Holding

Employees who retired before the cut‑off date are also entitled to the revised pension.

Summary

The petitioners, former officers of Indian Oil Corporation (Assam Oil Division) who retired before 1 December 1994, challenged a government notification dated 10 March 1995 that revised the pension formula only for officers retiring on or after that date. They argued that the cut‑off date was arbitrary and discriminatory, contending that under the non‑contributory Assam Oil Staff Pension Fund they were entitled to the revised pension. The respondents contended that the pension liability was limited to a separate trust created under the Income‑Tax Act and that improvements to the scheme could only benefit members in service. The Court held that the pension is a statutory liability of the employer, not dependent on the fund’s resources, and that retirees who were members of the same class are entitled to the benefit of the revised formula irrespective of the cut‑off date. Accordingly, the petition was partly allowed and the respondents were directed to delete the cut‑off date and grant the revised pension to the petitioners. The decision relied on Section 11 of the Burmah Oil Company (Acquisition…) Act, 1981 and precedents such as D.S. Nakara and V. Kasturi.

Issues considered

Is the cut‑off date in the pension revision notification constitutionally valid or discriminatory under Article 32?
Are retirees who retired before the cut‑off date entitled to the benefits of the revised pension formula?
Does the liability to pay pension depend on the existence of a separate pension fund/trust under the Income‑Tax Act?
How should Section 11 of the Burmah Oil Company (Acquisition…) Act, 1981 be interpreted with respect to pension liability?
Is the ratio decidendi in D.S. Nakara v. Union of India applicable to the present case?

Legislation cited

Income Tax Act, 1961

Subjects

pensionnon‑contributory pension schemediscriminationcut‑off dateArticle 32revision of pension formulaSection 11Burmah Oil ActIndian Oil CorporationAssam Oil Divisionservice law

Judgment

A SUBRATA SEN AND ORS.
v.
UNION OF INDIA AND ORS.

SEPTEMBER 18, 2001

B [M.B. SHAH AND R.P. SETHI, JJ.]

Service Law:

Pension-Assam Oil Sta.ff Pension Fund Rules-Bumzah Oil Company
(Acquisition of Shares of Oil India Limited and of the Undertakings in India of
c Assam Oil Con~pany Limited and the Burmah Oil Company (India Trading
Limited) Act, 1981-Section /I-Revised Pension Scheme providing applicability
of the scheme to employees who retired after a particular date-Employees who
retired before the cut off date-Held, entitled to revised pension-Constitution
of India, 1950-Article 32
D
Respondent-State issued notification providing for revision of pension
formula in respect of officers of Indian Oil Corporation (Assam Oil
Division). A specific cut off date for applicability of. the revision was
provided in the notification.

E Petitioners, employees of the Corporation who had retired prior to
cut off date, filed Writ Petition under Article 32 of the Constitution on the
ground that the cut off date was discriminatory and contended that they
were entitled to get the pension on the basis of revised formula.

Respondents admitted that petitioners were part of the group which
F came from erstwhile Assam Oil Company and were getting pension on the
basis on non-contributory pension scheme. However, they contended that
petitioners were not covered under revised pension scheme since separate
fund was allocated and trust was created and approved under Income Tax
Act, 1961, for paying pension to the retired employees and any improvement
G in the pension scheme in an approved pension fund would benefit only the
existing members in service.

Disposing of the appeal, the Court

HELD: 1.1•. The employees who retired before the cut off date viz.
H 1.12.1994 are also entitled to revised pension. [143-D]
140
SUBRATA SEN v. U.0.1. 141
1.2. The payment of pension was the liability of the employer as per A
the rules and that liability is required to be discharged by the Union of
India in lieu of its taking over of the Company. The rights of the employees
(including retired). are protected under .Section 11 of the Burmah Oil ,
Company (Acquisition of Shares of Oil India Limited and of the
Undertakings· in India ()r Assam Oil Company Limited and the Burmah
B
Oil Company (India Trading) Limited Act, 1981. [149-C; DJ

D.S. Nakara v. Union of India, [1983) 1 SCC 305 explained and
distinguished.

1.3. Pension is neither a bounty, nor a matter of grace depending
upon the sweet will of the employer, nor an ex gratia payment. It is a
c
payment for the past services rendered. It is a social welfare measure
rendering socio-economic justice to those who in the hey-day of their life
ceaselessly toiled for the employer on an assurance that in their old age
they would not be left in lurch. In view of the admission by Respondent, it
is clear that petitioners were not required to contribute any amount for D
getting pension. May be that in the present case, the Trust for pension fund
is created for Income Tax purposes or for smooth payment of pension, but
that would not affect the liability of employer to pay monthly pension
calculated as per the Rules on retirement from service and this retirement
benefit is not based on availability of pension fund. There is no question of E
pensioners dividing the Pension Fund or affecting the pro rata share on
addition of new members to the Scheme. [148~H; 149-A; Bl ·

2. Right to get pension is different from getting annuity on the basis
of accumulated contribution. [151-B]
F
Sasadhar Chakravarty and Anr. v. Union of India and Ors., [1996] 11
sec 1, distinguished.
3. The rules for grant of pension in the present case provide that an
employee mentioned in specified category shall automatically be member
of pension fund and is entitled to get pension on the date of his retirement. G
Amount of pension is to be determined as per the Rules. That Rule is
modified and the petitioners seek relief on the basis of t:1e amended rule on
the ground that there cannot be any discrimination between the employees
who retired prior to or after a particular date. There is no question of
pensioners (retired employees) dividing the pension fund and/or payment H
142 SUPREME COURT REPORTS [2001] SUPP. 3 S.C.R.
A of pension to be made only from the pension fund. The liability to pay
pension arises because of provision made in the rules. [151-B; C; DJ

D.S. Nakara v. Union of India, [1983] 1 SCC 305 and V. Kasturi v.
0
Managing Director, State Bank of India, Bombay and Am:, [1998) 8 SCC 30,
referred
,J
to.
B
4. In case of an employee governed under the Pension Scheme,
relations with the employer merely undergo a change, but are not snapped
altogether. There is no new scheme of payment of pension, but it is only a
revision of the existing pension scheme. Under the new Pension Scheme,
pension is required to be paid on the basis of 40 per cent the average of the
c last 10 months salary including average dearness allowance drawn by the
officer over the last 10 months of his service instead of earlier 40 per cent
of the average annual basic salary for the las.t five years of service
immediately preceding the date of retirement. [152-C; D; EJ

D All India Reserve Bank Retired Officers Association v. Union of India,
[1992] Supp. 1 SCC 664, referred to.

CIVIL ORIGINAL JURISDICTION: Writ Petition (C) No. 372of1999.

Under Article 32 of the Constitution of India.
E
V.R. Reddy and Dinesh Mathur for J.B.D. & Co. for the Petitioners.

Raj Birbal, V.K. Rao and Ms. Madhu Sikri for the Respondents.

B.A. Mohanty, K.C. Kaushik, Ms. Sunita Sharma and B.V. Balaram Das
for Union of India.
F
The Judgment of the Court was delivered by

SHAH, J. This petition under Article 32 of the Constitution of India is
filed by the petitioners who were employees of the Indian Oil Corporation
Limited (Assam Oil Division) and retired prior to 1st December 1994. It is
G pointed out that Assam Oil Division was formed by transfer of the Undertaking
of the Assam Oil Co. Ltd., a 100% subsidiary of the Burmah Oil Company
which has been nationalized w.e.f. 14.10. 1981. Petitioners were transferred
from Assam Oil Co. Limited to the Indian Oil Corporation - Assam Oil
Division (In short "AOD"), As per the Assam Oil Company Staff Pension Fund
H Scheme, they were getting pension on the following basis :
SUBRATA SEN v. U..0.1. [SHAH, J.] 143
"A sum equal to 40 percent of the average annual basic salary for A
the ·last five years of service immediately preceding the date of
retirement"

. It is pointed out that the Government of India has issued Notification
dated 10.3.1995 providing for revision of pension formula in respect of Indian
Oil Corporation (AOD) Offi~ers covered by AOD Staff Pension Scheme which B
reads thus :

"Pension for the officers retiring from December, 1994, onwards
m~y be computed on the basis of 40% of the average of the last 10
months salary including averages dearness allowance drawn by the
officer over the last 10 months of his service. (f and when pay revision C
take place retrospectively, the amount o.f pension .may be adjusted
accordingly. No dearness allowance will be paid on pension."

Petitioners submit that the cut-off date is discriminatory and that there
cannot be any classification of retiree who have retired prior to December, 1994
.and who are to retire from December, 1994 onwards and, therefore, they are D
I entitled to have pension on the basis of revised formula. For this, they have
/
relied on the decision rendered by this Court in D.S. Nakara v. Union of India,
(1983] 1 sec 305. In this petition, they have prayed as under :

(a) Issue a writ, direction or order in the nature of certiorari of any
other appropriate writ, direction of order quashing the cut off E
date mentioned in the impugned communication No. F. No.
F.29011/1/95-IOC dated 10.3.1995 (Annexure 'E'), as December,
1994 as having been arbitrarily fixed; and

(b) . Issue a writ, direction of order in the nature of mandamus or any
other appropriate writ, direction or order to ·the respondents F
directing them to extend benefits of the impugned communication
No. F. No. 29011/1/95-IOC dated 10.3.1995 to all the pensioners
of IOC (AOD) irrespective of date of retirement.

(c) Issue a writ, direction or order in the nature of mandamus or any
other appropriate writ, direction or order directing the respondents
G
to liberalize the AOC Pension Scheme so as to include the Ad
hoc Pension Relief to all retirees and who are still in service and
to superannuate under the AOC Pension Scheme as is being
granted to the ex-employees of AOC who stood transferred to
~; H
144 SUPREME COURT REPORTS [2001] SUPP. 3 S.CR.
A (d) Issue a writ, direction ·or order in the nature of mandamus or any
other appropriate writ direction or order directing the respondents· ..
to liberalize the AOC Pension Sche.me so as to include the
benefits of the CLI linked Pension Relief to all retirees and who
are still in service and to superannuate under the AOC Pension
Scheme, as in. being granted to the el.igible pensioners of OIL,
B
BPCL and HPCL;

(e) ' Issue a writ, direction or order in the nature of mandamus or ~my
other appropriate writ, direction or order directing the respondents
to liberalize the pension scheme pf the respondent no. 2 so as to
c include the benefit of restoration of the commuted pottioil of
pension after 15 years as i.s being granted to the sister companies
of the respondent no. 2 i.e. )3PCL and HPCL.

At the outset, we may state that Mr. V.R. Reddy, learned senior counsel
for the petitioners has not pressed for prayer (c) and With regard to prayers (d)
D and (e)"as they involve disputed questions of fact, the issues are not required
to be decided and are left open. In affidavit-in-reply filed on behalf of respondent
No. 2 also it has been submitted that it would have been appropriate for the
petitioners to approach the High Court for sorting out the disputed facts. For
the said reliefs, it would be open to the petitioners to approach the competent
•
E forum.

Mr. Raj Birbal, learned senior counsel for respondent No. 2 Indian Oil
Corporation submitted that in the present case there is ~o question of applying
the principles laid down in Nakara '.s· case. It is his submission that petitioners
were governed by the non-contributory Pension Scheme, namely, IOC (DOD)
F Staff Pension Fund approved under the Income Tax Act, 1961. Under the Rules
of the Pension Fund, annuity is purchased by the trustees in respect of such
members on their retirement/death from LIC and pension is paid by the LIC.
The right of and to receive the annuity and the quaf!tum gets crystallized at the
time of purchase of the annuity. It/is also pointed out that an improvement in
the pension scheme in an approv~d Pension Fund is effected on the basis of
G
the fund's financial position as determined by actuarial valuation based on
current resources of the fund and future contribution to be received by the fund
only in respect of the existing members in service.

, On, the question as to when retired employees are entitled to the benefit
H . of revised pension scheme, this Court after considering earlier aecisions in
SUBRATA SEN v. U.0.1. [SHAH, J.] 145
V. Kasturi v. Managing Director, State Bank of India, Bombay and Another, A
(1998) 8 sec ~o specified two categories as under:

"Category-I

Para 22. If the person retiring is eligible for pension at the time of his
retirement and if he survives till the time of subsequent amendment of B
the relevant pension scheme, he would become eligible to get enhanced
pension or wquld become eligible to get more pension as per the new
formula of computation of pension subsequently brought into force, he
would be entitled to get the benefit of the amended pension provision
froµ1 the date of such order as he would be a member of the very same C
class of pensioners when the additional benefit is being conferred on
all ofthem. In such a situation, the additional benefit available to the
same class of pensioners cannot be denied to him on the ground that
he had retired prior to the date on which the aforesaid additional
) benefit was conferred on all the members of the same class of pensioners
r who had survived by the time the scheme granting additional benefit D
to these pensioners 'came into force. The line of decisions tracing their
roots to the ratio of Nakara case would cover this category of cases

Category-II
E
Para 23. However, if an employee at the time of his retirement is not
eligible for earning pensi~n and stands outside the class of pensioners,
if subsequently by amendment of the relevant pension rules any
beneficial umbrella.of pension scheme is extended to cover a new class
of pensioners and when such a· subsequent scheme comes into force,
the erstwhile non-pensioner might have survived, then only if such F
extension of pension scheme to erstwhile non-pensioners is expressly
made retrospective by the authorities promulgating such scheme; the
erstwhile non-pensioner who has retired prior to the advent of such
extended pension scheme can claim benefit "of such a new extended
pension scheme."·
G
Learned counsel for the petitioners submitted that petitioners would be
covered by the Category (I) and would be entitled to get pension under the
revised pension scheme.· ··

As against this, learned -counsel for the respondents submitted that there H
146 SUPREME COURT REPORTS [2001] SUPP. 3 S.C.R.
A is a t.hird category wherein the pension is paid from pension fund scheme and
on the date of retirement, right to receive the pension amount is crystallized.
Hence, petitioners are: not entitled to get benefit of subsequent modificatiOn .
with respect to determinative factor for grant of pension such as qualifying ·
service.

B For appreciating this contention, we would refer to the averments made
in the affidavit-in-reply and the relevant rules which provided for grant of
pension to the petitioners. In the affidavit-in-reply, it has been stated that
petitioners were part of the group which came from erstwhile Assam Oil
Company and are getting pension on the basis of non-contributory pension
C scheme, i.e. "they do not contribute at all and are getting the pension on month
to month basis and on the other hand, the other employees of respondent no.
2 only get the benefit of contributory scheme."

From the aforesaid admission, it is clear that petitioners were not required
to contribute any amount for getting pension. May be that the Company (

D allocated separate fund and created a trust for paying pension to the retiring
employees but their right to get pension is crystallized as per the.rules and was
\
not dependent upon availability of the fund and was to be determined on the
basis of a rule which provided that they would get a sum equal to 40 percent
of the average basic salary for the last five years of service immediately
E preceding the date of retirement.

For this purpose, we would refer to relevant part of the rules of Assam
Oil Staff Pension Fund, which read thus :

"l. The following employees shall be Members of the Fund :
F (b) Persons who enter into a specified category of service with the
Company as detailed hereinafter the lst day of January, 1973 and
who are members of the Burmah Oil (India) Provident Fund or
Provident & Insurance Fund (India) Recognised.

G 2. A Pension will be granted to a Member on retirement from the
Service at or after Normal Pension Age provided that at the date
of such retirement:

(i) he has completed at least fifteen years of Pensionable
Service;
H
SUBRATA SEN v. U.0.1. [SHAH, J.] 147
(ii) he shall have been a member of the Provident Fund A
continuously of not less than ten years.

The pension payable to such a Member:

(a) who has completed at least twenty years' Pensionable
Service will be the Basic Figure as reduced by the Authorised B
Deduction; or

(b) who has completed at least fifteen years' Pensionable Service
but less than twenty years' Pensionable Service will be a
proportion of the Basic Figure equal to the ratio which the C
number of years of Pensionable Service (calculated to the
nearer month) bears to twenty years and the amount so
calculated will be reduced by the Authorised Deduction.

8. The Trustees may at the request of the Employer withhold
or discontinue a pension or annuity or any part thereof D
payable to a Member or his Dependents or exclude him or
them from all or any benefits hereunder if such Member is
dismissed for fraud or dishonesty or Misconduct or leaves
his employment without the consent of the Employer or
having left such employment acts to the detriment of such
E
employer's interest of assigns or charges his rights hereunder
or attempts to do so. Any sum so withheld discontinued or
excluded shall be forfeited to the Fund.

9. No person shall be entitled to transfer o~ assign whether by
way of security or otherwise however his interest or any F
part thereof in the Fund and no such transfer or assignment
shall be valid and neither the Employers nor the Trustees
shall recognise or be bound by notice to them respectively
of any such transfer or assignment.

10. Notwithstanding anything to the contrary m the Rules G
contained:

(a)

(b)
H
148 SUPREME COURT REPORTS [2001] SUPP. 3 S.C.R.
A (c) · All pensions and allowances shall be non-assignable and
(subject to the provisions of Rule 4) non-commutable and
.shall be paid monthly in advance without a pr<_>portion to
the date of cessation or at the discretion of the Trustees at
longer intervals and at such times at such places and in su~h
manner and subject to such evidence of health, age survival,
B
marital status, educational status and identity as t.he Trustees .
may prescribe."

Under Rule 16 "Basic Figure" means a suin equal to forty per centam
of the Member's average annual Basic Salary for the last five years of Service
C immediately· preceding the date of retirement. Likewise, "Normal Pension
Age" means the fifty-fifth birthday· for men and the forty-fifth birthday for
women.

Keeping in mind the aforesaid rules, we would first refer to the contention
of Mr. B.A. Mohanty and Mr. Raj Birbal, learned senior counsel for Union of
D .India and respondent No. 2 respectively who, in support of their submissions,
relied upon paragraJ?h 45 of the judgment in Nakara '.s case, which reads thus:

"45. Let us clear one misconception. The pension scheme including. the
liberalised scheme available to the government employees is non-
contributory in character. It was not pointed out that there is something .
E like a pension fund .... The payment of pension is a· statutory liability
undertaken by the Government and whatever becop.1es due and payable
is budgeted for. One could have appreciated this line of .reasoning
where there is a contributor:y scheme and a pension fund from which
alone pension is disbursed. That being not the case, there is no·question
F . of pensioners dividing the pension fund which, if more persons are
admitted to the scheme, would pro-rata affect the share."

. In .our view the aforesaid para does not in any way support the contention
of the respondents. ~n the contrary, on parity of reasoning, .we would also
. reiterate that let us be clear about this misconception. Firstly, the Pension
G Scheme including the liberalised scheme available to the employees is non-
contributory in character. Payment of pension does not depend tipoh Pension
Fund. It is the liability undertaken by the Company under the Rules and
· whenever becomes due and payable is to be paid. As observed in Nakara '.s case
(supra), pension is neither a bounty, nor a matter of grace depe11ding upon the
H sweet will of the employer, nor an ex~gratia payment. It is a payment for ihe
SUBRATA SEN v. U.0.1 .. [SHAH, J.] 149
past services rendered. It is a social welfare measure rendering socio-economic A
justice .to those who in the hey-day of their life ceaselessly toiled for the
employer on an assurance that in their old age they would not be left in lurch.
May be that in the present case, the Trust for pension fund is created for Income
Tax purposes of for smooth payment of pension, but that would not affect the
liability of employer to pay monthly pension calculated as per the Rules on
B
retirement from service and this retirement benefit is not based on availability
of pension fund. There is no question of pensioners dividing the Pension Fund
or affecting the pro-rata share on addition of new members to the Scheme. As
per Rule (1) quoted above, an employee would become member of the Fund
as soon as enters into a specified category of service of the Company. Under
Rule (8) Trustees may withhold or discontinue a pension or annuity or any part c
thereof.payable to a member.or his dependants, and that pension amount is non-
assignable. Further, the payment of pension was the liability of the employer
as p er the rul~s: and that liability is ~equired to be discharged by the UOI in lieu
0

of its tak:jng over of the Company. The rights of the employees '(including
r~tired) are protected under Section 11 of the Burmah Oil Company (Acquisition
D
of Shares of Oil India (Act 41) Limited and of the U11dertakings in India of
Assam Oil Company Limited and the Burmah Oil Company (India Trading)
Limited Act, 1981.
..
In support of his contention that petitioners are not entitled to get benefit
of revised scherrie, learned senior counsel for respondent No. 2, further, relied E
upon the decision of this Court in Sasadhar Chakravarty "and Am: v. Union of
bidia and Or11., (1996) 1l SCC 1, wherein the Court considered the Indian
Oxygen Ltd. Staff Pension Fund and the Pension Scheme thereunder. It was
the contention of the petitioners that improvements made in the existing pension
scheme after retirement of employees should also be made available to such F
retired ·employees who are the existing pensioners of the Fund. Negativing.the
said ·contention; the Court held thus : . .

" ..... This contention is based on a misunderstanding of the nature
of the annuity which is purchased in respect of each employee as under
\Yhen he retires. The right of an employee to receive the annuity and G
the qu_antum of this annuity gets determined at the time when the
an,nuity is purchased. Any subsequent improvements in a givt<n Pension
Fund Scheme would not be available to those persons whose rights are
already crystallized under the annuity scheme by which they are
governed because the amounts contributed by the employer in respect H
150 SUPREME COURT REPORTS [2001) SUPP. 3 S.C.R.
A of such persons are already withdrawn from the Pension Fund .t~
purchase an annuity. Any subsequent improvement in the Pension
Fund will benefit only those whose moneys form a part of the Pension
Fund."

In paragraph 11, the Court further observed :
B
"In these circumstances the ratio of D.S. Nakara v. Union of India,
[1983) i sec 305 cannot be applied to extend the benefit of
improvement in the pension schemes of such funds to the existing
pensioners. By the very nature of this scheme, such benefits are
available only to members in service. In the present case, the Pension
c Fund. is created out of contributions made by the employer in respect
of is employees who aie in ser~ice in the manner provided under the
Income Tax Act and the Rules. The contribution is in the form of a
fixed percentage of salary of each of the employees. There is, therefore,
no provision for an employer inaking any additional payment in
D respect of its past employees who are the existing pensioners. In
Nakara case the increase in pension could be met from the general
revenue of the Central Government. No such reserve of funds is
available to the trustees of an approved superannuation fund."

In our view, the ratio of the aforesaid judgment is not applicable in the
E present case. In the said case, Indian Oxygen Ltd. had set up a 'non-contributory
Superannuation fund' known as the Indian Oxygen Ltd. Executive Staff Pension
Fund. As per the Rules, an employee was entitled to receive an annuity under
a policy purchased by the trustee of tf1e Fund from the Life Insurance Corporation
of India. Petitioners in that case contended that the scheme of such non-
F contributory ~pproved superannuation fund should be modified so as to provide
for disbursement of pension by the fund themselves or in the alternative by a·
statutory body to be newly constituted under a new scheme. Further, the Fund
was coristituted for the purpose of providing an annuity to the beneficiaries and
the trustees were required to accumulate the contribution in respect of each
beneficiary and purchase an annuity from the Lif~ Insunmce Corporation of
G
India at the time of retirement or death of each employee or on his becoming
incapacitated prior to retirement as per Rule 89(2) of the Income Tax Rules,
1962. Therefore, when an employee retired; all accumulated contribution in
respect of employee concerned made by the employer to the pension fund of
the trust was crystallized (or the benefit of employee. In that set of circumstances, •
H the Court observed that the right of the employee to receive the annuity and
SUBRATA SEN v. U.0.1. [SHAH, J.] 151
quantum of his annuity gets crystallized at the time of purchase of annuity A
under the then existing scheme of Life Insurance Corporation of India. The
Court also observed. that the contention was. based on misunderstanding of the
nature of the annuity which is' purchased in the interest of each employee as
and when he retires. The position in the present case is altogether different.
Right to get pension is obviously different from getting annuity on the basis
B
of accumulated "Contribution. The rules for grant of pension provide that an
employee mentioned in specified category shall automatically be member of
pension fund and is entitled to get pension on the date· of his retirement.
Amount of pension is to be determined as per the Rules. That Rule is modified ·
and the petitioners seek relief on the basis of the amended rule on the ground
that there cannot be any discrimination between the employees who retired c
prior to or after a particular date, as held in Nakara ~· case which is followed
by this Court in various decisions including V. Kasturi (Supra). Further, there,
is no question of pensioners (retired employees) dividing the pension fund and/
or payment of pension to be made only from the pension fund. The liability
to pay pension arises because of provision made in the rules. In this view of
D
the matter, the decision in Sasadhar Chakravarty (Supra) wo!.!ld have no
bearing.

Further, in All India Reserve Bank Retired Officers Association v. Union
of India, [1992] Supp. l SCC 661, Ahmadi J., (as he then w~s) speaking for
the Court in the aforesaid decision highlighted the observations in Nakara 's
case found at p.333 para 46 to the following effect (SCC p. 674 para 7):

" ... the pension will have to be recomputed in the light of the
formula enacted in the liberl'J,lised pension scheme and effective from
the date the revised scheme comes into force. And beware that it is not
a new scheme, it is only a revision of existing scheme. It is not a new F
retiral bene.fi.t. It is an upward revision of an existing benefit. If it was
a wholly new concept, a new retiral benefit, one could hav~ appreciated
an argument that those who had alfe'ady retired could n~t expect it."

The Court further observed :
G
" ..... It must be realised that· in the case of an employee governed
by the CP.F (Contributory Provident Fund) scheme· his relations with
the employer come to an end on his ~etirement and receipt of the CPF
amount but in the case of an employee governed under the pension
a
scheme his relations with the employer merely undergo change but H
. 152 SUPREME COURT REPORTS [2001] SUPP. 3 S.C.R.
A do not snap altogether. That is the reason why this Court in NalWra
case drew a distinction betwe~n liberalisation of an existing benefit
and introduct_ion of a totally new scheme. In the case of pensioners it
is 1!-ec;essary to revise the pensio.n periodically as the continuous fall
in the rupee value and the rise in prices of essential commodities
.necessitates an adjustment of the pension amount but that is not the
B
case of employees governed under the CPF scheme, since they had
received the lump .sum payment which they were at liberty to invest
in a manner that .would yield optimum return which would take care
of the inflationary trends. This distinction between those belonging lo
the pension scheme and those belonging to the CPF scheme has been
c rightly emphasised by this Court in Krishena case'."

Same is the position in the present case. As observed in the aforesaid
case, in case of an employee governed under the Pension S.cheme, relations
with the employer merely undergo a change, but are not snapped altogether.
There is no new scheme of payment pension, but it is only a revision of the
D existing pension scheme .. Under the new Pension Sch~me, pension is required .·
to be paid on the basis of 40 per cent of the average of the last 10 months salary
including average dearness allowance drawn by the officer over the last 10
m1;mths of his service instead of earlier 40 per cent of the average annual basic
salary for the last five years of service immediately preceding the date ·of
E retirement.

1n· view of the aforesaid legal position, this petition is required to be
partly allowed and the Respondents are.'ditected to give pensionary benefits to
the petitioners nn the basis of notificat.ion dated 10th March, 1995 by deleting
the Words "retiring from Dec~mber, 1994 onwards" from the said notification,
F The Writ Petition stands disposed of accordingly. There shall tie no order .as
to cost.s.

K.K.T. Petition disposed of.