring before 1.6.1988. Therefore, the High Court erred
while determining the issue projected before it. [Para 26]
G [910-B-F]
2. A valid classification is truly a valid discrimination.
Article 16 of the Constitution permits a valid classification.
A valid classification is based on a just objective. The
result to be achieved by the just objective presupposes
H the choice of some for differential consideration/
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 885
ETC. v. STATE OF TAMILNADU
treatment, over others. A classification to be valid must A
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 B
for a valid classification may be summarized 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 is fixed to categorise one set of pensioners for c
favourable consideration over others, the twin test for
valid. classification (or valid discrimination) must
necessarily be satisfied. Any classification without
reference to the object sought to be achieved, would be
arbitrary and violative of the protection afforded under 0
Article 14 of the Constitution of India, it would also be
discriminatory and violative of the protection afforded
under Article 16 of the Constitution of India. [Paras 27 and
30) [910-G-H; 911-A-C; 915-B]
3. 'Dearness allowance' is extended to employees to E
balance the effects of ongoing inflation, so as to ensure
that inflation does not interfere with the enjoyment of life,
to which an employee is accustomed. Likewise, the
objective of 'dearness pay' is to balance the effects of
ongoing inflation, so that a pensioner can adequately F
sustain the means of livelihood to which he is
accustomed. In the present context, 'dearness allowance'
is paid to Government employees keeping in mind the All
India Consumer Price Index. When a State Government
chooses to treat 'dearness allowance' as 'dearness pay', G
the objective remains the same i.e., inflation in the market
place is sought to be balanced for retired employees by
giving them the benefit of 'dearness pay'. Since the
component of inflation similarly affects all employees,
and all pensioners (irrespective of the date of their entry H
886 SUPREME COURT REPORTS [2013] 4 S.C.R.
A into service or retirement), it is not per se possible to
accept different levels of 'dearness pay' to remedy the
malady of inflation. Just like the date of entry into service
(for serving employees) would be wholly irrelevant to
determine the 'dearness allowance' to be extended to
B serving employees, because the same has no relevance
to the object sought to be achieved. Likewise, the date
of retirement (for pensioners) would be wholly irrelevant
to determine the 'dearness pay' to be extended to retired
employees. [Paras 27 and 28] [911-D-E, F-H; 912-A-C]
c 4. In the instant case, the State Government has not
disclosed any object which is desired to achieve by the
cut-off date. Most importantly, the financial constraints of
the State Government, were not described as the basis/
reason for the classification made in the impugned
D Government order dated 9.8.1989. No employee has a
right to draw 'dearness allowance' as 'dearness pay' till
such time as the State Government decides to treat
'dearness allowance' as 'dearness pay'. And therefore, the
State Government has the right to choose whether or not
E 'dearness allowance' should be treated as 'dearness
pay'. As such, it is open to the State Government not to
treat any part of 'dearness allowance' as 'dearness pay'.
In case of financial constraints, this would be the most
appropriate course to be adopted. Likewise, the State
F Government has the right to choose how much of
'dearness allowance' should be treated as 'dearness
pay'. As such, it is open to the State Government to treat
a fraction, or even the whole of 'dearness allowance' as
'dearness pay'. Based on Rule 30 of the Tamilnadu
G Pension Rules, 1978, it is clear that the component of
'dearness pay' would be added to emoluments of an
employee for calculating pension. In a situation where the
State Government has chosen, that a particular
component of 'dearness allowance' would be treated as
H 'dearness pay', it cannot discriminate between one set of
KALLAKKURICHI TALUK RETD. OFFASSO., TAMILNADU, 887
ETC. v. STATE OF TAMILNADU
pensioners and another, while calculating the pension A
payable to them. Though a valid classification may justify
such an action, but in the present case, the State
Government has not come out with any justification/basis
for the classification whereby one set of pensioners has
been distinguished from others for differential treatment. s
Therefore, the instant classification made by the State
Government in the impugned Government order dated
9.8.1989 placing employees who had retired after 1.6.1988
at a disadvantage, vis-a-vis the employees who retired
prior thereto, by allowing them a lower component of c
'dearness pay', is clearly arbitrary and discriminatory, and
as such, is liable to be set aside, as violative of Articles
14 and 16 of the Constitution of India. [Paras 28, 29 and
31] [913-F-H; 914-A-E; 915-E-F]
Union of India vs. P.N. Menon (1994) 4 SCC 68; State D
of Rajasthan vs. Amrit Lal Gandhi (1997) 2 SCC 342: 1997
(1) SCR 121; State of Punjab vs. Amar Nath Goel (2005) 6
SCC 754: 2005 (2) Suppl. SCR 549 -distinguished.
Case Law Reference: E
(1994) 4 sec 68 distinguished Para 32(i)
1997 (1) SCR 121 distinguished Para 32(ii)
2005 (2) Suppl. SCR 549 distinguished Para 32(iii)
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8848-8849 of 2012.
From the Judgment & Order dated 17.12.2007 of the High
Court of Judicature at Madras in W.A. Nos. 9 and 75 of 2007. G
WITH
C.A. Nos. 8850-8852, 8853-8855, 8856, 8857, 8858, 8859,
8860, 8861-8863, 8864, 8865, 8866, 8868, 8869, 8871, 8872,
8873-8874, 8875, 8876, 8877-8878, 8879, 8880, 8881, 8882,
8883 & 8870 of 2012. H
888 SUPREME COURT REPORTS [2013] 4 S.C.R.
A K. Ramamoorthy, AK. Ganguly, V. Krishnamurthy, Dr. A.
Francies Julian, Raju Ramachandran, S. Gurukrishna Kumar,
AAG, N. Shoba, Sri Ram J. Thalapathy, V. Adhimoolam, V.
Balaji, MSM. Asai Thambi, C. Kannan (for B.K. Pal), Hari
Shankar K., V. Balachandran, S. Beno Bencigar (for M.A.
B Chinnasamy), P.R. Kovilan Poongkuntran, Geetha Kovilan, R.V.
Kameshwaran, Gautam Narayan, Asmita Singh, Nikhil Nayyar,
P.V. Yogeswaran, Danish Zubair Khan, Sumit Kumar, Syed
burhanur Rahman, Madhur Panjwani, A Prasanna Venkat (for
B. Balaji), Subramonium Prasad for the appearing parties.
c The Judgment of the Court was delivered by
JAGDISH SINGH KHEHAR, J. 1. The Government of
Tamil Nadu has been issuing executive order from time to time
to determine the composition of allowances to be added to pay
D for quantifying wages for calculating pension. It is the case of
the appellants, that the State Government followed a consistent
practice of treating 'dearness allowance' as 'dearness pay' for
the computation of pension and other retiral benefits.
Illustratively, we are informed, that by a Government Order
E dated 11.3.1970 the State Government included 'dearness
allowance' at the rate then prevalent, as a component of wages
for calculating average emoluments for determining pension,
for those who retired on or after 26.2.1970. The instant
Government Order dated 11.3.1970 was applicable to
F employees who retired between 26.2.1970 and 1.10.1970.
2. One R. Narasimachar who had retired on 21.11.1969
was not extended the benefit of 'dearness allowance' drawn by
him at the time of his retirement, while computing his pension.
This denial was because the Government order dated
G 11.3.1970, extended the benefit referred to above only to such
employees who had/would retire on or after 26.2.1970.
Dissatisfied with the aforesaid denial, he filed Writ Petition
no.1815 of 1986 contending, that his pension should have been
calculated by taking into consideration 'dearness allowance'
H
KALLA.KKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 889
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
which was being drawn by him at the time of his retirement, as A
'dearness pay'. A learned Single Judge of the High Court of
Judicature at Madras (hereinafter referred to as, the High Court)
allowed the aforesaid writ petition on 15.3.1990 by holding, that
the State Government was not right in restricting the applicability
of the Government Order dated 11.3.1970 only to employees B
who retired between 26.2.1970 and 1.10.1970. The learned
Single Judge directed, that 'dearness allowance' which the
appellant was drawing, at the time of his retirement, be treated
as 'dearness pay' for calculating his pension. On 26.2.1991, the
writ appeal filed by the State Government against the order c
dated 15.3.1990 (passed by the learned Single Judge allowing
Writ Petition no.1815 of 1986), was dismissed.
3. Based on the aforesaid judgment dated 15.3.1990,
which the State Government accepted, a clarificatory
Government Order dated 4.12.1991, was issued. Under the D
Government Order dated 4.12.1991, even for employees who
had retired prior to 1.12.1966, 'dearness allowance' actually
drawn by them, at the time of their retirement,would be taken
as 'dearness pay' for purposes of calculating pension. For
employees retiring between 1.12.1966 and 25.2.1970, E
'dearness allowance' upto the level obtaining in December,
1966 would be taken into consideration as 'dearness pay' for
determining pension (and gratuity). It is therefore submitted, that
'dearness allowance' became a component of pension, for all
employees who had retired upto 25.2.1970. F
4. In order to place the sequence of facts in the correct
perspective, it was further brought to our notice that the
Government order dated 11.3.1970 was clarified by a
subsequent letter dated 4.12.1991. As per the aforesaid order G
and letter, Government servants retiring from service on or after
26.2.1970, and upto 1.10.1970, 'dearness allowance' up to the
level obtaining in December, 1966, was to be reckoned as
'dearness pay' for purposes of pension (and gratuity).
Thereupon, through a subsequent Government order dated
H
890 SUPREME COURT REPORTS (2013) 4 S.C.R.
A 4.12.1991, directions were issued for extending the benefit
contemplated by the Government order dated 11.3.1970 and
the Government's letter dated 4.2.1991, even to those who had
retired prior to 26.2.1970.
5. A Government order dated 4.12.1991 was then brought
8
to our notice. It provided, that notional revised pension payable
from 1.6.1988 would be encashable only with effect from
1.12.1991. It also provided, that those Government servants who
had retired prior to 26.2.1970 but had died before 1.12.1991,
C would be ineligible for the benefits contemplated for retirees
prior to 26.2.1970. However, if the concerned Government
employee had died after 1.12.1991, the benefits contemplated
for retirees prior to 26.2.1970 would be released to the legal
heirs of such retirees. It is, therefore apparent, that for the
benefits of the aforesaid Government order, the retirees under
D reference would be deprived of the actual monetary benefit
payable to him, from the date of his or her retirement, till
30.11.1991 (as arrears of pension under the aforesaid
Government orders were payable only with effect from
1.12.1991).
E
6. The aforesaid R. Narasimachar again assailed the
Government order dated 4.12.1991, by contesting the
determination of the State Government, in denying to him, the
benefit of arrears from the date of his retirement (on
F 21.11.1969) till 30.11.1991, by filing Writ Petition no. 4038 of
1992 before the High Court. The aforesaid Writ Petition was
allowed by the High Court. The High Court held, that monetary
benefits could not be denied for the period preceding
1.12.1991. In other words, retirees before 1.12.1991 were held
G entitled to arrears from the date of their retirement till
30.11.1991. The cut off date (1.12.1991) for extending the
benefit of arrears was accordingly set aside.
7. The judgment rendered by the High Court in Writ
Petition no. 4038 of 1992 on 15.6.1993, quashing the action
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 891
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
of the State Government in limiting payment of arrears, only with A
effect from 1.12.1991, was accepted by the State Government.
The judgment of the High Court was given effect to, by a
Government order dated 26.7.1993, whereby, the earlier
Government order dated 4.12.1991 was modified. Under the
Government order dated 26.7.1993, pensioners were held B
eligible for arrears of pension from the date of their actual
retirement. The aforesaid benefit of arrears was also extended
, to legal heirs of such pensioners, who had died in the
meantime.
8. Based on the factual position narrated in the foregoing C
paragraphs, it clearly emerges, that 'dearness allowance' was
taken as 'dearness pay' for employees retiring from government
service, at all times, without any interruption, for the computation
of retiral benefits including pension. The aforesaid narration
also reveals, that the component of 'dearness allowance' to be D
treated as 'dearness pay' for being taken into consideration for
calculating pension, was determined by the State Government,
through Government orders issued from time to time. The
narration recorded hereinabove pertains to employees whose
date of retirement preceded 1.10.1970. E
9. The factual position being recorded hereinafter relates
to the period after 1.10.1970.
10. On 6.2.1974, a Dearness Allowance Committee was
constituted, to inter alia make recommendations, of allowances F
which should be treated as a component of wages, for
calculating pension of retired/retiring employees. On 7.7.1974,
the Dearness Allowance Committee inter alia recommended,
that 'dearness allowance' be treated ;;is 'dearness pay' in full,
for computing retiral benefits including pension. Accepting the G
recommendations of the Dearness Allowance Committee, the
Finance Department, issued a Government Order dated
6.2.1975 directing, that 'dearness allowance' actually being
drawn by employees retiring on or after 1.2.1975 be treated as
H
892 SUPREME COURT REPORTS [2013) 4 S.C.R.
A 'dearness pay' for calculating average pay ( by taking not
consideration 10 months wages, prior to the date of retirement),
for calculating pension, (gratuity and travelling allowance). It
would be relevant to mention, that at the aforesaid juncture,
employees drawing pay upto Rs.299/-, were entitled to Rs.55/
B - as 'dearness allowance'; and those drawing pay at Rs.300/-
and above, were entitled to Rs.70/- as 'dearness allowance'.
Accordingly, by the Government Order dated 6.2.1975, the
State Government, determined the component of 'dearness
allowance' (Rs.55/- or Rs.70/-, as the case may be) to be taken
c into consideration, for calculating pension. The intention of the
instant Government Order was, that employees retiring on or
after 1.2.1975, should derive full benefit of, the merger of the
then existing 'dearness allowance' into wages, as 'dearness
pay' for computing pension. The Government order dated
0 6.2.1975 permitted employees retiring on or after 1.2.1975, an
addition of 'dearness allowance' actually being drawn by them,
(during the period of ten months, prior to the date of their
retirement), by treating the same as 'dearness pay', for
calculating average wages. The said average wage, would lead
E to the computation of pension actually payable.
11. K. Venkataraman filed Writ Petition no. 8237 of 1995
before the High Court with a prayer that 'dearness allowance'
drawn by him for a period of ten months prior to the date of his
retirement (on 30.6.1974) be treated as 'dearness pay' for
F calculating his pension. The benefit sought, had been denied
because he had retired on 30.6.1974, whereas, the benefit of
the Government order dated 6.2.1975 was extended only to
such employees who had retired after 1.2.1975. The aforesaid
Writ Petition came to be transferred to the Tamil Nadu
G Administrative Tribunal (hereinafter referred to as, the
Administrative Tribunal). Before the Administrative Tribunal, the
Writ Petition was renumbered as T.A. 845 of 1991. The·
Administrative Tribunal, by its order dated 1.4.1993, held that
K. Venkataraman was entitled to the benefits extended to other
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 893
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
pensioners, irrespective of the fact that he had retired (on A
30.6.1974 i.e., prior to the cut off date (1.2.1975).
12. The State Government, accepted the decision of the
Administrative Tribunal in K. Venkataraman's case (in T.A. no.
845 of 1991 decided on 1.4.1993), and implemented the same. 8
For the aforesaid purpose, the Finance (Pension) Department
issued a Government order dated 23.9.1993. Accordingly, K.
Venkataraman's pension was recalculated by treating
'dearness allowance' actually drawn by him, during the ten
months preceding the date of his retirement, as 'dearness pay'. C
It therefore emerges, that the manner of computing pension for
retired and retiring employees were equated, in so far as the
component of 'dearness allowance' is concerned.
13. We were told, that when one or the other Government
order introduced a distinction in pensionary benefits, for D
computing pension, the same was equated through judicial
intervention. Such judicial interventions were then adopted by
the State Government, from time to time. This aspect of the
matter, factual as well as legal, was not disputed by the learned
counsel representing the respondents. This position continued E
till the adoption of the recommendations of the Fourth Tamil
Nadu Pay Commission Report, details whereof, shall be
narrated soon hereafter.
14. On 1.1.1979, the Tamil Nadu Pension Rules, 1978
F
(hereinafter referred to as "the Pension Rules") came to be
enforced. After the promulgation of the Pension Rules, pension
of retiring government employees had to be determined in
consonance with the said Rules. It is not in dispute, that pension
to Government employees is now regulated under the Pension
Rules. Under the Pension Rules, pension is calculated on the G
basis of an employee's emoluments/wages, immediately
before his retirement. For this, reference may be made to Rule
30 of the Pension Rules, which is being extracted hereunder:-
"30. Emoluments-In the rules, unless the context otherwise H
894 SUPREME COURT REPORTS [2013] 4 S.C.R.
A requires,--
(1) Emoluments means and include:-
(i) Pay, other than special pay granted in view
of his personal qualifications, which has
B been sanctioned for a post held by him
substantively or in an officiating capacity
(including temporary capacity under
emergency provisions) or to which he is
entitled by reason of his position in a cadre:
c
(ii) special pay, dearness pay and personal pay;
and
(iii) any other remuneration which may be
specially claused as emoluments by the
D Government."
(emphasis is ours)
The emoluments/wages to be taken into consideration for
E computing pension is dependent on the allowances which are
added to pay. The composition and component of the said
allowances is determined by the State Government from time
to time through Government orders. A perusal of Rule 30 of the
Pension Rules reveals, that 'dearness pay' is a component of
F the wages to be taken into consideration for computing
pension. And 'dearness pay' is a component of 'dearness
allowance; which on a declaration by the State Government
approves (through a Government order) for being taken into
consideration for calculating pension.
G .15. In 1986, the Fourth Tamil Nadu Pay Commission gave
its report. The Pay Commission recommended, that 'dearness
allowance', prevalent at the end of three years (after the Pay
Commission's recommendations), should be treated as
'dearness pay', in order to ensure a reasonable pension level.
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 895
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
The Finance (Pension) Department having considered the A
recommendations made by the Pay Commission, issued a
Government Order dated 30.4.1986, providing that 'dearness
allowance' and 'additional dearness allowance' sanctioned upto
30.9.1987 would be treated as 'dearness pay' for calculating
pension, in respect of those who retired (or died) on or after B
1.10.1987. The concession of adding 'dearness pay' 'Nas
extended to the period of 10 months for calculating average
emoluments, for those who retired before or after 31.7.1987.
But employees retiring on or after 1.10.1987 were entitled to
add 'dearness allowance' sanctioned upto 1.10.1987 to their c
wages, for quantifying pension (family pension and death-cum-
retirement gratuity). It is therefore apparent, that even after the
acceptance of the recommendations of the Fourth Pay
Commission report, 'dearness allowance' remained a
component of wages. As such, 'dearness allowance' continued
0
to be taken into consideration for computing pension of retiring
government employees.
16. The Fifth Tamil Nadu Pay Commission submitted its
report in 1989. The instant Pay Commission recommended,
the following formula for calculating pension: E
Basic Pay Per Month Rate of Pension Per Month
(i) Not exceeding Rs.1,500 30 percent of basic pay
subject to a minimum of
F
Rs.375 p.m.
(ii) Exceeding Rs.1,500 but 20 per cent of basic pay
not exceeding Rs.3,000/- subject to a minimum of
Rs.450 p.m.
G
(iii) Exceeding Rs.3,000/- 15 per cent" of basic pay
subject to a minimum of
Rs.600 and a maximum of
Rs.1,250 p.m.
H
896 SUPREME COURT REPORTS [2013] 4 S.C.R.
A The Fifth Pay Commission also recommended different
percentages of increase in pension for existing pensioners, who .
had retired prior to 1.6.1988. By a Government Order dated
9.8.1989 the Finance Department while accepting the
recommendations of the Fifth Tamil Nadu Pay Commission
B fixed a slab system, for adding 'dearness allowance' as
'dearness pay' for calculating pension. This decision of the State
Government was to be implemented for employees retiring on
or after 1.6.1988.
C 17. Original Application no. 1919 of 1991 was filed by
Ambasamudaram, Taluk Pensioner Associations before the
Administrative Tribunal. Likewise, a large number of other
Original Applications (including OA no. 4952of1992, O.A. no.
2227 of 1992, 0.A. no. 4265 of 1992, 0.A. no. 4953 of 1992,
OA no.2645 of 1994 and OA no.2646 of 1994) were filed
D before the Administrative Tribunal. Through the aforesaid
original applications, the petitioners/applicants assailed the
Government Order dated 30.4.1986 (issued in furtherance of
the recommendations made by the Fourth Tamil Nadu Pay
Commission), as well as, the Government Order dated
E 9.8.1989 (issued in furtherance of the recommendations made
by the Fifty Tamil Nadu Pay Commission). All the aforesaid
original applications were disposed of by the Administrative
Tribunal vide a common order dated 6.5.1996. The operative
part of the order passed by the Administrative Tribunal while
F disposing of the aforementioned original applications is being
extracted hereunder:
"OA 1919/91
We set aside the G.O.Ms. No.810 (Finance and t'ay
G Commission) Department dated 9.8.89 in so far as it
affects the applicant's association and direct the
respondent to extend the benefits of 60% increase in the
pre-revised pension plus the Dearness Allowance at 608
points available to those who retired prior to 1.6.60 to
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 897
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
those pensioners and family pensioners of cases of A
retirements or death occurring after 1.6.60.
OA 2227/92
We quash the G.O.Ms. No.371, Finance dated
30.4.1986 and G.0.Ms.No.911; finance dated 4.12.1991 B
in so far as they have restricted their applicability to the
pensioners and family who retired prior to 1.10.1987 listed
in Appendix 1 and 2 and those who retired during the
period from 1.10.1987 to 31.5.1988 as listed in Appendix
from the services of Government, local bodies and aided C
educational institutions and direct the respondent to count
the DA and ADA as dearness pay for all ten months
preceding retirement for computing average emoluments
to fix their pensionary benefits including pension and value
of commutation and also direct the respondent to pay the D
arrears of pension, gratuity and value of commutation of
pension on such refixation computed from the date of
retirement or death as the case may be to the pensioners
and family pensioners.
E
OA 4265/92
We quash the G.O.Ms.No.115, Finance dated
6.2.1975 and G.O.Ms.No.911 Finance dated 4.12.1991 in
respect of the applicant as far as it relates to classification
of pensioners and direct the respondent to extend the F
benefits of the impugned G.Os. to the affected pensioners
and family pensioners and pay the arrears of pension and
gratuity and the family pension computed on refixation of
their original pension or family pension from the date of
their retirement or the date of death of the Government G
servant as the case may be.
OA 4953/92
We quash G.O.Ms.No.371, Finance dated
H
898 SUPREME COURT REPORTS [2013] 4 S.C.R.
A 30.4.1986 and G.0.Ms.No.911 Finance dated 4.112.91 in
respect of the applicant as far as they have restricted their
applicability to the pensioners and family pensioners' who
retired or died as the case may be prior to 1.10.87 and
after 1.4. 78 and direct the respondent to allow the
B pensioners who retired during the period from 1.10.87 to
31.5.1988 to count the DA and ADA as dearness pay for
all the 10 months preceding retirement for computing
average emoluments and extend the benefits of the
impugned GOS to them, and pay them the arrears of
c pension, gratuity and value of commutation on such
refixation computed on and from the date of retirement or
death as the case may be to the affected pensioners and
family pensioners.
OA No.2645/94
D
We direct the respondents to extend the benefit of
G.O.Ms.No.679, Finance (Pension) Department, dated
23.9.93 to the applicant also and revise his pension with
effect from 1.11.1974 taking into account the Dearness
E Allowance drawn by him from 9.1.1974 to 31.10.1974 and
pay him the arrears due to him consequent on the revision
from 1.11.1974.
OA No.2646/94
F We quash the letter No.88079/Pension/93-I, Finance
Department, dated 1.10.1993 and direct the respondent
to extend the benefit granted in G.0.Ms.No.115, Finance
dated 6.2.75 to those who retired during the period from
1.10. 70 to 1.2. 75 and pay them ar4rears of pension and
G DCRG from the dates of their retirement.
The applications are allowed. Taking into
consideration the fact that most of the applicants would
have died or most of them would have reached the age of
more than 70, we direct the respondent to refix their
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 899
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
pension and pay the arrears within two months from the A
date of receipt of this order or a copy thereof."
18. The factual narration recorded hereinabove refers to
the Government orders issued from to time, directing the
component of 'dearness allowance', which was to be taken into
8
consideration as 'dearness pay' for computation of pension; the
outcome of the challenges raised to the aforesaid Government
orders; and the eventual implementation thereof in the context
of the implementation of the component of 'dearness pay' to be
taken into consideration for calculating pension. Even though
the exhaustive details of the same have been narrated above, C
it is necessary to record a summary thereof, so as to have a
bird's eye view of the manner in which 'dearness pay' has been
extended to retired Government employees from time to time.
Accordingly, the aforesaid summary is being paraphrased
below:- D
(i) Government order dated 11.3.1970 included
'dearness allowance' as a component of wages for
calculating pension for only such employees who retired
between 26.2.1970 and 1.10.1970. By judicial intervention, E
the aforesaid Government order extending the benefit of
treating 'dearness allowance' as 'dearness pay', was held
to be applicable even to employees who had retired prior
to 26.2.1970. The State Government accepted the
aforesaid legal position and extended the same benefit of F
'dearness allowance' by treating the same as 'dearness
pay' to all pensioners equally.
(ii) Government order dated 6.2.1975 was issued to give
effect to the recommendations made by the Dearness
Allowance Committee to the effect, that 'dearness. G
allowance' sanctioned with effect from 1.4.1974 (Rs.55/-
for employees drawing pay upto Rs.599/-, and Rs.70/- for
employees drawing pay upto Rs.600/- and above) would
be treated as 'dearness pay' for employees retiring on or
H
900 SUPREME COURT REPORTS [2013) 4 S.C.R.
A after 1.2.1975 ( by 'adding dearness allowance actually
drawn by them during the ten months preceding their
retirement. By judicial intervention, it was held that the
aforesaid benefit would also extend to such employees who
had retired during the period between 2.10.1970 and
B 31.1.1975, and that, 'dearness allowance' sanctioned from
time to time and actually drawn by the retiring employee
would be treated as 'dearness pay' in case of those who
retired during the period between 2.10.1970 and
31.1.1975 (for calculation of pension).
c (iii) Government order dated 30.4.1986, while accepting
the recommendation made by the Fourth Tamil Nadu Pay
Commission, provided for certain pensionary benefits to
employees who had retired between 1.10.1987 and
31.5.1988, by allowing them to count 'dearness allowance'
D and 'additional dearness allowance' as 'dearness pay'. The
concession of 'dearness pay' was extended for the entire
ten months for calculating average emoluments in case of
those who retired after 31.7.1987. By judicial intervention,
it was held that the concession of adding 'dearness
E allowance' as 'dearness pay' would extend even to
employees who had retired (or died) prior to 1.10.1987. It
was also held, that pensioners who had retired during the
period between 1.10.1987 and 31.5.1988 would be
entitled to count 'dearness allowance' and 'additional
F dearness allowance' as 'dearness pay' (for all the ten
months preceding their retirement) for computing average
wages for calculating pension. The State Government
accepted the aforesaid legal position and extended the
aforesaid benefits equally to all pensioners.
G (iv) Government order dated 9.8.1989, while accepting the
recommendations made by the Fifth Tamil Nadu Pay
Commission, introduced a slab system, for adding
'dearness allowance' as 'dearness pay' into the component
of wages for calculating pension. A distinction was made
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 901
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
be.tween employees retiring before and after 1.6.1988. By A
judicial intervention, the benefit of treating 'dearness
allowance' as 'dearness pay' was extended to employees
irrespective of the date of their retirement.
(v) Government order dated 4.12.1991 provided, that B
arrears of pension based on recalculation of pension, by
taking into consideration the component of 'dearness
allowance' as 'dearness pay', would be released to
pensioners with effect from 1.12.1991, even in cases
where the concerned pensioner had retired with effect from
a date preceding 1.12.1991. By judicial intervention, C
arrears of pension, based on recalculation of pension,
were ordered to be released to retired employees, by
taking into consideration the component of 'dearness
allowance' as 'dearness pay' equally for all employees. The
State Government accepted the aforesaid legal position D
and extended the said benefit to pensioners who had
retired prior to 1.12.1991.
19. The aforesaid factual/legal position is a historical
narration of the inclusion of 'dearness allowance' as 'dearness E
pay' from time to time for computation of pension. What
emerges from this narration is, that all pensioners (past,
present and future) were equally granted the benefit of
'dearness allowance' as 'dearness pay' for calculating pension.
Whenever a class of pensioners was discriminated against, for F
computation of pension, on the basis of dearness allowance/
pay judicial intervention restored the equation. The equation
was then given effect to by the State Government from time to
time. Clearly, judicial intervention repeatedly erased the
classifications created between pensioners, on the basis of G
'dearness pay'.
20. The present controversy yet again presents a dispute,
inter se, between the State Government and retired employees
in respect of the component of 'dearness allowance' liable to
be treated as 'dearness pay', for computing pension payable H
902 SUPREME COURT REPORTS (2013] 4 S.C.R.
A to retired Government employees. Even though the instant
controversy also arises out of Government order dated
9.8.1989, the same remained unsettled in the earlier rounds of
litigation (emerging out of the same Government order dated
9.8.1989), presumably because none of the retired employees
B fell within the classes of pensioners included in the present
litigation. The employees herein are those who retired on or
after 1 5.1988. By the impugned Government order dated
9.8.1989, pensionary benefits of an employee retired/retiring
on or after 1.6.1988 were required to be computed by adding
c 'dearness allowance' to 'dearness pay' at a fixed percentage.
By virtue of the aforesaid determination, employees retiring on
or after 1.6.1988 would be at a disadvantage, as against the
employees who had retired prior thereto.
21. The afore-stated challenge to the impugned
D Government order dated 9.8.1989 was raised before the
Administrative Tribunal through an Original Application (O.A. no.
5771 of 2001) by an Association of retired Government
employees. The aforesaid Original Application came to be
transferred to the High Court, wherein it was renumbered as
E Writ Petition (T) no. 32045 of 2005. A learned Single Judge of
the High Court allowed the aforesaid Writ Petition on 20.4.2006.
The learned Single Judge held, that the State Government, in
not extending benefits to members of the appellant Association,
had discriminated against them. The impugned Government
F order dated 9.8.1989, to the extent that it did not confer the
same benefits (based on the component of 'dearness
allowance' treated as 'dearness pay'), for employees who
retired on or after 1.6.1988, was held as unsustainable. Writ
Petition (T) no. 32045 of 2005 was accordingly allowed.
G
22. Dissatisfied with the order dated 20.4.2006 passed
by the learned Single Judge, allowing Writ Petition (T) no.
32045 of 2005, the State Government preferred a Writ Appeal
before a Division Bench of the High Court. The aforesaid Writ
Appeal, alongwith writ petitions filed before the High Court on
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 903
ETC. v. STATE OFTAMILNADU [JAGDISH SINGH KHEHAR, J.]
the same subject, were taken up for collective adjudication. By A
an order dated 17.12.2007, Writ Appeal no. 1002 of 2006 was
allowed. The order dated 20.4.2006, passed by the learned
Single Judge (allowing the claim of the employees who had
retired on or after 1.6.1988), was set aside. All writ petitions
filed by retired employees on the same subject matter which B
were taken up for disposal alongwith the Writ Appeal referred
to above, were simultaneously dismissed. Through the instant
Civil Appeals, different employees' associations, as also
employees (singularly and collectively), have assailed the order
passed on 17.12.2007 by the Division Bench of the High Court, c
allowing Writ Appeal no. 1002 of 2006 (and connected
appeals); and dismissing the writ petitions preferred by
employees (and employees' associations) taken up for
collective disposal, alongwith the aforesaid Writ Appeal (no.
1002 of 2006).
D
23. During the course of hearing, learned counsel
representing the appellants, first and foremost, vehemently
contended, on the basis of the legal and the factual position
noticed above, that the benefit of 'dearness allowance' as
'dearness pay' has always equally been extended to all the E
pensioners, irrespective of the date of their retirement. It was
further contended, that as and when there was discrimination
on the above subject, the same was suitably remedied by the
State Government, by amending/modifying the earlier
Government orders. It was submitted, that a similar F
discrimination emanating out of the same Government order
dated 9.8.1989, pertaining to a set of employees differently
classified, was corrected through judicial intervention (details
already noticed above). During the aforesaid course of
repeated adjudication, on the subject under consideration, the G
matter once came up to this Court, when Special Leave
Petition (Civil) no. 23643 of 1996, filed before this Court by the
State Government, was dismissed. Even a review petition filed
before this Court, by the State Government thereafter,
admittedly met the same fate. It was accordingly submitted, that H
904 SUPREME COURT REPORTS [2013] 4 S.C.R.
A the same principle which was made applicable to different
sections of pensioners, under the same Government order
dated 9.8.1989, should be extended to the instant class of
retired Government employees i.e., those who retired on or after
1.6.1988.
B
24. Besides the aforesaid legal premise, for assailing the
impugned Government order dated 9.8.1989, learned counsel
representing the appellants, invited our pointed attention to a
compilation enclosed by the Retired Officers' Association (in
Civil Appeal no. 8856 of 2012). The said compilation was
C relied upon to demonstrate to us, the extent of discrimination
caused to the appellants (who retired on or after 1.6.1988). For
this reason various hypothetical situations were illustratively
placed before us, for our consideration. In each such
hypothetical illustration, the appellants took into consideration
D the same number of years of service rendered, against the
same post, wherein the pensioner had also retired at the same
component of last pay drawn. Therefrom, it was sought to be
established, that employees who had retired on or after
1.6.1988 would be at a substantial disadvantage. Illustratively,
E for the adjudication of the present controversy, a hypothetical
situation relating to an employee holding the post of Deputy
Collector is being placed below:
F Cadre taken Deputy Collector
Date of retirement 30.04.1988
Net qualifying service 33 years
Scale of Pay 1340-75-1715-90-2435
Pay last drawn Rs. 2435/-
G Average Emoluments Rs. 2435/-
Original Pension fixed Rs. 1218/-
Pension revised as per Rs. 1448/-
G.O. 449
Revision as per G.O. 810
H As on 01.06.1988 Rs. 1622/-
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 905
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
Pension as per G.O. 271 1622/- A
Add: 50% increase 811/-
Total Pension 2433/- (With effect from
1.6.1988)
(Pension as on 1.1.1966) 2433/- B
Add: 111% 2701/-
Interim Relief-I 50/-
Interim Relief -II 244/-
40% Hike 974/-
c
Total Pension 6402/- (With effect from
1.1.1996)
JOO( JOO( )()()( )()()(
D
Cadre taken Deputy Collector
Date of retirement 30.06.1988
Net qualifying service 33 years
Scale of Pay 2200-75-2800-100-4000
Average Emoluments Rs. 2515/- + E
Add: 13% as per G.O. 810 Rs. 327/-
Rs.2842/-
Pension 50% Rs.1421/- F
As on 1.1.96:
Pension Rs.1421/-
Add 148% 2104/-
Interim relief-I 50/-
Interim relief-II 143/- G
40% Hike 569/-
-------
Total Pension Rs.4287/- (With effect
from 1.1.1996)
JOO( JOO( JOO( )()()( H
906 SUPREME COURT REPORTS [2013] 4 S.C.R.
A
Cadre taken Deputy Collector
Date of retirement 30.06.1993
Net qualifying service 33 years
1O months average
B emoluments Rs.2725/-
Add: 13% increase Rs. 355/-
Rs.3080/-
Pension fixed at 50% Rs.1540/-
c Revised pension as on
1.1.1996 Rs.1540/-
Add Dearness Allowance
148% 2280/-
Interim relief-I 50/-
D Interim relief-II 154/-
40% Hike 616/-
Total Pension Rs.4640/- (With effect
from 1.1.1996)
E
After narrating the computations made in the illustrations
referred to above, it was submitted that it clearly emerged, that
a person who had retired as a Deputy Collector on 30.4.1988
(before 1.6.1988) would get pension of Rs.6,402/-; while a
Deputy Collector, who retired on 30.6.1988, would get
F Rs.4,287/-; and a Deputy Collector who retired on 30.6.1993,
would get Rs.4,640/- as p~nsion, all of them having the same
33 years of qualifying service, as well as, a similar last pay prior
to their retirement. What is important is, that the figures referred
to above were accepted in the response sought by the High
G Court from the Accountant General, Tamil Nadu. In the response
from the Accountant General, Tamil Nadu, the only mistake
found was the amount of pension depicted as Rs.6,402/- for a
Deputy Collector (who retired prior to 1.6.1988). According to
the Accountant General, Tamil Nadu, on a correct analysis, the
H said figure would be Rs.6,808/-. It is therefore apparent, that
KAUAKKURICHI TALUK REID. OFF. ASSO., TAMILNADU, 907
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
in identical circumstances, a Deputy Collector retiring prior to A
1.6.1988 would draw pension a1 the monthly rate of Rs.6,808/
-, whereas, a Deputy Collector retiring thereafter on 30.6.1988,
would get a monthly pension of Rs.4,287/-. This would show that
a person who retired from the same cadre before the crucial
date i.e., 1.6.1988, would get about Rs.2,500/- per month more B
than the one who had retired from the same cadre after the said
date. The aforesaid illustration has been highlighted by us, in
order to determine the correctness of the following inferences
drawn by the Division Bench of the High Court, while passing
the impugned order dated 17.12.2007:- c
"Learned counsel for the parties circulated their respective
calculations showing working sheet of pension as
admissible to a class of employees, who retired prior to
1st June, 1988 in the unrevised scales of pay and those
similarly situated and retired after 1st June, 1988 in the D
revised scales of pay. Charts are varying. While in the
chart submitted by the State Government it has been
shown that those who retired after 1st June. 1988 will be
getting a little bit higher than those who retired prior to 1st
June. 1988. the calculation submitted by individual parties E
shows that those who retired just prior to 1st June. 1988
may get a little higher emoluments than those who retired
after 1st June. 1988. It is for the said reason, we also
sought for opinion from the Accountant General, Tamil
Nadu, who has submitted its calculation chart, as circulated F
between the parties and quoted hereunder:-
"As per instructions of the Hon'ble High Court of
Madras in W.P. 11634 of 2002, the working sheets
submitted by both the Government and the
petitioners in WA 1002 of 2006 have been G
scrutinized and the following observations are
made:-
A. Government Working Sheet:
H
908 SUPREME COURT REPORTS [2013] 4 S.C.R.
A Details of the case As it is As it
should
be
Designation: Tahsildar Rs.1387 Rs.1573
Date of Retirement: 31.5.1988
B Scale of Pay: Rs.1160-50-1460-70-
1950
Pay Rs.1880
Designation: Tahsildar Rs.1534 Rs.1534
c Date of Retirement: after 1.6.1988
Scale of Pay: Rs.2000-60-2300-75-
3200
Pay Rs.2300
1/579 revision is applied in this case, then the revised pension
D from 1.6.88 works out to Rs.2000 + 18% D.A.
B. Petitioner Working Sheet: Out of nine illustrations,
five cases are found to be correct and in four cases,
the correct calculations are given below:-
E Details of the case As it is As it
should
be
Designation: Deputy Collector ('A') Rs.2433 Rs.2589
Date of Retirement: 30.4.1988 (from 1.6.88) (from ~.6.88)
Scale of Pay: Rs.1340-75-1715-90-2435 Rs.6402 Rs.6808
F Pay Rs.2435 (from 1.1.96) (from 1.1.96)
Designation: Block Development Officer Rs.849 Rs. 947
CA') (from 1.2.88) (from 1.2.88)
Rs. 1427 (irom 1.6.88)
Date of Retirement: 31.1.1988 (from 1.6.88) Rs. 4796
G Rs. 4303 (from 1.1.96)
Scale of Pay: Rs.1045-45-1450-65-1675 (from 1.1.96)
Pay Rs.1515
Designation: Secondary Grade Teacher Rs.472 Rs.513
('A') (Se\. Grade) (from 1.1.88) (from1 .1.88)
Rs.815 Rs.890
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 909
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
(from 1.6.88) (from 1.6.88) A
Date of Retirement: 31.12.1987 Rs. 2480 Rs.2790
Scale of Pay: Rs. (from 1.1.96) (from 1.1.96)
Pay Rs.820
Designation: Tahsildar Rs.1232 Rs. 1209
Date of Retirement: 31.3.1990 (from 1.4.90) (from 1.4.90) B
Scale of Pay: Rs.1160-50-1460-70-1950 Rs. 3723 Rs. 3654
Pav Rs.2180 from 1.1.90 !from 1.1.96\ lfrom 1.1.96'
It is certified that subject to the observations made supra the
illustrative calculations are in order.
Branch Officer/Pension 30"
c
From the aforesaid chart it appears that those who retired
prior to 1st June, 1988 or after 30th June. 1988 from similar
post. they will get almost similar quantum of pension.
(emphasis is ours) D
25. Learned counsel for the appellants pointed out, that the
determination by the High Court to the effect, that employees
who had retired prior to 1.6.1988 from a similar post, would
" ... get a little higher. .. " pensionary emoluments, than those who E
retired afterwards, was clearly preposterous. Learned counsel
for the appellants, while referring to the illustration narrated
above, also invited our attention to the affidavit dated
15.12.2011 (filed by the first respondent in Civil Appeal
no.8856 of 2012), wherein the position canvassed at the behest
F
of the appellants was considered. According to the
acknowledged position, the first respondent (in the affidavit
dated 15.12.2011 ), on proper calculations asserted, that in
identical circumstances, a Deputy Collector retiring prior to
1.6.1988 would draw pension at a monthly rate of Rs.6,808/-,
whereas, a Deputy Collector retiring after 30.6.1988 would get G
a monthly pension of Rs.4,287/-. This would show, that merely
on account of the accident of retiring before or after 1.6.1988,
one of the pensioners would draw pension at the rate of about
Rs.2,500/- per month more than the other. We are satisfied, that
the illustration referred to hereinabove, clearly negates the H
910 SUPREME COURT REPORTS [2013) 4 S.C.R.
A conclusion drawn by the Division Bench of the High Court in
the impugned order dated 17 .12.2007, to the effect, that retirees
prior to 1.6.1988 from a similar post would " ... get a little higher"
pensionary emoluments.
B 26. We have given our thoughtful consideration to the
controversy in hand. First and foremost, it needs to be
understood that the quantum of discrimination, is irrelevant to
a challenge based on a plea of arbitrariness, under Article 14
of the Constitution of India. Article 14 of the Constitution of India
ensures to all, equality before the law and equal protection of
C the laws. The question is of arbitrariness and discrimination.
These rights flow to an individual under Articles 14 and 16 of
the Constitution of India. The extent of benefit or loss in such a
determination is irrelevant and inconsequential. The extent to
which a benefit or loss actually affects the person concerned,
D cannot ever be a valid justification for a court in either granting
or denying the claim raised on these counts. The rejection of
the claim of the appellants by the High Court, merely on account
of the belief that the carry home pension for employees who
would retire after 1.6.1988, would be trivially lower than those
E retiring prior thereto, amounts to bagging the issue pressed
before the High Court. The solitary instance referred to above,
which is not a matter of dispute even at the hands of the first
respondent, clearly demonstrates, that in a given situation, an
employee retiring on or after 1.6.1988 could suffer a substantial
F loss, in comparison to an employee retiring before 1.6.1988.
We are, therefore satisfied, that the High Court clearly erred
while determining the issue projected before it.
27. At this juncture it is also necessary to examine the
G concept of valid classification. A valid classification is truly a
valid discrimination. Article 16 of the Constitution of India
permits a valid classification (see, State of Kera/a vs. N.M.
Thomas (1976) 2 SCC 310). A valid classification is based
on a just objective. The result to be achieved by the just
H objective presupposes, the choice of some for differential
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 911
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
consideration/treatment, over others. A classification to be valid A
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 B
be summarized as, a distinction based on a classificRtion
. 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 c
over others, the twin test for valid classification (or valid
discrimination) must necessarily be satisfied. In the context of
the instant appeals, it is necessary to understand the overall
objective of treating "dearness allowance" (or a part of it) as
"dearness pay". There can be no doubt, that .'dearness
0
allowance' is extended to employees to balance the effects of
ongoing inflation, so as to ensure that inflation does not interfere
with the enjoyment of life, to which an employee is accustomed.
Likewise, the objective of 'dearness pay' is to balance the
effects of ongoing inflation, so that a pensioner can adequately E
sustain the means of livelihood to which he is accustomed .
Having understood the reason why the Government extends the
benefit of 'dearness allowance' and 'dearness pay', to its
employees and pensioners respectively, we would venture to
search for answers to the twin tests which must be satisfied,
for making a valid classification (or a valid discrimination), in F
the present fact situation.
28. In the present context, it needs to be kept in mind, that
'dearness allowance' is paid to Government employees
keeping in mind the All India Consumer Price Index. Inflation in G
the market place is sought to be balanced by paying 'dearness
allowance' to Government employees. When a State
Government chooses to treat 'dearness allowance' as
'dearness pay', the objective remains the same i.e., inflation in
the market place is sought to be balanced for retired employees H
912 SUPREME COURT REPORTS [2013] 4 S.C.R.
A by giving them the benefit of 'dearness pay'. Since the
component of inflation similarly affects all employees, and all
pensioners (irrespective of the date of their entry into service
or retirement), it is not per se possible to accept different levels
of 'dearness pay' to remedy the malady of inflation. Just like
B the date of entry into service (for serving employees) would be
wholly irrelevant to determine the 'dearness allowance' to be
extended to serving employees, because the same has no
relevance to the object sought to be achieved. Likewise, the
date of retirement (for pensioners) would be wholly irrelevant
C to determine the 'dearness pay' to be extended to retired
employees. Truthfully, it may be difficult to imagine a valid basis
of classification for remedying the malaise of inflation. In the
absence of any objective, projected in this case, the question
of examining the reasonableness to the object sought to be
D achieved, simply does not arise. Our straying into this
expressed realm of imagination, was occasioned by the fact,
that the pleadings filed on behalf of the State Government, do
not reveal any reason for the classification, which is subject
matter of challenge in the instant appeal. The only position
adopted in the pleadings filed before this Court for introducing
E a cut off date for differential treatment, is expressed in
paragraph 4 of the counter affidavit, filed by the State of Tamil
Nadu, which is being extracted herewith:.-
"With reference to the averments made in the Grounds of
F the Special Leave Petition, I submit that the fifth Pay
Commission has revised pay and pension with effect from
1.6.1988. As per the recommendation of the above Pay
Commission, the Government had issued orders for the
revision of pension and Family Pension with effect from
G 1.6.1988 in G.O.Ms. No. 810. Finance (PC) Department,
dated 9.8.1989. It is submitted that the fourth Tamil Nadu
Pay Commission has recommended that at the end of the
period of three years, the Dearness Allowance sanctioned
upto that period could be treated as Dearness Pay. The
Fourth Pay Commission revision was given with effect
H
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 913
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
from 1.10.1984. Based on the above recommendation, the A
Government has issued orders in G.O.Ms. No.371,
Finance, dated 30.4.1986, read with Government letter
No.124414/Pension/86-1, di. 11.2.1987, that the Dearness
Allowance sanctioned upto 30.9.1987 shall be treated as
Dearness Pay for the purpose of pensionary benefit in the B
case of the Govt. Servant retiring on or after 1.10.1987.
The orders issued in G.O.Ms. 371, Finance dated
30.4.1985 as amended in Government letter No.70707-Af
Pension /86-1, dated 8. 7. 1986 read as follows:-
"The Fourth Tamil Nadu Pay Commission have C
among other things recommended that at the end
of a period of three years the Dearness Allowance
sanctioned upto the period could be treated as
Dearness Pay in order to ensure a reasonable
pension level. The Government accept the D
recommendation of the Commission and direct that
in the case of Government servant, who will be
retiring on or after 1.10.1987, the Dearness
Allowance sanctioned upto 1.10.1987 shall be
reckoned as Dearness Pay for purpose of pension E
in the case of death of a Government servant
occurring on or after 1.10.1987 while in service the
Dearness Allowance sanctioned upto 1.10.1987
shall be treated as Dearness Pay for the purpose
of computing Family Pension." F
It is therefore, evident, that the State Government has not
disclosed any object which is desired to achieve by the cut off
date. Most importantly, the financial constraints of the State
Government, were not described as the basis/reason for the G
classification made in the imputgned Government order dated
9.8.1989.
29. The issue in hand needs to examine from another
perspective as well. It must be clearly understood, that no
914 SUPREME COURT REPORTS [2013] 4 S.C.R.
A employee has a right to draw 'dearness allowance' as 'dearness
pay' till such time as the State Government decides to treat
'dearness allowance' as 'dearness pay'. And therefore, the State
Government has the right to choose whether or not 'dearness
allowance' should be treated as 'dearness pay'. As such, it is
B open to the State Government not to treat any part of 'dearness
allowance' as 'dearness pay'. In case of financial constraints,
this would be the most appropriate course to be adopted.
Likewise, the State Government has the right to choose how
much of 'dearness allowance' should be treated as 'dearness
C pay'. As such, it is open to the State Government to treat a
fraction, or even the whole of 'dearness allowance' as
'dearness pay'. Based on Rule 30 of the Pension Rules, it is
clear that the component of 'dearness pay' would be added to
emoluments of an employee for calculating pension. In a
situation where the State Government has chosen, that a
0
particular component of 'dearness allowance' would be treated
as 'dearness pay', it cannot discriminate between one set of
pensioners and another, while calculating the pension payable
to them (for the reasons expressed in the preceding
paragraph). Of course, a valid classification may justify such an
E action. In this case, the State Government has not come out
with any justification/basis for the classification whereby one set
of pensioners has been distinguished from others for
differential treatment.
F 30. The instant controversy should not be misunderstood
as a determination of the total carry home pension of an
employee. All the Government orders referred to above, deal
with the quantum of 'dearness allowance' to be treated as
'dearness pay' for the calculation of pension. 'Dearness pay'
G is one of the many components, which go into the eventual
determination of pension. Therefore, the focus in the
adjudication of the present controversy must be on 'dearness
pay', rather than on the eventual carry home pension. The
relevance and purpose of treating 'dearness allowance' as
H 'dearness pay', has been brought out in the foregoing
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 915
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
paragraphs. Therefore, clearly, the object sought to be A
achieved by adding 'dearness pay' to the wage of a retiree,
while determining pension payable to him, is to remedy the
adverse effects of inflation. The aforesaid object has to be
necessarily kept in mind, while examining the present
controversy. Any classification without reference to the object B
sought to be achieved, would be arbitrary and violative of the
protection afforded under Article 14 of the Constitution of India,
it would also be discriminatory and violative of the protection
afforded under Article 16 of the Constitution of India.
31. Having given our thoughtful consideration to the C
controversy in hand, it is not possible for us to find a valid
justification for the State Government to have classified
pensioners similarly situated as the appellants herein (who had
retired after 1.6.1988), from those who had retired prior thereto.
Inflation, in case of all such pensioners, whether retired prior D
to 1.6.1988 or thereafter, would have had the same effect on
all of them. The purpose of adding the component of 'dearness
pay' to wages for calculating pension is to offset the effect of
inflation. In our considered view, therefore, the instant
classification made by the State Government in the impugned E
Government order dated 9.8.1989 placing employees who had
retired after 1.6.1988 at a disadvantage, vis-a-vis the
employees who retired prior thereto, by allowing them a lower
component of 'dearness pay', is clearly arbitrary and
discriminatory, and as such, is liable to be set aside, as violative F
of Articles 14 and 16 of the Constitution of India.
32. It is also imperative for us to take into consideration,
a few judgments rendered by this Court, which were brought
to our notice by the learned counsel representing the State G
Government. Reliance was placed on three judgments to
substantiate the submissions advanced on behalf of the
respondents.
(i) First of all, reliance was placed on the decision
rendered by this Court in Union of India Vs. P.N. Menon,. H
916 SUPREME COURT REPORTS [2013] 4 S.C.R.
A (1994) 4 SCC 68. Facts in the first cited judgment reveal, that
a recommendation was made by the Third Pay Commission
to the State Government, suggesting review of the existing
wage position, based on unprecedented inflation. The State
Government was asked (by the Third Pay Commission) to take
B a decision on whether the dearness allowance scheme should
be extended further; or in 1he alternative pay-scales themselves
should be revi&ed. This suggestion of the Third Pay
Commission was based on the fact, that the price level index
had arisen above the 12 monthly average to 272. Having
C considered the matter, the State Government decided to extend
the dearness allowance scheme. It simultaneously issued an
Office Memorandum, (hereinafter referred to as 'O.M.') whereby,
a portion of 'dearness allowance' was to be treated as pay for
computation of retiral benefits. The benefit of the aforesaid
O.M. was extended only to those employees who had/would
D retire on or after 30.9.1977. The aforesaid O.M, also
contemplated, that persons who had/would retire on or after
30.9.1977 but not later than 30.04.1979 would be allowed to
exercise an option, to choose one out of the two alternatives.
They could either seek the benefit of death-cum-retirement
E gratuity by excluding the element of 'dearness allowance',
alternatively, they could seek the same, by including the element
of 'dearness allowance'. The issue which came up for
adjudication before this Court was, whether the aforesaid O.M.
was sustainable in law, as it did not extend equal benefits to
F all retirees, irrespective of the dates of their retirement. All the
respondents had retired before 30.9.1997. While determining
the aforesaid issue, this Court took into consideration inter alia
the fact that the decision to merge a part of 'dearness
allowance' with pay, was taken with reference to the price index
G level.. This decision was taken on the recommendations of the
Third Pay Commission. In the aforesaid view of the matter, and
specially because, an option was given to employees who had
retired between 30.09.1977 and 30.04.1979, to get their
pension and (death-cum-retirement gratuity) calculated, by
H including or excluding the element on dearness pay, this Court
KALLAKKURICHI TALUK RETD. OFF.ASSO., TAMILNADU, 917
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.)
ruled, that the State Government had adopted measures A
ensuring similar benefits to all. And that, there was no intention
to create a class within a class. This Court felt that the
classification, had a reasonable nexus with the price level index
at 272, on 30.09.1977. This according to this Court was just
and valid. The factual position, that needs to be highlighted, in B
so far as the first cited judgment i.e. in P.N. Menon's case
(supra) is that, the respondent employees had never been in
receipt of dearness pay, when they retired from service, and
therefore, the O.M. in question could not have been applied to
them. This is how this Court examined the matter in the cited c
case. This Court also noticed, that prior to the O.M. in question,
the pension scheme was contributory, and only with effect from
22.9.1977, the pension scheme was made non contributory.
Since the respondent employees in the first cited case, were
not in service at the time of introducing the same, they were 0
held not eligible for the said benefit.
(ii) Next, learned counsel relied upon the judgment in State
of Rajasthan Vs. Amrit Lal Gandhi, (1997) 2 SCC 342. The
facts, in the second cited judgment were, that originally teachers
of the Jodhpur University were governed by contributory E
provident fund rules. There was no pension scheme applicable
to them. In 1983, a committee constituted by the University
Grants Commission, recommended the introduction of pension-
cum- gratuity for university and college teachers. Thereupon, the
Senate and Syndicate of the Jodhpur University resolved to F
introduce a pension scheme for university teachers. The
resolution of the Syndicate and Senate also provided, that
options would be sought from existing teachers, so as to enable
them, to choose whether they should be governed by the
contributory provident fund rules, or would like to accept the G
benefits under the pension scheme. As the recommendation
of the Syndicate and the Senate, of the Jodhpur University had
financial implications, approval of the State Government was
imperative. On examining the recommendations, the State
Government decided to introduce the pension scheme with H
918 SUPREME COURT REPORTS [2013] 4 S.C.R.
A effect from 1.1.1990. Based thereon, the Syndicate and the
Senate passed a concurring resolution expressing, that the
pension scheme would become operational with effect from
1.1.1990. Based thereon, those teachers who were in the
service of the Jodhpur University on or after 1.1.1990, were
B required to submit their options. The question which arose for
consideration in the second cited judgment was, whether
employees who had retired before 1.1.1990, had a similar right
to claim pension, as was being extended to employees, who
had/would retire on or after 1.1.1990. The High Court partly
c accepted the plea of the retirees by holding, that the pension
scheme should be extended to employees who had retired on
or after 1.1.1986. This Court did not approve the decision
rendered by the High Court. This Court noticed, that the
approval of the resolutions of the Syndicate and Senate of the
Jodhpur University had been accorded by the State
0
Government after the State Legislature had passed the
University Pension Rules, and the General Provident Fund
Rules. This Court also noticed, that the State Government in
its affidavit had taken an express stand, that the introduction
E of the pension scheme was economically viable only with effect
.from 1.1.1990. In other words, the State Government could bear
the financial burden of the pension scheme, only if it was
introduced with effect from 1.1.1990. Based on the aforesaid
position adopted by the State Government, this Court
concluded, that the determination of the State Government in
F introducing the pension scheme for employees, who had retired
with effect from 1.1.1990 had not been fixed arbitrarily or without
any valid reason/basis. This Court accordingly, set aside the
judgment rendered by the High Court.
G (iii) Finally, learned counsel placed reliance on the
judgment rendered by this Court in State of Punjab Vs. Amar
Nath Goel, (2005) 6 SCC 754. In the third cited case,
employees both of the Central Government, as also, of the
State Governments of Punjab and Himachal Pradesh, who had
H retired prior to 1.4.1995 sought death cum-retirement gratuity,
KALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 919
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.]
up to the increased limit of Rs. 2.5 lakhs. The claim raised by A
the employees was rejected in some cases, whereas in some
other cases the Central Administrative Tribunal and the High
Court took the view, that the benefit of increased quantum of
death-cum-retirement gratuity, should be extended to
employees, who had retired between 1.7.1993 and 31.3.1995 B
as well. Having examined the aforesaid controversy, this Court
arrived at the conclusion, that the decision of the Central
Government and State Governments to limit the benefit only to
employees, who had retired ( or died) on or after 1.4.1995, was
based on a concrete determination of financial implications, as c
such, it was held that the cut off date (1.4.1995) was neither
arbitrary nor irrational, as alleged. Consequently, the plea
advanced at the hands of the employees assailing the cut off
date as arbitrary, and by alleging that it was not based on any
rational criteria, was rejected. D
33. We have considered the submissions urged at the
hands of the learned counsel for the respondent, based on the
judgments cited at the bar. In our view, none of the judgments
relied upon is relevant to the present controversy.
E
(i) In so far as P.N. Menon's case (supra) is concerned,
having examined the controversy. this Court arrived at the
conclusion, that the State Government adopted measures
which would ensure, similar benefits to all. This court also
expressed the view, that there was no intention of the State F
Government, to create any class within a class. The price level
index at 272 on 30.9.1977 was the determining factor for the
State Government's decision. It was accordingly concluded, that
there was a valid and reasonable nexus to the object sought
to be achieved. But most importantly this Court felt, that the G
decision of the State Government in not extending benefits to
the respondents was based on the fact, that they were not in
receipt of the any 'dearness pay' at the time of their retirement.
Moreover, since the family pension scheme was contributory
when the respondents had retired, the respondents could not H
920 SUPREME COURT REPORTS [2013] 4 S.C.R.
A justifiably seek the benefits, which were available only to the
retirees after the pension scheme was made non contributory.
There is, therefore no co-relation of the first cited judgment with
the controversy in hand.
(ii) In Amrit Lal Gandhi's case (supra) pension was
8
introduced for the first time for university teachers based on
resolutions passed by the Syndicate and the Senate of the
Jodhpur University. The same were approved by the State
Government with effect from 1.1.1990. The instant pontroversy
is, therefore, not between one set of pensioners alleging
C discriminatory treatment, as against another set of pensioners.
There were no pensioners, to begin with. Retirees were entitled
to provident fund under the existing Provident Fund Scheme.
The question of discrimination of one set of pensioners from
another set of pensioners, therefore, did not arise in the second
D cited judgment. Financial viability was, as such, a relevant issue.
The State Government adopted the stance, that the introduction
of the pension scheme was financially viable only if the scheme
was introduced with effect from 1.1.1990. The cut off date clearly
disclosed a classification founded on an intelligible differentia,
E which had a rational relationship with the object sought to be
achieved. There is therefore, in our view, no correlation of the
second cited judgment with the controversy in hand.
(iii) In so far as the third cited judgment is concerned, this
F Court in Amrit Lal Gandhi's case (supra) examined an issue
where, the increased death-cum-retirement gratuity could only
be claimed by employees, who had retired after the cut off date
(1.4.1995). Death-cum-retirement gratuity is a one time benefit,
whereas, pension enures to retired employees for the entire
G length of their lives. Pension is therefore a continuing benefit.
Death-cum-retirement gratuity, is a one time benefit, disbursed
in accordance with to the rules prevalent at the time (of
retirement). Herein also, the issue under consideration was not
different measures for computing, a continuing retiral benefit,
based on any cut off date. We are therefore of the view, that
H
l<ALLAKKURICHI TALUK RETD. OFF. ASSO., TAMILNADU, 921
ETC. v. STATE OF TAMILNADU [JAGDISH SINGH KHEHAR, J.)
the instant judgment is also not relevant for the adjudication of A
the controversy in hand.
In view of the above, we are satisfied, that none of judgments
relied upon by the learned counsel for the respondents, have
any bearing to controversy in hand. B
34. The instant appeals are accordingly allowed. The
impugned order dated 17.12.2007 passed by the High Court
is hereby set aside. The impugned Government Order dated
9.8.1989, to the extent that it extends to employees who retire
on or after 1.6.1988, a lower component of 'dearness pay', as C
against those who had retired prior to 1.6.1988, is set aside,
being violative of Articles 14 and 16 of the Constitution of India.
K.K.T. Appeals allowed.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "pension"Sign in to search