STATE OF WEST BENGAL ETC. ETC.versusRATAN BEHARI DEY AND ORS.

A                    STATE OF WEST BENGAL ETC. ETC.
                                   v.
                       RATAN BEHAR! DEY AND ORS.

                                  AUGUST 6, 1993

B             [S.C. AGRAWAL AND B.P. JEEVAN REDDY, JJ.]

          C01poration of Calcutta Employees (Death-cum-Retirement) Benefit
    Regulations, 1982:

C          Chapter I, Regulation I-Pension scheme introduced with effect from
    April 1, 1977-Fixation of cut-off date-Whether arbitrmy and un-
    reasonable-Scheme automatically made applicable to the employees reti1ing
    after publication of Regulations--Option given to employees who had retired
    on or after the cut-off date, but p1ior to date of publication of Regulation-Ex-
    clusion of employees who had retired p1ior to the cut-off date-Whether
D   disoiminatory.

       .  Constitution of India, 1950: Articles 14 and 16-lntroduction of Pen-
    sio~ Scheme for employees-Fixation of cut-ofI date-Whether arbitra1y and
    unreasonable-Classification of employees with reference to cut-off date-E.x-
E   clusion of those who had retired plior to the cut-off date-While giving option
    to those who had retired on or after the cur-off date but p1ior t<' publication
    of Regulations introducing the Pension Scheme-Whether discliminat01y.

          Respondents 1 to 43 in the appeals retired from the service of the ·
   Calcutta Municipal Corporation in the year 1967 or thereafter but prior
F to April 1, 1977. On retirement, each of them was paid the provident fund
   and other terminal benefits payable to them in accordance with rules then
   in force. No pension was provided for by the rules or regulations then in
   force. Subsequently, on the basis of the recommendations of the Pay
   Commission which had been appointed by the State Government in March
   1978, the Corporation of Calcutta Employees (Death-cum-Retirement)
G Benefit Regulations, 1982, were framed and published in the year 1982. Th~
  ·Regulations, which were given effect to from April 1, 1977, also provided
   for a Pension Scheme. The Regulations were antomatically made ap-
   plicable to those who had retired after publication of the Regulations.
   However, an option was given to those who had retired on or after April
H l, 1977, but prior tu the date of publication of the Regulations to come
                                      514
                       STATE OF W.B. v. R.B. DEY

under the Scheme.                                                                 A
      The respondents approached the High Court for issuance of a writ
of mandamus applying the said Regulations to all those employees who
retired even prior to April 1, 1977. Relying on the decision of this Court
in D.S. Nakara & Ors. v. Union of India, (1983] 2 S.C.R. 165, the High Court
granted the prayer, holding that all the retired employees of the Corpora-        B
tion constituted one single cla,.s and classi()ing them into two categories
with reference to April 1, 1977 was neither reasonable nor was it in any
manner related to the object of the Regulations.

      In the appeals, before this Court, the correctness of the decision of       C
the High Court was challenged by the State and the Corporation. It was
submitted that the respondents, who had retired prior to April 1, 1977 and
had drawn out the terminal benefits permissible to them, constituted a
different class from those who retired after April 1, 1977 and were
governed by Regulations; the appointment of the Pay Commission to
examine the claim of the employee was ordered in the financial year               D
1977-78 and though the Commission submitted its report later and it was
accepted after some time, the Government was justified in fixing the first
day of the financial year 1977-78, as the date from which the said Regula-
tions were to be given effect to.
                                                                                  E
        On behalf of respondents if was submitted that the Regulations were
not merely prospective; they were given retrospective effect on and from
April 1, 1977; the employees, who retired on or after April 1, 1977 but prior
to the date of publication of the Regulations were sitnated similarly to the
respondents and all of them were governed by the Provident Fund Scheme,
but the Regulations created a rtistinction among them with reference to an        F
artificial date viz., April 1, 1977; and brought about discrimination between
the similarly placed employees; and that a similar option, as had been
b>iven t.o the employees retiring on or after April 1, 1977 but before the date
of publication of the Regulations, ought to have been given to all those
employees who retired prior to April 1, 1977.                                     G
      Allowing the appeals, this Court

       HELD: 1.1. It is open to the State or the Corporation, as the case may
be, to change the conditions of service unilateraly. Terminal benefits as well
as pensionary benefits constitute conditions of service. The employer has         H
    516                   SUPREME COURT REPORTS [1993] SUPP. 1 S.C.R.

A the undoubted power to rcYise the salaries and/or the pay-scales as also
  terminal benefits/pensionary benefits. The power to specif)' a date from
  which the revision of pay-scales to terminal benefits/pens'ionary benefits, as
  the case may be, shall take effect is a concomitant of the said power. So long
  as such date is specified in a reasonable manner, i.e., without bringing
  about a discrimination between similarly situated persons, no interference
B
  is called for by the Court in that behalf. [519-H; 520-A-B]

                      -
          D.S.Nakara & Ors. v. Union of India, [1983] 2 S.C.R. 165; distin-
    guished.

C         JVishena Kwnar v. Union of India & Ors., [1990] 4 S.C.C. 207;
    referred to.

          1.2. The power of the State to specily a date "ith effect from which
    the kcgulations framed, or amended, as the case may be, should come into
    force is unquestioned. A date can be specified both prospectively as well
D   as retr~spectively. [520-H; 521-A]

         13. It cannot be said that prescribing April 1, 1997 as the date from
    which the new Regulations were to come into force is either arbitrary or
    discrin1inatory. The State Governn1ent appointed a Commission to ex~
E amine the demand of the employees and to recommend the necessary
    measures in that behalf. The three members constituting the Commission
    differed with each other in certain particulars. The Government examined
    their recommendations and acce11ted them with certain n1oditications in
    the year 1981. After processing the matter through relevant departments,
    the Regulations were issued and pubiishcd in the year 1982. In the above
F   circumstances, the State Government th0<1ght that it would be appropriate
    to give effect to the said Regulations on and from April 1, 1977 i.e., the
    first day of the financial year in which the Pay Commission \Vas appointed
    by the Government. It cannot be said that the Gowrnment acted un-
    reasonably in specif)ing the said date. [519-G; 520-E-F]

G         1.4. It was within the power of the Corporation to enforce the
                                                                                   r
    Regulations either prospectively or with retrospective effect from such date   l
    as they might specify. Of course, in such cases the State cannot pick a date
    out of its hat. It has to prescribe the date in a reasonable manner, having
    regard to all the relevant facts and circumstances. Once this is done,
H <1nestion of disFrimination does not arise. (521-C-D]
            STATEOFW.B. v. R.B. DEY[B.P.JEEVAN REDDY, I.]                   517

          Susluna Shanna v. State of Rajastlian, [1985) 3 S.C.R. 243, referred     A
    to.

         1.5. No absolute proposition can be stated that while effecting any
    change, in the conditions of service relating to retiral benefits, no date
    from which such change "ill come into force can be specified. [521-F-G)
                                                                                   B
          CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3472-73
    of 1991.

         From the Judgment and Order dated 18.4.1988 of the Calcutta High
    Court in F.M.A.T. No. 2347 of 1987.
                                                                                   c
          D.N. Mukherjee and Dilip Sinha for the Appellants in C.A. No. 3472
    of 1991.

         S.B. Sanyal, S.K. Jain and Sudhanshu Atreya for the Appellants in
    C.A. No. 3473 of 1991.
                                                                                   D
          P.P. Rao, Raj Kumar Gupta and P.C. Kapur for the Respondents.

          The following Judgment of the Court was delivered by

          B.P. JEEVAN REDDY, J. These two appeals are preferred by the             E
    Stale of West Bengal and the Calcutta Municipal Corporation respectively
    against the judgment of the Division Bench of the Calcutta High Court
    dismissing the appeal preferred by the Calcutta Municipal Corporation
    (F.M.A.T. No. 2347 of 1987) against the judgment of the learned Single
    Judge allowing the writ petition. The writ petition was filed by the respon-
1   dents for issuance of writ of mandamus commanding the State of West            F
    Bengal and the Municipal Corporation to extend the benefit of pension
    under the Corporation of Calcutta Employees (Death-cum-retirement)
    Benefit Regulations, 1982 to them by declaring the date, April 1, 1977,
    specified in Regulation-I of the Chapter-I of said Regulations as non-est
    and void. A mandamus was granted as prayed for, which was affirmed on          G
    appeal by the Division Bench.

          Respondents 1 to 43 in both the appeals (writ petitioners) were the
    employees of the Cakulla' Municipal Corporation. They retired from the
    Corporation service in the year 1967 or thereafter but prior to April l,
    1977. On retirement, each of the writ petitioners were paid the provident      H
                                                                        1
    518                   SUPREME COURT REPORTS [1993] SUPP. 1 S.C.R. ···

A fund in accordance with rules then in force. Since no pension was provided
    for by the rules or regulations then in force they evidently did not claim
    and were not granted any pension. Whatever terminal benefits were pay-
    able to them were paid.

        On the basis of the demand of the Corporation employees for
B payment of pension, the Government of West Bengal appointed in March
  1978, a Pay Commission to examine the said claim and to make their
  recommendation. The Commission consisted of three members. It sub-
  mitted it report on September 27, 1979. The three members submitted
  three different reports, differing with each other in certain particulars. The
C said reports were examined by the Government and accepted with certain
  modifications on April 27, 1981. On the basis of the said acceptance, the
  aforesaid regulations were framed and published in the year 1982. The
  Regulations were given effect to from April 1, 1977. The Regulations
  provided inter alia that every employee who retired on or after April 1,
  1977 can exercise the opinion in the prescribed proforma within the time
D specified to come under the Pension Scheme. So far as persons retiring
  after the publication of the said Regulations were concerned, they were
  automatically governed by the said Regulations (Pension Scheme); there
  was no question of an option in their case. The Regulations were accord-
  ingly given effect to.
E
        The writ petitioners (respondents l to 43 in these appeals) ap- ·
  proached·the High Court of Calcutta in the year 1985 for issuance of writ
  of mandamus applying the said Regulations to all those employees who
  retired even prior to April 1, 1977. The prayer was granted as prayed for.
  The High Court has mainly relied upon the decision of this Court in D.S.
F Nakara & Ors. v. Union of India, [1983] 2 S.C.R. 165. The High Court was
  of the opinion that all the retired employees of the Corporation constituted
  one single class and classifying them into two categories with reference to
  April 1, 1977 is neither reasonable nor is it in any manner related to the
  object of the Regulations. The correctness of the. said view is challenged
G in these appeals.

        The learned counsel for the appellant, S/Shri S.B. Sanyal and·
  D.N.Mukherjee relied strongly upon the later decision of this Court in
  K1ishena Kumar v. Union of India & 01'., [1990] 4 S.C.C. 207, a decision
  of the Constitution Bench. It is submitted that the specification of April l,
H 1977 as the date from which the Pension Scheme provided by 1982 Regula·
        STATEOFW.B. v. R.B. DEY[B.P.JEEVAN REDDY,J.)                     519

t ion was to come into force was neither arbitrary nor discriminatory. The      A
writ petitioners who had retired prior to April 1, 1977 and had drawn out
the terminal benefits permissible to them, constituted a different class from
those who retired after April 1, 1977 and were governed by Regulations.
Counsel submitted that the High Court was not right in _holding that the
Government and Corporation have not satisfactorily explained the reasons
for specifying April l, 1977 as the date from which the Regulations were        B
given effect to. They submitted that the representation of the employees
for grant of pension was reiterated in the year 1977 and the appointment
of Pay Commission to examine their claim was also ordered in the financial
year 1977-78. Though the Commission submitted its report later and it was
accepted after some time, the Government was justified in fixing the first
day of the financial year 1977-78 as the date from which the said Regula-
                                                                                c
tions were to be given effect to.

      Sri P.P. Rao, learned counsel appearing for the respondents 1 to 43
not only relied upon the principle of Nakara but also tried to distinguish
the decision in Klishena Kumar. He submitted that the Regulations were          D
not merely prospective; they were given retrospective effect on and from
April 1, 1977. The employees who retired on or after April 1, 1977 but
prior to the date of publication of the Regulations were situated similarly
to the writ petitioners. All of them were governed by the Provident Fund
Scheme. But the Regulations created a distinction among them with refer-
ence to an artificial date viz. April 1, 1977. Those who retired earlier to     E
the said date were made ineligib!e for the benefit of the Pension Scheme
while those who retired on or after the said date were made eligible. A
similar option, as has been given to the employees retiring on or after April
1, 1977 but before the date of publication of the Regulations, ought to have
been given to all those employees who retired prior to April 1, 1977 but
                                                                                F
were alive on the said date. Since this was not done, the appellants must
be held to have discriminated against the employees retiring prior to April
1, 1977.


       In our opinicn, the principle of Nakara has no application to the
facts of this case. The precise principle enunciated in Nakara has been duly G
explained in Klis/Jena Kumar hy a coordinate Bench. For reasons to be
assigned hereinafter, it cannot be said that prescribing April 1, 1977 as the
date from which the new Regulations were to come into force is either
arbitrary or discriminatory. Now, it is ope'n to the State or to the Corpora-
tion, as the case may be, _t? change the conditions of service unilateraly. H
    520                   SUPREME COURT REPORTS [1993] SUPP. 1 S.C.R.

A Terminal benefits as well as pensionary benefits constitute conditions of·
  service. The employer has the undoubted power to revise the salaries
  and/or the pay-scales as also terminal benefits/pensionary benefits. The
  power to specify a date from which the revision of pay-scales or terminal
  bencfits/pensionary benefits, as the case may be, shall take effect is a
B concomitant of the said power. So long as such date is specified in a
  reasonable manner, i.e., without bringing about a discrimination between
  similarly situated persons, no interference is called for by the Court in that
  behalf. It appears that in the Calcutta Corporation, a pension scheme was
  in force prior to 1914. Later, that scheme appears to have been given up
  and the Provident Fund Scheme introduced. Under the Provident Fund
C Scheme, a certain amount was deducted from the salary of the employees
  every month and credited to the Fund. An equal amount was contributed
  by the employer which too was credited to the Fund. The total amount to
  the credit of the employee in the fund was paid to him on the date of his
  retirement. The employees, however, were demanding the introduction of
D a pension scheme. The demand fell on receptive years in the
  1977........... may be because in that year the Left Front Government came
  to power in that State, as suggested by the writ petitioners. The State
  Government appointed a Commission to examine the said demand and to
  recommend the necessary measures in that behalf. The three members
  constituting the Commission differed with each other in certain particulars.
E The Government examined their recommendations and accpted them with
  certain modifications in the year 1981. After processing the matter through
  relevant departments, the Regulations were issued and published in the
  year 1982. In the above circumstances, the State Government thought that
  it would be appropriate to give effect to the said Regulations on and from
F April l, l'J77 i.e., the first day of the financial year in which the Pay
  Commission was appointed by the Government - a fact which could not
  have been unknown to the Corporation employees. We cannot say that the
  Government acted unreasonably in specifying the said date. It may also be
  that, that was the year in which the Left Front came into power in that
  State, but that does not detract from the validity of the aforesaid reasons
G .assigned by the State in its counter-affidavit filed before the Division Bench
   of the High Court. We are not in agreement with the opinion expressed by
   the High court that the reasons assigned by the State Government are
  neither relevant nor acceptable.

H         In this context, it may be remembered thai the power of the State to
        STATE OF W.B. v. R.B. DEY [B.P . .IEEVAN REDDY, J.]              521

specify a date with effect from which the Regulations framed, or amended,       A
as the case may be, shall come into force is unquestioned. A date can be
specified both prospectively as well as retrospectively. The only question is
whether the prescription of the date is unreasonable or discriminatory.
Since we have found that the prescription of the date in this case is neither
arbitrary nor unreasonable, the complaint or discrimination must fail.
                                                                                B
       Now coming to the argument of Sri P.P. Rao that the Regulations
bring about an unreasonable classification between similarly placed
employees is concerned, we must say that we are not impressed by it. It is
not submitted that the Corporation had no power to give retrospective
effect to .the Regulations. It was within the power of the Corporation to       C
enforce the Regulat\ons either prospectively or with retrospective effect
from such date as they might specify. Of course, as repeatedly held by this
Court, in such cases the State cannot, as the expression goes, pick a date
out of its hal. It has to prescribe the date in a reasonable manner, having
regard to all the relevant facts and circumstances. Once this is done,          D
question of discrimination does not arise. Reference in this behalf may also
be had to the decision of this Court in Sushma Shamw v. State of Rajas-
than, [1985] 3 S.C.R. 243, a decision of the Division Bench comprising
E.S.Venkataramiah and Sabyasachi Mukharji, JJ.

        As rightly pointed in Klishena Kuma1; Nakara was a ca.se where an       E
artificial dale was specified classifying the retirees, governed by the same
Rules and similarly situated, into two different classes, depriving one such
class of the benefit of liberalised Pension Rules. It was found in that case
that the specification of the date (from which the liberalised Rules were to
come into force) was arbitrary. Whereas in this case, the employees reilir-     F
ing prior to April l, 1977 and those retiring thereafter were governed by
different sets of Rules. The argument to the contrary may mean that the
Government can never change the conditions of service relating to retiral
benefits with effect from a particular date. No such absolute proposition
can be stated that while effecting any such change, no date from which
such change will come into force can be specified. As stated above, a date G
can he prescribed but such date should not be drawn in such a manner as
to bririg about discrimination between persons situated similarly i.e., in a
manner violative of Article 14. This aspect has been elaborately dealt with
and explained in Krishena Kzunar and we do not think it necessary to
repeat the same.                                                                H
    522                  SUPREME COURT REPORTS (1993] SUPP. l S.C.R.

A          For the above reasons, the appeals are allowed, the judgment and
    orders of the learned Single Judge as well as the Division Bench of the
    Calcutta High Court under appeal are set aside. It is, however, directed
    that if any of the writ petitioners have been given the benefit of the 1982
    Regulations in pursuance of the decision of the learned Single Judge or of
B   the Division Bench, as the case may be, of the Calcutta High Court, they
    shall not be called upon to refund the same. In other words, while no
    recovery should be made from them, they shall also be not entitled to claim
    any amount either on account of pensionary benefits or Provident Fund
    Scheme benefits.

c         There shall be no order as to costs.

    N.P.V.                                                   Appeals allowed.