THE GOVERNMENT OF ANDHRA PRADESH AND ORS.versusSYED YOUSUDDIN AHMED

        THE GOVERNMENT OF ANDHRA PRADESH AND ORS.                                   A
                                         v.
                         SYED YOUSUDDIN AHMED

                                AUGUST 13, 1997
>

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

          Service Law--Governmenc employee-Nature of relationship between
    the Government and its employee-Whether contractual-Held, origin of
    Government service is contractual but once appointed, the Government ser-
    vant acquires a status, and rights and obligations are detennined by Statute.   c
            Constitution of India-Article 309, proviso-Power of Government to
    make /aw-Unilateral amendment without consent of Government
    employee-Determination of service condition-Retrospective amend-
    ment........Pennissibilty of-Held, the Legislature under Article 309 and the
    Governor under proviso to Article 309 of the Constitution can make law          D
    detennining the service conditions and such law can also be retrospectively
    made.

           A.P. Revised Pension Rules, 198o-:R.ule 31........Pension-Rule
    amended-Applicability of-Held, the amended Rule 31 became applicable
    to all the employees who were in service on the date the amended Rule came      E
    into force for purpose of finding out the meaning of the expression
    'emoluments' on the basis of which the pension of the employee has to be
    calculated on superannuation.

           Fundamental Rules-Rr. 9(21)(a)(i), 9(23), 9(25)-Pay Incentive
    award-Whether can be treated as part of emoluments for detennining pen-         F
    sion-Held, whether the 'incentive award' is held either a 'special pay' or
    'personal pay' the same would not from part of 'pay' and consequently would
    not f om1 part of emoluments under Rule 31 of the AP Revised Pension Rules,
    1980.

          The Respondent was an employee of the erstwhile Hyderabad State
                                                                                    G
    and after the merger of the said State and. on re· organisation, he became
    an employee of the State of Andhra Pradesh, While he w~s working as
    Deputy Executive Engineer in the Irrigation Department, he had been
    granted four advance increments as 'incentive award'. Since this amount
    was not taken into account while calculating his pension, he approached H
                                       419
    420                   SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R.
A   the Administrative Tribunal.

          The Tribunal directed that the incentive increments drawn by the
    Respondent on the date of his superannuation should be taken as part of
    his emoluments and therefore, should be taken into account for determina-
    tion of his pension. Hence this appeal.
B
          Allowing the appeal, this court

           HELD : 1. The A.P. Revised Pension Rules were framed by the Gover-
    nor in exercise of power under proviso to Article 309 of the Constitution. The
C   relationship between the Government and its servant is not like an ordinary
    contract of service between a master and servant but a legal relationship
    something in the nature of status. Origin of Government service is contrac-
    tual. But once appointed to his post or office, the Government servant ac-
    quires a status and his rights and obligations are no longer determined by
    consent of both parties but by statute or statutory rules which may be framed
D   and altered unilaterally by the Government. [423-F-G]

          2. The Legislature under Article 309 of the Constitution and the
    Governor under proviso to Article 309 of the Constitution can make law
    determining the service conditions of the Government employees and such
    law can also be retrospectively made. [423-A]
E
           3. In the present case question of retrospective application of the
    amended provisions of Rule 31 of the Revised Pension Rules really does not
    arise. It becomes applicable to all the employees who were in service on the
    date the amended rules came into force for the purpose of finding out the
    meaning of the expression 'emoluments' on the basis of which the pension of
F   the employee has to be calculated on superannuation. [424-A]

        4. The incentive increment which is granted to a Government servant
  for arduous nature of duty discharged by a Government servant though
  wouIJ not come directly under the purview of the Medical and Health
G Department Memorandum dated 5.5.78 relating grant of increment for un-
  dergoing sterilization operation, yet in view of the Government letter dated
  25.5.84 issued by the General Administrative Department making term~ and
  conditions of go.verning the grant of family planning increment incentive
  applicable, the said incentive increment can be held to be a 'personal pay' of
  the Respondent. But neither the aforesaid Health Department Memoran-
H dum dated 5.5.78, nor the Government letter dated 25.5.84 issued by the
                   GOVT. OF AP. v. YOUSUDDIN [PATIANAIK,J]                    421

    General Administrative Department could make aforesaid incentive incre-          A
    ment to be part of the emoluments under the provisions of Rule 31 of the
    Pension Rules so that the_ Respondent can claim inclusion of the said
    amount for determining his pension. [425-D-F]


-          5. For the purpose of Rule 31 of the Pension Rules, 'emoluments', of
    Government servant would mean the pay which he is drawing as defined in
    Rule 9(2l)(a)(i) of the Fundamental Rules. This Rule clearly excludes the
                                                                                     B

    'special pay' or 'personal pay' granted to the Government servant in view
    of his personal qualifications or otherwise from the purview of the expres-
    sion 'pay' and therefore, whether the 'incentive award' is held either a
    'special pay' or 'personal pay' the same would not form part of'pay' under       C
    Rule 9(2l)(a)(i) of the Fundamental Rules and consequently would not
    form part of emoluments under Rule 31 of the Rules for being taken into
    account for computation of pension of the RespondenL [425-G-H]

           6. It cannot be said that in view of the proviso to Rule 2 of the Fun-
    damental R~les'which was inserted in 1984, no rule can be modified or            D
    replaced by the Governor under Article 309 of the Constitution to the disad-
    vantage of any person already in service except in respect of matters relating
    to the age of superannuation. It has no reference to any other rule which a
    Governor could frame under proviso to Article 309 of the Constitution. In
    that view of the matter the proviso to Rule 2 of the Fundamental Rules
    cannot affect the powers of the Governor to amend the Pension Rules in           E
    exercise of his powers under proviso to Article 309 of the Constitution.
                                                                       [426-C-E]
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9473 of
    1996.
                                                                                     F
        From the Judgment and Order dated 14.7.95 of the Andhra Pradesh
    Administrative Tribunal in O.A. No. 10380 of 1990.

          A. Raghubir, K. Ram Kumar and C. Balasubramanian for the Ap-
    pellants.
                                                                                     G
            S.W.A. Quadri for Lakshmi Raman Singh for the Respondent.

            The Judgment of the Court was delivered by

          PA'ITANAIK, J. This appeal is directed against the judgment of the
    Full Bench of Andhra Pradesh Administrative Tribunal in O.A. No. 10380           H
    422                  SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R.

A of 1990. The Tribunal by the impugned order directed that the 'incentive
  increments' which had been given to the respondent for his meritorious
  work must be held to be a personal pay and the said personal pay has to
  be taken into account for determining the 'emoluments' which the respon-
  dent was drawing on the date of his superannuation for the purpose of
  calculating his pension. The responµent, admittedly, was an employee of
B the erstwhile Hyderabad State and filter the merger of the said State and      -
  on re-organisation he became an employee of the State of Andhra Pradesh.
  On the date of his superannuation on 31.12.1989 he was working as a
  Deputy Executive Engineer in the Irrigation Department and he had been
  granted four advance increments as 'incentive award' pursuant to GOMs
C No. 562 GAD dated 17.11.1982 and GOMs No. 127 I & CAD dated
  8.4.1988. In calculating his pension since this amount drawn by the respon-
  dent as incentive increment was not taken into account he approached the
  Administrative Tribunal. The Tribunal by the impugned order having
   directed that the incentive increments drawn by the respondent on the date
   of his superannuation should be taken as a part of his emoluments and,
D therefore, should be taken into account for determination of his pension,
   the State, has come up in appeal.

         The learned counsel for the appellant contended that the pension of
  the State Government employee has to be determined in accordance with
  the Andhra Pradesh Revised Pension Rules of 1980, which has been
E framed under proviso to Article 309 of the Constitution, hereinafter
  referred to as 'the Rules'. Under the Rules the expression 'emoluments'
  mean 'pay' as defined in Rule 9(21)(a)(i) of the Fundamental Rules which
  a Government servant was receiving immediately before his retirement or
  on his death. In Rule9(21)(a)(i) of the Fundamental Rules the expression
  'pay· means : the pay, other than special pay or granted in view of his
F personal qualifications, which has been sanctioned for a post held by him
  substantively or in an officiating capacity, or to which he is entitled by
  reasons of his position in a cadre. Therefore, the 'incentive award' which
  the respondent was drawing while working as a Deputy Executive Engineer
  cannot form a part of 'Pay' as defined in Rule 9(21)(a)(i) of the Fundamen-
G ta! Rules and consequently would not form a part of 'emoluments' within
   the ambit of Rule 31 of the Rules for the purpose of calculation of pension
   of the Government servant. The Tribunal, therefore, committed gross error
   in directing that the said 'incentive award,. should be taken into account
   for determining the pension of the respondent. The learned counsel for
   the respondent on the other hand contended, Rule 31 which was amended
H in 1988 will not govern the case determining pepsion of the employees who
                    GOVT.OFA.P.v. YOUSUDDIN[PA'ITANAIK,J)                    423

       were already in service and it would apply to those who joined the service A
       after the amendment came into force. The learned counsel further sub-
       mitted that in view of the proviso to Rule 2 of the Fundamental Rules the
       Pension Rules could not have ·been amended to the disadvantage of a
       person already in service and consequently the amended provisions of Rule
       31 of the Revised Pension Rules must be declared to be invalid. Though
       the Tribunal did not go into the said question even though raised, the B
       respondent is entitled to raise the question in support of the order passed
       in favour of the respondent by the Tribunal.

             In view of the rival submissions at the Bar the questiOns that arise
       for our consideration are :
                                                                                    c
              (i) Is the amended Rule 31 of the Pension Rules has any application
 '     to the existing employees like the respondent or it applies to those
::i<
       employees who would join the service after amendment has come into
       force?

             (ii) Whether in calculating the pension of the respondent, the amount D
       which he was receiving as 'incentive award' on the date of his superannua-
       tion can be taken as a part of emoluments within the meaning of Rules 31
       of the Revised Pension Rules?

              (iii) Is the proviso to Rule 2 of the Fundamental Rules any way
       affects the amendment of the Pension Rules as contended by learned           E
       Counsel for the respondent?

              So far as the contention raised by the counsel appearing for the
       respondent that the amended Rules 31 of the Pension Rules will have no
       application to the existing employees of the Government is concerned, we
       do not find any substance in the same. The Pension Rules is a Rule framed F
       by the Governor in exercise of the power under proviso to Article 309 of
       the Constitution. The relationship between the Government and its servant
       is not like an ordinary contract of service between a master and servant
       but a legal relationship something in the nature of status. Origin of Govern-
       ment service is contractual. But once appointed to his post or office, the G
       government servant acquires a status and his rights and obligations are no
       longer determined by consent of both parties, but by statute or statutory
       rules which may be framed and altered unilaterally by the Government.
       The Legislature under Article 309 of the Constitution and the Governor
       under proviso to Article 309 of the Constitution can make law determining
       the service conditions of the Government employees and such law can also H
    424                             SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R.

A be retrospectively made. But in the case in hand question of retrospective
    application of the amended provisions of Rule 31 of the Revised Pension
    Rules really does not arise. It becomes applicable to all the employees who
    were in service on the date the amended rules came into force for the
    purpose of finding out the meaning of the expression 'emoluments' on the
    basis of which the pension of the employee has to be calculated on
B   superannuation. In this view of the matter the contention of the learned
    counsel for the respondent that Rule 31 would apply only to those
    employees who joined service after the amended rules came into force is
    wholly without substance and the same is accordingly rejected.

          Coming now to the second question the answer would depend upon
C an interpretation of Rule 31 of the Revised Pension Rules and Rule 9(21)
    (a)(i) of the Fundamental Rules. Under Rule 31, of the Pension Rules the
    expression 'emoluments' would mean 'Pay' as defined in Rule 9(21)(a)(i)
    of the Fundamental Rules which a Government servant was receiving
    immediately before his retirement. Rule 9(21)(a)(i) of the Fundamental
D   Rules defines 'Pay' to mean : 'Pay' means the amount drawn monthly by a
    Government servant as -

           (i) the pay, other than special pay or granted in view of his personal
    qualifications, which has been sanctioned for a post held by him substan-
    tively or in an officiating capacity, or to which he is entitled by reasons of
E   his position in a cadre;

          The expression 'Special Pay' has been defined in Fundamental Rules
    9(25) to mean an addition, of the nature of pay, to the emoluments of a
    post or of a Government servant granted in consideration of -

F         (a) the specially arduous natures of the duties; or

          (b) a specific addition to the work or responsibility.

           The expression 'personal pay' has been defined in Rule 9(23) of the
     Fundamental Rules to mean, additional (Jay granted to the Government
G    servant,

           (a) .......................................................... .

           (b) in exceptional circumstances, on other personal considerations.

H          The learned counsel appearing for the respondent had submitted
              GOVT. OF AP. v. YOUSUDDIN [PATIANAIK, J)                  425
. that in view of the clarificatory circular issued by the General Administra- A
  tion (AR&T I) Department dated 25.5.84 to the effect that the increments
  with cumulative effect granted to a government servant the terms and
  conditions governing the grant of Family Planning Ineentive increment
  would apply and since under the terms and conditions governing the grant
  of Family Planning incentive issued by the Government of Andhra Pradesh B
  under Memorandum No. 402/02/78-M&H dated 5.5.1978 such advance
  increments have been held to be 'personal Pay' to be reckoned as basic
  pay for the purpose of pension the respondent is entitled to getthe same ·
  benefit, so far as the incentive increments awarded in his favour which he
  was drawing on the date of his superannuation. We are, however, not in a
  position to accept this submission of .the learned counsel for the respon, C
  dent. It is no doubt true, that under the Family welfare Programme an
  incentive granted to the government servant therein the Government of
  Andhra. Pradesh had issued an Administrative Order stating therein that
  the advance increments sanctioned for undergone sterlization operation in
  the lower post or higher post shall continue to be available as 'personal
  pay' to be reckoned as basic pay for the purpose of pension etc. The D
  incentive increment which is granted to a government servant for arduous
  nature of duty discharged by a government servant though would not
  directly come under the purview of the Medical and Health Department
  Memorandum dated 5.5.78 relating to grant of increments for undergoing
  sterlization operation, yet in view of the Government letter dated 25.5.84 E
  issued by the General Administration Department making terms and con-
  ditions of governing the grant of Family Planning increment incentive
  applicable, the said incentive increment can be held to. be a 'personal pay' .
  of the respondent. But neither the aforesaid Heall!! Department Memoran-
  dum dated 5.5.1978, nor the Government latter dated 25.5.84, issued by the
  General Administration Department could make aforesaid incentive incre- F
  ment to be a part of the emoluments under the Provisions of Rule 31 of
  the Pension Rules so that the respondent can claim inclusion of the said
  amount for determining his pension. It may be stated here that for the
  purpose of Rule 31 of the Pension Rules 'emoluments' of government
  servant would mean the pay which he is drawing as defined in Rule
  9(21)(a)(i) of the Fundamental Rules. Said Rule 9(21)(a)(i) clearly ex- G
  eludes the 'special pay' or 'personal pay' granted to a government servant
  in view of his personal qualifications or otherwise from the purview of the
  expression 'pay' and, therefore, whether the 'incentive award' is held either
  a 'special pay' or 'personal pay' the same would not form part of 'pay'
  under Rule 9(21)(a)(i) of the Fundamental Rules and consequently would ff
    426                   SUPREME COURT REPORTS [1997) SUPP. 3 S.C.R.

A not form part of emoluments under Rule 31 of the Rules for being taken
    into account for computation of pension of the respondent. The Tribunal,
    therefore, is wholly in error in directing that the 'incentive award' granted
    to the respondent may be taken into account for determining his pension.
    The contention of the learned counsel appearing for the respondent, on
    this score is devoid of any force.
B
          So far as the third question is concerned, undoubtedly the Tribunal
   has not gone into the issue and as the question had been raised before the
    Tribunal, we permitted the respondent to raise the question also in this
   proceeding. The counsel for the respondent urged that in view of the
    proviso to Rule 2 of the Fundamental Rules which was inserted by Section
C 7 of Act 23 of 1984, no rule can be modified or replaced by the Governor
    under Article 309 of the Constitution of India to the disadvantage of any
   person already in service except in respect of matters relating to the age
    of superannuation and as such the Pension Rules could not have been
  . amended to the disadvantage of the respondent who was already in service.
D We do not find any force in the aforesaid contention since the proviso in
    question prohibits modification or replacement of provisions of Fundamen-
    tal Rules itself in exercise of power under Article 309 of the Constitution
    to the disadvantage of a person already in service. It has no reference to
    any other Rule which a Governor could frame under proviso to Article 309
    of the Constitution. In that view of the matter the proviso to Rule 2 of the
E Fundamental Rules cannot affect the power of the Governor to amend the
    Pension Rules in exercise of his power under the proviso to Article 309 of
    the Constitution. The said contention is devoid of any force.

           In view of our conclusion on question no. 2 the impugned order of
    the Tribunal cann9t be sustained and we accordingly set asid~ the same. It
F   may be stated that the 'incentive award' which the respondent was drawing
    while continuing as Deputy Executive Engineer cannot be held to be a part
    of 'emoluments' for the purpose of determining the pension of the respon-
    dent under the Pension Rules. The QA No. 10380 of 1990 filed before the
    Andhra Pradesh Administrative Tribunal stands dismissed and this appeal
    is allowed but in the circumstances there will be no order as to cost.
G
    K.H.N.S.                                                    Appeal allowed.