STATE OF RAJASTHAN AND ANR.versusPREM RAJ

A                    STATE OF RAJASTHAN AND ANR.
                                          v.
                                    PREM RAJ

                               FEBRUARY 14, 1997

B                [S.C. AGRAWAL AND G.B. PATTANAIK, JJ.)

          Service law :


c
                                                          .
          Rajasthan Service Rules, 1951: Rules 250-A, 250-C, 255-A and 256-B.

        Pe11Sio1t-Liberalisation of-Cut-off date-Validity of-Notifications is-
  sued in 1970 and 1974 liberalising pension scheme challenged on ground of
  discrimination 011 basis of cut-off dates prescribed therein-High Court struck
  down said Notification without, considering effect of Notification dated
  2.9.1985 which extended benefit of liberalised pension to pre-31.3.1979
D retirees-Held : the said retirees were entitled to benefit of Notifii;ation dated
  2.9.1985-Hence, it was not necessary for High Court to strike down the
  Notifications issued in 1970 and 1974.

           Pe11Sio1t-Liberalisatio11 of-Extension of liberalisation benefit to
E   retirees prior to liberalisation-Law laid down in D.S. Nakara's case, [1983]
    2 SCR 165-Held : Case law reviewed and contention that the decision in
    Nakara's case had been given a complete go-by, rejected.

        The respondents-pensioners were pre-1979 retirees having superan-
  nuated on 14.1.1969 and before December 1968 respectively. On Superan-
F nuation, their pension had been computed in accordance with Rule 256 of
  the Rajasthan Service Rules, 1951. The appellant-State issued two
  Notifications in the years 1970 and 1974, which liberalised the pension
  scheme and prescribed cut-off dates therein. By Notification dated
  21.1.1980, the State Government provided a revised formula for calculation
  of pension on slab basis in respect of Government Servants who retired
G on or after 31.3.1979. By another Notification dated 2.9.1985, the State
  Government extended the benefit of the revised pension formula to pre-
  31.3.1979 pensioners. The respondents filed a writ petition before the High
  Court challenging the 1970 and 1974 Notifications without challenging the
  Notification dated 2.9.1985 on the ground that they discrimi~ated the
H respondents-pensioners on the basis of cut-off dates. The High Court,
                                           60
                          STAIB v. PREM RAJ                             61

following the decision of this Court in Nakara's case, struck down the 1970 A
and 1974 Notifications without striking down the Notification dated
2.9.1985 by which the revised pension formula was extended to pre-1979
retirees. Being aggrieved by the High Court's judgment the appellant
preferred the present appeal.

       On behalf of the appellant it was contended that it was permissible    B
for the State Government to provide different modes of computation of
pension in respect of Government Servants retiring on different dates and
it could not be challenged on the ground of discrimination so long as the
cut-off date provided had a reasonable nexus with the change in the mode
of the computation, that the principles laid down by this Court in Nakara's   C
case was no longer being followed in recent cases and, therefore, the High
Court was in error in allowing the writ petition following the decision of
this Court in Nakara's case, and that without challenging the Notification
dated 2.9.1985 the respondents were not entitled to the relief granted by
the High Court.
                                                                              D
      On behalf of the respondents it was contended that the decision of
this Court in Nakara's case had not been over-ruled and what ·had been
indicated in the subsequent cases was that if the Government provided a
new scheme and made the said scheme applicable from a particular date
then the retirees prior to that date would not be entitled to the benefit     E
under the new scheme, and that if a pension scheme which was in vogue
was liberalised from time to time then all pensioners would be entitled to
the benefit of such liberalised rules and that was what had been granted
by the High Court in the present case.

     Allowing the appeal, this Court                                          F
       HELD : 1. The State Government had liberalised the pension scheme
and introduced the revised pension formnla for calculation of pension in
respect of Government servants retiring on or after 313.1979. By Notifica-
tion dated 2.9.1985 the benefit of the revised pension formnla was extended
to all the pre,313.1979 retirees provided they were in receipt of pension G
under the Rajasthan Service Rules, 1951. The principle of Nakara's case
was made applicable and the aforesaid Notification was issued on that
basis and there is no infirmity iri the said Notification. The High Court
without noticing the aforesaid Notification and without considering the
effect of the same unnecessarily examined the 1970 and 1974 Notifications H
     62                       SUPREME COURT REPORTS                 [1997)2 S.C.R.

A and erroneously struck down the same. The Notification dated 2.9.1985 not
     having been challenged and the High Court not having quashed the same,
     the pre-1979 retirees like the respondents would be governed by the same.
     In this view of the matter the impugned judgement of the High Court
     cannot be sustained and accordingly the same is set aside. [69-G-H, 70-E]

B              Indian Ex-Services League & Ors. v. Union of India, [1991] 2 SCC 104,
     relied on.

           2. For deciding the present controversy it is not necessary to further
     delve into the question as to the extent to which the decision of this Court
C    in Nakara's case has been followed or explained. But suffice it to say that
     the contention of the appellant that the decision of this Court in Nakara's
     case has been given a complete go-by cannot be sustained. [69-D]

        D.S. Nakara & Ors. v. Union of India, [1983] 2 SCR 165; Krishena
  Kumar v. Union of India, [1990] 4 SCC 207; State of West Bengal & Ors. v.
D Rattan Behari Dey & Ors., [1993] 4 SCC 62 and State of Rajasthan v.
  Se1'anivatra Karamchari Hitkari Samiti, [1995] 2 SCC 117, discussed.

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5450 of
     1994 Etc.

E          From the Judgment and Order dated 23.5.91 of the Rajasthan High
      Court in D.B.C.W.P. No. 575 of 1989.

               Aruneshwar Gupta, Manoj K. Das and Solanki Rath for the Appel-
      lants.

F          Ashok K. Srivastava for Sikkim, Sushi! Kr. Jain, A.P. Dhamija, B.L.
      Bishnoi and K.K. Gupta for the Respondent.

               The Judgment of the Court was delivered by

        G.B. PA'ITANAIK, J. These two appeals involve a common question
G of law and as such were heard together and are being disposed of by the
      common judgment. The respondent in both the appeals are pre-1979
      retiree, the respondent in Civil Appeal No. 5450 of 1994 having superan-
      nuated on 14.11.1969 and the respondent in the other appeal having
      superannuated before December 1968. On superannuation, their pension
 H    had been computed in accordance with Rule 256 of the Rajasthan Service
                     STATEv. PREM RAJ (G.B. PATTANAIK,J.]                    63

       Rules, 1951, (hereinafter referred to as 'th". Rules') whereunder Dearness A
       Allowance received by them while in set vice had not been taken into
       account for computation in the amount of peri!tion. On 18th March, 1971
       the Governor of Rajasthan in exercise of powers conferred by proviso to
       Article 309 of the Constitution amended the Rules giving it retrospective
       effect w.e.f. 1.4.1970, which was incerted as Rule 250-C(1)(a). The said B
       provision stipulates that in case of Government Ser{ants retiring from
       service on or after 1.4.1970 the term "emoluments" used for the purpose of
       pension, service gratuity and death-cum-retirement gratuity shall mean the
       'pay' as defined in rule 7(24) and Dearness pay appropriate to pay, if any,
       which the offict:r was receiving immediately before his retirement. The

--   . aforesaid provision is extracted herein below in extenso :

              "Notwithstanding the provisions contained in rule 250, 250-A,
              250-B in case of Government Servants retiring from service on or
                                                                                   C



              after 1.4.1970, the term 'emoluments' used for purposes of pension,
              service gratuity an<l death-cum-retirement gratuity shall mean the
              "pay" as defined in rule 7(24) and dearness pay appropriate to pay, D
              if any, which the officer was receiving immediately before his
              retirement, provided that-

              (2) The Special Pay, if any, granted for performance of additional
              duties or a post in addition to duties of his own post shall not be E
              taken into account
                            .     for the. purpose of this rule."

           By the said Notification dated 18th Mar.ch, 1971 Rule 250-A(1) was
     also amended giving it retrospective effect from w.e.[ 1.4.1970, which is
     extracted herein below in extenso :
                                                                                  F
             "Notwithstanding the provisions contained in rule 256, in case of
             a Government servant retiring from service on or after 1.4.70 the
             amount of superannuation, retiring, invalid and compensation
-.           gratuity and the pension shall be admissible as follows :
                Completed six                                                     G
                                          Scale of         Maximum Pension
               monthly periods of
                                      Gratuity/Pension    (in Rs. per annum)
               qualifying service
                        1                      2                    3
                 60 30/80th                "       "              8100
           By Notification dated 2.12.1974 giving it retrospective effect w.e.f. H
    64                      SUPREME COURT REPORTS              [1997] 2 S.C.R.

A 31.10.1974 Rule 256-B was also amended which extracted herein below in
    extenso:

            "Notwithstanding the provisions contained in Rule 256-A, in
            respect of a Government Servant retiring on or after 31.10.1974
            the amount of superannuation retiring invalid and compensation
B           gratuity and pension admissible shall be as follows :

                  Completed six
                                          Scale of        Maximum Pension
               . monthly periods of
                                      Gratuity/Pension   (in Rs. per annum)
                 qualifying service
c                       1                     2                    3
                                          n
                   60   33/80th                   "            12000.00

          The effect of the aforesaid amendment was that while the maximum
    pension in respect of Government Servants retiring from service on or after
D   1.4.1970 was 8,100, but those who retired on or after 31.10.1974 it became
    12,000 and while in case of the former pension was to be computed on
    30/80th bulin case later it became 33/80th. By Notification dated 2.12.74
    Rule 250-C(3) was also amended providing therein that in case of Govern-
    ment servants retiring on or after 31.10.1974 the term "emoluments" used
    for the purpose of pension, service gratuity and death-cum-retirement
E   gratuity shall mean pay as defined in Rule 7(24) and shall include dearness
    allowance, dearness pay (where admissible) and ad-hoc reliefs admissible
    on 31.12.1972. By Notification dated 21.1.1980, the Government of Rajas-
    than provided a revised formula for calculation of pension on slab basis in
    respect of Government Servants retiring on or after 31st March, 1979. By
F   yet another Notification dated September 2, 1985, the Government of
    Rajasthan extended the benefit of revised pension formula to pre- 31.3.1979 .
    pensioners. This benefit was extended to pre-31.3.1979 retirees possibly
    hecause of the decision of this Court in D.S. Nakara & Ors. v. Union of
    India, (1983) 2 SCR 165. The respondent in the first case approached the
    Rajasthan High Court in the year 1989 which was registered as Civil Writ
G   Petition No. 575 of 1989 claiming the benefits of the three amended
    provisions referred to earlier and contended that the amended provisions
    so far as they provided a cut-off date for its application are arbitrary. It
    may be stated that the Circular of September 2, 1985 by which revised
     pension formula was extended to pre-31.3.1979 pensioners was not chal-
H   lenged and on the other hand it was prayed that after determination of the
               STATEv. PREM RAJ [G.B. PATTANAIK,J.]                     65

emoluments in accordance with the amended provisions of 1970 and 1974, A
the relief may be granted in accordance with the Circular dated September
2, 1985. The Division Bench of the Rajasthan High Court following the
decision of this Court in Nakara's case referred to supra struck down the
cut-off date of 1.4.1970 in Rule 256-A as well as struck down the cut-off
date of 1.4.1973 in Rule 250-C and also struck down the cut-off date
provided under sub-rule 3 of Rule 250-C. It also held that the computation B
of pension as per Rule 256-B should be made applicable to all Government
Servants irrespective of date of retirement and the provision making it
applicable to those Government servants who have retired on or after
31.10.1974 is invalid. The High Court further directed that the pension of
the respondent should be refixed as per Notification dated 2.9.1985 after C
determining the emoluments of the respondent under the amended
provisions.

      In the second case, the writ petition was heard by a learned single
Judge who allowed the same on identical grounds and an appeal against
the same to the Division Bench by the State of Rajasthan was dismissed D
and thus the appeal by special leave therein.

       Mr. Aruneshwar Gupta, the learned counsel appearing for the ap-
pellant contended that the decision of this Court in Nakara's case has been
watered down by the subsequent decisions in Krishena Kumar's case ,           E
(1990] 4 SCC 207; Indian &:-Services League and Others v. Union of India,
(1991] 2 SCC 104; State of West Bengal and Others v. Ratan Behari Dey and
Others, (1993) 4 SCC 62 and in State of Rajasthan v. Sevanivatra Karamchari
Hitkari Samiti, (1995] 2 SCC 117 and in the law as it stands now it is
permissible for the State Government to provide different modes of com-       F
putation of pension in respect of Government Servants retiring oh different
dates and it cannot be challenged on the ground of discrimination so long
as the cut-off date thus provided has a reasonable nexus with the change
in the mode of the computation. The learned counsel went to the extent of
urging that the principles laid down by this Court in Nakara's case is no
longer being followed in recent cases and, therefore, the High Court was      G
in error in allowing the Writ Petition following the decision of this Court
in Nakara's case. Mr. Gupta also urged that the respondent in each of the
appeals having superannuated in 1969 and 1968 respectively and having not
challenged the different amended provisions which came into existence
between 1970 and 1974 and having approached the High Court in the year        H
    66                   SUPREME COURT REPORTS                  [1997] 2 S.C.R.

A 1989 long 19 years after the first amended provision was made in 1970, the
    High Court should not have entertained the writ petition at all. The learned
    counsel lastly urged that in any of the matter the Notification of September
    2, 1985 having provided for a revised pension formula to pre-31.3.1979
    pensioners which includes the respondents case and the said Notification
B   having indicated the mode of computation of pension and as well as having
    defined the expression 'emoluments' and without challenging the said
    Notification the respondent is not entitled to the relief as granted by the
    High Court.

         Mr. Srivastava, the learned counsel for the respondent, on the other
C hand, contended that the decision of this Court in Nakara's case has not
  been over-ruled and what has been indicated in the subsequent cases is
  that if the Government provides a new scheme and make the said scheme
  applicable from a particular date then the retirees prior to that date will
  not be entitled to the benefit under the new scheme. But if a pension
  scheme which was a vogue is liberalised from time to time then all pen-
D sioners would be entitled to the benefit of such liberalised rules and that
  is what has been granted by the High Court in the present case. The
  learned counsel fairly conceded that the Notification of September 2, 1985
  providing for a liberalisation of pension by introduction of slab system even
  in respect of pre-31.3.1979 retirees has not been assailed by the respondent.
E
           Having examined the rival contentions and on a closer scrutiny of the
    Notification of the Government of Rajasthan dated September 2, 1985 we
    are of the considered opinion that the High Court committed gross error
    in examining the validity of the earlier amended provisions and striking
F   down the same and granting the relief to respondent without striking down
    the Notification dated September 2, 1985 or at least para 3 and 5 thereof.
    In this view of the matter it would not be necessary to examine the bigger
    issue raised by Mr. Gupta as to whether the decision of this Court in
    Nakara's case is really not being followed in the later decision, though we
    would briefly notice the extent to which the Nakara's decision has been
G   explained in the later decision.

           In D.S. Nakara's case [1983] 2 SCR 165 the memorandum issued by
    the Government of India dated May 25, 1979 and September 23, 1979
    liberalising the form for computation of pension in respect of employees
H   governed by the Central Civil Services (Pension) Rules, 1972 who retired
                STATEv. PREM RAJ [G.B. PATTANAIK,J.)                       67

on or after March 31, 1979 was challenged to be arbitrary and violative of       A
Article 14. This Conrt came to conclnsion that when the State considered
it necessary to liberalise the Pension Scheme in order to augumenting the
social security in old age to Government servants, it could not grant benefit
of liberalisation only to those who retired subsequent to the specified date
and deny the same to those who had retired prior to that date. The division
which classified the pensioners into two clauses on the basis of the specified   B
date was devoid of any rational principle and was both arbitrary and
unprincipled being unrelated to the object sought to be achieved by grant
of liberalised pension and the guarantee of equal treatment contained in
Article 14 was violated inasmuch as the pension rules which were statutory
in character meted out differential and discriminatory treatment to equals       C
in the matter of computation of pension from the dates specified in the
impugned memoranda.

       This Constitution Bench decision was considered by another Con-
stitution Bench in Krishe11a Kumar's case (1990] 4 sec 207. In the said case D
prior. to 1957 the only scheme for retirement benefits in the Railways was
the Provident Fund Scheme. The same scheme was replaced in the year
1957 by a pension scheme. Thus all the employees who were in service prior
to the introduction of pension scheme were given option either to retain
the Provident Funds benefits or to switch over to pensionary benefits on
condition that the contribution made by the Railways to the Provident E
accounts would revert to the Railways on exercise of option. The
employees who did not opt for pension scheme even though had ample
opportunity to opt for the same, came forward with a claim that they should
be given the benefits of pensionary scheme following the principle of
Nakara's case. This Court held that the pension scheme and the provident p
fund scheme are structurally different and applying the principles of
Nakara's case, it cannot be held that the pension retirees and the provident
fund retirees from a homogeneous class. The Court also further held that
the rules governing the provident fund are entirely different from rules
governing pension scheme and, therefore, it would not be reasonable to
argue that the rules applicable to the pension retirees was also equally G
applicable to provident fund retirees. It was noticed by the Court that in
Nakara's case the provident fund retirees were not in mind before the
Court and only the pension retirees were treated as a homogeneous class.
The Court further held that there would be no discrimination in treating
the provident fund retirees differently from the pension retirees.           fl
    68                   SUPREME COURT REPORTS                  [1997] 2 S.C.R.

A        In the case of Indian Ex-Services League & Ors. v. Union of India,
  [1991] 2 SCC 104, in yet another Constitution Bench case the liberalised
  pension scheme and fixation of cut-off date for applicability of the same
  came up for consideration before the Court. The petitioners therein
  claimed "one rank one pension" for all retirees in the armed forces ir-
B respective of the date of retirement by application of Nakara's case. The
  Court held that the decision in Nakara's case has to be read as one of
  limited application and its ambit cannot be enlarged to cover all claims
  made by the pension retirees or a demand for an identical amount of
  pension to every retiree from the same rank irrespective of the date of
  retirement, even though the reckonable emoluments for the purpose of
C computation of their pension be different. In the aforesaid case, conse-
   quent upon the decision of this Court in Nakara's case a Notification was
   issued on 3rd December, 1983 by the Government of India for re-comput-
  ing the revised pension of pre-April 1, 1971 retirees according to liberalised
   pi:nsion scheme. The re-computation was made according to the liberalised
D pension scheme giving the same benefit to all retirees irrespective of their
   date of retirement. But the petitioners contended that the ratio of Nakara's
   case is that all retirees who held the same rank irrespective of the date of
   retirement must get the same amount of pension. This Court rejected the
   said contention. On reading the memorandum of the Government of India
   the Court held that the benefit of liberalised pension scheme was made
E applicable even to pre-April 1, 1979 retirees of the armed forces and the
   computation ·according to the liberalised formula for them was done by
   Government order dated 22nd November, 1983 and December 3, 1983. In
   other words, what was held by this Court in the Indian Ex- Services League's
    case that after introduction of the liberalisation scheme, from a specified
F date, even the retirees earlier to the same date would get the benefit of the
    liberalisation scheme but not in the same manner and to the same extent
   which persons in service and retiring after the date would get.

        In State of West Bengal and Others v. Ratan Behari Dey and Others,
  [1993] 4 SCC 62, this Court considered the question whether in providing
G a pension scheme .the State could fix up a particular date and make it
  applicable to those who retired on or after that date. The Court distin-
  guished the Nakara's case by holding that in Nakara's case an artificial date
  had been specified classifying the retirees governed by the same rules and
  similarly situated into two different classes depriving one such class of the
H benefit of the liberalised pension rules and that was held to be bad.
                STATEv. PREM RAJ (G.B.PATTANAIK,J.)                       69

Following the decision of the Court in Krishena Kumar's case it was held A
that the State can specify a date with effect from which the Regulations
framed or amended conferred the pensionary benefits shall come into force
but the only condition is that the State cannot pick a date out of its hat
and the date has to be prescribed in a reasonable manner having regard
to all the facts and circumstances.
                                                                                B
       In State of Rajasthan v. Sevanivatra Karamchari Hitkari Samiti, (1995]
2 SCC 117, the provisions contained in Rule 268-H of Rajasthan Service
Rules came up for consideration as to whether the aforesaid provisions
restructuring the rights of Government servants in service on 29.2.1964 can
be held to be violative of Article 14. The Court applied the principle in       C
Krishena Kumar's case and Indian Ex-Services League's case and held that
the fixation of 29.2.1964 as the cut-off date with effect from which the new
liberalised pension scheme in Chapter XXIII-A was introduced cannot be
said to be arbitrary or violative of Article 14 of the Constitution. As has
been stated earlier for deciding the present controversy it is not necessary
for us to further delve into the question as to the extent to which the         D
decision of this Court in Nakara's case has been followed or explained. But
suffice it to say that the contention of Mr. Gupta, the learned counsel for
the appellant that the decision of this Court in Nakara's case has been given
a complete go-by cannot be sustained.
                                                                                E
       The real question that arises for consideration in the present two
appeals is whether it is at all permissible to examine the validity of the
earlier Notification of the Government issued in the years 1970 and 1974
without considering the effect of Notification dated September 2, 1985 by
which Notification even the pre-March 31, 1979 retirees were extended the
benefit of revised pension formula. It appears that State of Rajasthan had      F
liberalised the pension scheme and introduced the revised pension formula
by Notification dated 21.1.1980 for calculation of pension on slab basis in
respect of Government Servants retiring on or after 31st March, 1979. By
September 2, 1985 Notification the Government was pleased to order that
the benefit of the revised formula for calculation of pension on slab basis     G
would be extended to all pensioners provided they were in receipt of
pension as on 1.4.1979 under Rajasthan Service Rules as amended from
time to time. In other words, the principle of Nakara's case was made
applicable and the Notification dated September 2, 1985 was issued, Para-
graph 3(1) of aforesaid Notification dated September 2, 1985 stipulated
that the last emolument immediately preceding the date of retirement may        H
   70                    SUPREME COURT REPORTS                 [1997] 2 S.C.R.

A be taken into account for the purpose of calculation of revised pension
  wherever the average emoluments were earlier computed on the basis of
  36 months emoluments. The last emolument for this purpose shall be as
  per rules in force at the time of retirement of the respective Government
  servants. Paragraph 3 provided the mode of computation of the pension of
  such pre-March 31, 1979 retirees, Paragraph 4 mentions the classes of
B pensioners to whom the order will not be applicable. Paragraph 5 provides
  an ad hoc formula developed on certain assumptions and a ready reckoner
  saying the rate of existing pension and revised pension was annexed. It
  further provides that each pensioner would exercise an option as to
  whether he would receive the revised pension on the ad-hoc formula or
C with reference to the actual calculation based on service records and the
  option once exercised would be final. The ad-hoc formula was devised as
  it was thought that re-computation of pension on the basis of actual
  emoluments which a pensioner was drawing and qualifying service being a
  time consuming process and considerable time may be necessary for locat-
  ing the old records which may not be readily available. Thus, it would
D appear, by the Notification dated September 2, 1985, the Government of
  Rajasthan also extended the benefit of the revised pension formula on slab
  basis to pre-March 31, 1979 retirees and see no infirmity with the said
  Notification. The High Court in our considered opinion without noticing
  the aforesaid Notification and without examining the same unnecessarily
  examined the earlier liberalisation orders and erroneously struck down the
E same. The Notification dated September 2, 1985 not having been chal-
  lenged and the High· Court not having quashed the same, the pre-March
  31, 1979 retirees like the respondents in both the appeals would be
   governed by the same and depending upon the question whether they have
   exercised their option to get the revised pension on the basis of ad-hoc
   formula or to be computed on the basis of the last emoluments drawn and
F
   the number of years of service therein, the computation of pension has to
   be done. The September 2, 1985 Notification in the present case is some-
   what similar to the Notification which were for consideration by this Court
   in Indian Ex-Se1vices League's case referred to earlier. in this view of the
   matter the impugned judgment of the High Court cannot be sustained and
G we accordingly set aside the same. These appeals are allowed and the Writ
   Petitions filed by the respondents stands dismissed but in the circumstances
   there will be no order as to costs.

     V.S.S.                            Appeals allowed and Petition dismissed.


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