Supreme Court of India
U. RAGHAVENDRA ACHARYA AND ORS.versusSTATE OF KARNATAKA AND ORS.
- Citation
- 2006 INSC 331
- Decided
- 12 May 2006
- Disposal
- Appeal(s) allowed
- Bench
- S B SINHA
Holding
Retired teachers are entitled to pension computed on the basis of the revised UGC pay scales effective 1 January 1996, and the State cannot retrospectively curtail those vested benefits.
Summary
The appellants were retired teachers of university and private aided colleges in Karnataka who retired between 1 January 1996 and 31 March 1998. They had been placed on par with government college teachers and were governed by the UGC pay scales, which were revised with effect from 1 January 1996. The State Government later issued notifications fixing a cut‑off date of 1 April 1998 for the computation of pension benefits, thereby seeking to deny the appellants pension based on the revised pay scales. The Supreme Court held that the teachers were entitled to pension calculated on the basis of the emoluments last drawn under the revised UGC scales, that Rule 296 of the Karnataka Civil Services Rules applied to them, and that the State could not retrospectively alter their vested pension rights. Consequently, the impugned notifications were set aside and the appeals were allowed with costs.
Issues considered
- Whether retired teachers who received the benefit of the revised UGC pay scales w.e.f. 1 January 1996 can be denied pensionary benefits calculated on that basis by fixing a later cut‑off date.
- Whether Rule 296 of the Karnataka Civil Services Rules applies to the appellants for the purpose of computing pension.
- Whether a State notification can retrospectively alter vested pension rights of retired employees.
Subjects
pensionretrospective effectRule 296UGC pay scalesvested rightdiscriminationservice lawKarnataka Civil Services Rulescut‑off dateemoluments
Judgment
A U. RAGHAVENDRA ACHARYA AND ORS.
v.
STATE OF KARNATAKA AND ORS.
MAY 12, 2006
B [S.B. SINHA AND PP. NAOLEKAR, JJ.]
Service Law:
Karnataka Civil Services Rules: Rule 296.
c Pension-Calculation of-With reference to emoluments last drawn- -
Teachers had retired during the period I. I. 1996 to 31.3. 1996 fi·om Regional
Engineering College which was established by the Central Government at
the request of the State Government-It was a centrally aided institution-
Teachers of the Uniwrsity or Private Aided Colleges of the State were being
D paid the same salary as was being paid to the teachers of the Government
Colleges-The revised scales of pay as recommended by the Pay Revision
Committee became applicable to the teachers of the Engineering College
with effect from I.I. I 986-The UGC scales ofpay were applicable to them--
The Central Government revised the scales ofpay of its employees with effect
from 1.1.1996-The State Government issued appropriate notification
E extending the UGC pay scales as revised from 1. I. 1996, inter alia, to the
teachers of the Government and Aided Colleges-However, a notification
dated 22. 7.2000 was issued by the State Government extending the UGC pay
scales from I .1.1996 tu the teachers, librarians, etc. of the <Jovernmentl
Aided Culleges--A further notification dated 8.8.2000 was issued extending
the AICTE pay scale~ from 1.1.1996 to them - But the High Court held that
F the revised scales of pay were not applicable to those teachers who had
retired during the period from 1.1.1996 to 31.3.1998-Correctness of-
Held: The teachers of the Engif;eering College were treated to be at par with
the holders of similar posts in Government Co//eges--The said teachers
indisputably are governed by the UGC scales of pay--They are entitled to
G the pensionary benefits also- -Pension is not a bounty-It is treated to be a
deferred salary--The said teachers had retired from service-The State,
therefore, could not have amended the statutory Rules adversely affecting
their pension with retrospective effect-Hence, the swd teachers could
nut have been deprived of retiral benefits calculated with effect Ji-om
/. /. J996.
H
582
U. RAGHAVENDRAACHARYA v. STATE 583
- Words & Phrases:
"Emoluments"-Meaning of-In the context of Rule 296 of the
A
Karnataka Civil Services Rules.
The appellants were the retired teachers of the University or
Private Aided Colleges and had retired during the period 1.1.96 to B
31.3.1998. The appellants were being paid the same salary as was being
paid to the teachers of the Government colleges. The appellants had
retired from the Karnataka Regional Engineering College, which was
established by the Government of India at the request of the State
Government. It was a centrally aided institution and was notified by the
Government of India and the State Government as a Deemed University
c
with effect from 26.6.2002.
The revised scales of pay as recommended by the Pay Revision
Committee became applicable to the appellants with effect from 1.1.1986.
The UGC scales of pay were applicable to them. The Central Government D
revised the scales of pay of its employees with effect from 1.1.1996. The
State Government issued appropriate notification extending the UGC
pay scales as revised from 1.1.1996, inter alia, to the teachers of the
Government and Aided Colleges. However, a notification dated 22.7.2000
was issued by the State Government extending the UGC pay scales from
1.1.1996 to the teachers, librarians, etc. of the Government/Aided E
Colleges. A further notification dated 8.8.2000 was issued extending the
AICTE pay scales from 1.1.1996 to them.
The appellants filed writ petitions before the High Court questioning
the said notifications dated 22.7.2000 and 18.8.2000. A Single Judge of F
the High Court allowed the writ petitions holding that the revised scales
of pay became applicable to those teachers who had retired during the
period from 1.1.1996 to 31.3.1998 and that they could not have been
deprived of the said benefit. But the Division Bench of the High Court
allowed the appeal preferred by the State against the said judgment.
The review petitions filed thereagainst were dismissed. Hence the G
appeals.
The following question of law arose before the Court:
Whether the appellants having been given the benefit of the revised H
A
584 SUPREME COURT REPORTS [2006) SUPP. 2 S.C.R.
pay scales w.e.f. 1.1.1996 could have been deprived of the retiral benefits
calculated with effect therefrom?
..
Allowing the appeals, the Court
HELD: I. The fact that the appellants were treated to be at par
B with the holders of similar posts in Government Colleges is neither
denied nor disputed. The appellants indisputably are governed by the
UGC scales of pay. They are entitled to the pensionary benefits also.
They had been given the benefits of the revision of scales of pay by the
10th Pay Revision Committee w.e.f. 1.1.1996. The pensionary benefits
c payable to them on attaining the age of superannuation or death were
also stated to be at par with the employees of the State Government.
The State Government, for all intent and purport, has treated the
teachers of the Government Aided Colleges and the Regional Engineering
colleges on the one hand and the teachers of the colleges run by the State
itself on the other hand at par. Even the financial rules were made
D applicable to them in terms of the notifications, applying the rule of
incorporation by reference. Although Rule 296 of the Karnataka Civil
Services Rules per se may not be applicable so far as the appellants are
concerned, it now stands admitted that the provisions thereof have been
applied to the case of the appellants also for the purpose of computation
E of pensionary benefits. Therefore, there cannot be any doubt whatsoever
that the term "Emoluments" as contained in Rule 296 of the Rules
would also l\pply to the case of the appellants. (595-A, B, C, D]
2. It is one thing to say that the State can fix a cut-off date unless
and until the same is held to be arbitrary or discriminatory in nature;
F the same would be given effect to for carrying out the purpose for which
it was fixed. IQ this case, the cut-off date, for all intent and purport, had
been fixed as 1.1.1996. It is, thus, not a case where the cut-off date was
fixed as 1.4.1996 as the State merely intended to confer only same
benefits. (596-A, BJ
G Transmission Corporation, A.P. Ltd. v. P. Ramachandra Rao, (2000[
4 SCALE 362, held inapplicable.
3. The State while implementing the new scheme for payment of
grant of pensionary benefits to its employees, may deny the same to a
H class of retired employees who were governed by a different set of rules.
U. RAGHAVENDRA ACHARYA v. STATE 585
The extension of the benefits can also be denied to a class of employees A
if the same is permissible in law. The case of the appellants, however;
stands absolutely on a different footing. They had been enjoying the
benefit of the revised scales of pay. Recommendations have been made
by the Central Government as also the University Grants Commission
to the State Government to extend the benefits of the Pay Revision
Committee in their favour. The pay in their case had been revised in B
1986 whereas the pay of the employees of the State Government was
revised in 1993. The benefits of the recommendations of the Pay
Revision Committee w.e.f. 1.1. 1996 thus could not have been denied to
the appellants. (596-C, D, E]
c
4.1. The stand of the State Government that the pensionary
benefits had been conferred on the appellants w.e.f. 1.4.1998 on the
premise that the benefit of the revision of scales of pay to its own
employees had been conferred from 1.1.1998 is wholly misconceived.
Firstly, because the employees of the State Government and the
appellants, in the matter of grant of benefit of revised scales of pay, do D
not stand on the same footing as revised scales of pay had been made
applicable to their cases from a different date. Secondly, the appellants
had been given the benefit of the revised scales of pay w.e.f. 1.1.1996.lt
is now well settled that a notification can be issued by the State
accepting the recommendations of the Pay Revision Committee with E
retrospective effect as it was beneficent to the employees. Once such a
retrospective effect is given to the recommendations of the Pay Revision
Committee, the concerned employees despite their reaching the age of
superannuation in between the said dates and/or the date of issuance
of the notification would be deemed to be getting the said scales of pay
as on 1.1.1996. By reason of such notification as the appellants had F
derived a vested right, they could not have been deprived therefrom and
that too by reason of executive instructions. (596-H, 597-A-B)
4.2. Pension, as is well known, is not a bounty. It is treated to be
a deferred salary. It is akin to right of property. It is co-related and has G
a nexus with the salary payable to the employees as on the date of
retirement. [597-C]
5. These appeals involve the question of revision of pay and
consequent revision in pension and not the grant of pension for the first
time. Only the modality of computing the quantum of pension was H
586 SUPREME COURT REPORTS (2006] SUPP. 2 S.C.R.
A required to be determined in terms of the notification issued by the State
Government. For the said purpose, Rule 296 of the Rules was made
applicable. Once the Rule became applicable, indisputably the
computation of pensionary benefits was required to be carried out in
terms thereof. The Pension Rules envisage that pension should be
calculated only on the basis of the emoluments last drawn. No order,
B therefore, could be issued which would be contrary to or inconsistent
therewith. Such emoluments were to be reckoned only in terms of the
statutory Rules. If the State had taken a conscious decision to extend
the benefit of the UGC pay scales w.e.f. l. I.I 996 to the appellants
allowing them to draw their pay and allowances in terms thereof, there
C is no reason as to why the pensionary benefits would not be extended
to them from the said date. [597-D, E, F)
6. The impugned orders furthermore are opposed to the basic
principles of law inasmuch as by reason of the executive instructions an
D employee cannot be deprived of a vested or accrued right. Such a right
to draw pension to the extent of 50% of the emoluments, computed in
terms of the Rules w.e.f. 1.1.1996, vested to the appellants in terms of
Government notification read with Rule 296 of the Rules. [598-A)
7. As the amount calculated· on the basis of the revised scales of
E pay on and from 1.1.1996 to 31.3.1998 have not been paid to the
appellants by the State Government as ex gratia, and in fact was paid
by way of emoluments to which the appellants became entitled to in
terms of their conditions of service, which in turn are governed by the
statutory Rules, they acquired a vested right therein. If the appellants
F became entitled to the benefits of the revised scales of pay, and
consequently to the pension calculated on the said basis in terms of the
impugned rules, there would be a reduction of pension with retrospective
effect which would be violative of Articles 14 and 16 of the Constitution
of India. [598-B-D[
G Chairman, Railway Board v. C.R. Rangadhamaiah, (1997) 6 SCC
623, followed.
8.1. The appellants had retired from service. The State, therefore,
could not have amended the statutory Rules adversely affecting their
H pension with retrospective effect. [598-G)
U. RAGHAVENDRAACHARYA v. STATE 587
Subrata Sen v. Union of India, [2001) 8 SCC 71; D.S. Nakara v. A
Union of India, [1983] 1 SCC 305; State of West Bengal v. W.B. Govt.
Pensioners' Associations, [2002] 2 SCC 179; K.L. Rathee v. Union ofIndia,
[1997) 6 SCC 7 and Indian Ex-Services League v. Union of India, [1991)
2 sec 104, relied on.
5.2. It is also trite that persons similarly situated cannot be B
discriminated against. [600-D)
K. T. Veerappa v. State of Karnataka, (2006) 4 SCALE 293, relied on.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1389 of
2006.
c
From the Judgment and Order dated 11.3.2004 of High Court of
Karnataka at Bangalore in W.A. Nos. 587-625/2002.
WITH D
Civil Appeal No. 1390 of 2006.
Civil Appeal No. 1391 of 2006.
Civil Appeal No. 1392 of 2006. E
Civil Appeal No. 1393 of 2006.
Civil Appeal No. 1394 of 2006.
Civil Appeal No. 1395 of 2006. F
Civil Appeal No. 1865 of 2005.
S.B. Sanyal, Naresh Kaushik, Shilpa Chohan, S.C. Gupta, D.K. Sharma,
Mrs. Lalitha Kaushik, S.N. Bhat, D.P. Chaturvedi, N.P.S. Panwar, R.S.
Hegde, Savitri Pandey, Chandra Prakash, Raahul Tyagi, Girish G
Ananthamurthy, P.P. Singh, Naveen R. Nath, Lalit Mohini Bhat, Amitha
Shenoy and Hetu Arora for the Appellants.
Sanjay R. Hegde, Anil Kumar Mishra, A. Rohan Singh, Vikas Roajipura,
Poonam Kaul and E.C. Vidyasagar for the Respondents. H
588 SUPREME COURT REPORTS (2006] SUPP. 2 S.C.R.
A The Judgment of the Court was delivered by
S.B. SINHA, J. :
These appeals involving identical questions of fact and law were taken
up for hearing together and are being disposed of by this common judgment.
B
The appellants in these appeals are retired teachers of the University
and Private Aided Colleges (to whom UGC scales of pay were applicable).
They have retired during the period 1.1.1996 to 31.3 .1998. So far as the
teachers of the University or Privates Aided Colleges are concerned,
indisputably, they were being paid the same salary as was being paid to the
c teachers of the Government colleges. The appellants in Civil Appeal
No.1391/2006, have retired from the Karnataka Regional Engineering
College, Surathkal, Karnataka, which was established by the Government of
India at the request of the Government of Karnataka. It is a centrally aided
institution as envisaged under Entry 64 of List I of the Seventh Schedule
D to the Constitution of India. So far as the said institution is concerned, its
expenditure used to be borne by the Government of India and the State of
Karnataka. It, however, has been notified by the Government of India as a
Deemed University with effect from 26.6.2002.
It is not in dispute that the revised scales of pay as recommended by
E the Pay Revision Committee became applicable to the appellants with effect
from 1.1.1986. It is also not in dispute that the UGC scales of pay were
applicable to them. The Government of Karnataka, by a letter dated
17.12.1993 directed that the matter relating to the fixation of pension on the
basis of UGC pay scales would be governed by Rule 296 of the Karnataka
Civil Services Rules (hereinafter referred to as 'the Rules'), providing for
F
computation of emoluments for the purpose of pension and gratuity of a
Government ser1ant. In the said letter it was stated:
"The term 'emoluments' has been defined and redefined from time
to time whenever pension has been revised by Executive orders.
G The terms Emoluments for purpose of pensionary benefits as
defined in G.O. Dated 17.8.87 benefits includes among other things
the last pay drawn. It is therefore, clarified that the pay drawn by
the teachers of degree colleges in respect of whom UGC scales have
been extended by G.O. No. ED 88 UNI 88 dtd. 30.3.90 w.e.f. 1.1.86
and who have opted to UGC scales of pay, the last pay drawn by
H
U. RAGHAVENDRA ACHARYA v. STATE [SINHA, J.] 589
them in the UGC scales of pay among other things may be treated A
as emoluments for purpose of pensionary benefits under G.O. Dtd.
FD 20 SRS 87 (I) dtd. I 7 .8.87 ."
In continuation of the said letter dated I 7. 12.1993, the Government
of Karnataka by letter 12. I 0. I 994, clarified that the pay drawn by the
teachers of degree colleges in respect of whom UGC scales of pay had been B
extended by G.O. No. ED 28 UNI 88 dtd. 30.3.90, may be treated as
emoluments for the purpose of settling pensionary benefits under G.O.
No. FD 20 SRS 87(F) dated I 7.8.87. It was further stated:
"It is further clarified that the clarification issued already on
17.12.93 equally applies in respect of teachers of aided degree
c
colleges also to whom the benefit of UGC scales of pay as
contemplated in G.O. ED 88 UNI 88 dated 30.3.90 have been
extended. Action may be taken accordingly."
By a notification bearing G.O. No. ED No. 442 dated I2.5.88, the D
Government of Karnataka extended the revision of pensionary benefits
contemplated by the aforesaid order dated I 7.8.87, to the teachers of the
aided educational institutions, whose pension was to be paid out of the
consolidated fund of the State. It stands admitted that whereas 80% of the
additional amount required for discharging the said liability was to be borne
by the Central Government, 10% thereof was to be borne by the institution E
concerned and the rest 10% amount was to be raised by way of additional
generation of revenue, as would appear from the letter of the Ministry of
Human Resource Development, Department of Education, Government of
India dated I 7.8.98.
F
It is furthermore not in dispute that the Central Government pursuant
to or in furtherance of the recommendations made by the Central Pay
Commission, revised the scales of pay of its employees with effect from
1.1.1996. The revision of such pay scales was also accepted by the University
Grants Commission. Grant of revision of such pay scales was also
recommended for the posts held by the appellants herein. On or about G
22.7.1999, the Government of India by a letter addressed to the Education
Secretaries of all the States and Union Territories, stated in a categorical
stand that the revision of pension structure for retired teachers shall be
as is applicable to the employees working in Central Universities. It was
stated:
H
590 SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R.
A "Since the Central Govt. has already revised the pension structure
of its employees and the same has been extended to the teachers
in Central Universities, it is requested that appropriate orders in this
regard may kindly be issued at an early date for the teachers in State
Universities and Colleges.
B The AIFUCTO delegations further highlighted the problems faced
by teachers in getting recognition of past service for pensionary
benefits and condonation of break in service while moving from one
State to another. It is requested that the guidelines issued by UGC
in this regard may be followed and the State Govts. May have
c reciprocal arrangements amongst themselves to obviate the problems
faced by the teachers."
The Government of Karnataka issued appropriate notification
extending the UGC pay scales as revised from l. l .1996, inter alia
to the teachers of Government and Aided Colleges, stating:
D
"5. Government is pleased to revise the pay scales of teachers,
librarians and physical education directors in Government and aided
colleges under the control of the Department of Collegiate Education
as detailed below.
E 6. Coverage:
This scheme applies to Lecturers, Lecturers (Senior Scale), Lecturers
(Selection Grade), Librarians, Librarians (Senior Scalr), Librarians
(Selection Grade), Director of Physical Education, Directors of
Physical Education (Senior Scale) and Directors of Physical
F Education (Selection Grade), Principals Grade-I and Principals
Grade-II.
7. Date of effect:
The revised UGC pay scales will be retrospectively effective from
G 1st January, 1996, and other benefits prospectively from the date
of this order."
The said revised scales of pay were to be inclusive of basic pay,
dearness allowance, interim relief and fixed dearness allowance admissible
H as on I. 1.1996. However, on 22. 7.2000, a notification was issued by the
U. RAGHAVENDRAACHARYA v. STATE [SINHA, J.] 591
Government of Kamataka, extending the UGC pay scales from 1.1.1996, to A
the teachers, librarians, etc. of the Government/Aided Colleges stating:
"Revised UGC pay scales have been extended to the Teachers,
Librarians and Physical Education Directors in the Government/
Aided Colleges of the Collegiate Eduction Department in GO read
at (I) above. Subsequently, various clarifications have been issued B
by the Government of India and UGC on the implementation of the·
pre-revised scale will become entitled to one increment in the
revised scale with effect from 1.1.1996 and the lecturers drawing
pay at 14th and 15th stage of the pre-revised scale will become
entitled to two increments in the revised scale on 1.1.1996. As the c
lecturers drawing pay from I0th to 15th stage will get the benefit
of bunching, they will become entitled to the next increment in the
revised scale on completion of 12 months from the date of stepping
up of their pay viz. 12 months from 1.1.1996."
However, paragraph 27 A was inserted thereto in respect of revision of
D
pensionary benefits, which is to the following effect:
"27-A: Revision of pensionary benefits:
(i) UGC scales as revised from 1.1.96 have been linked to the index E
level of 1510 points inasmuch as the revised pay scale structured
includes the DA admissible as on 1.1.96 to the extent of 138% of
basic pay. As on 1.1.96 the pensionary benefits under the ·state
Government had not been revised. The revised pay scales of the
State Government employees came into force from 1.4.98 by F
merging the DA as on 1.1.96. The pensionary benefits were also
simultaneously revised w.e.f. 1.4.98. Therefore, the revised pay
drawn in the UGC pay scales for the period from 1.1.96 upto
31.3.98 shall not be taken as emoluments for the purpose of
pensionary benefits. Accordingly,
G
(a) In respect of teachers drawing UGC pay scales who have retired
during the period from 1.1.96 to 31.3.98 they shall be eligible for
the benefit of the fixation of pay and arrears under the revised UGC
scales of pay only. There shall not be any change in their pensionary
H
592 SUPREME COURT REPORTS (2006] SUPP. 2 S.C.R.
A benefits with reference to the revised UGC pay and the retirement
benefits already sanctioned in the pre-revised UGC pay scales will
not undergo any modifications. However, they shall be entitled to
the benefit of fixation of revised pensionlfam ily pension as
contemplated in GO No.FD(Spl.) 2 PET 99 dated 15.2.99 only
w.e.f. !st April, 1998. Para 6 of GO No.FD (Sp!.) 2 PET 99 dated
B 15.2.99 stand modified to this extent.
(b) In respect of teachers drawing UGC pay scales and who have
issued on or after 1.4.98, the pay drawn in the revised UGC pay
scales shall be counted for the purpose of pensionary benefits and
c the orders revising the pensionary benefits vide GO No.FD (Sp!.)
I PET 99 dated 15.2.99 shall be made applicable."
A similar amendment was made in respect of the Regional Engineering
Colleges by inserting para 3 IA.
D The mode of payment of arrears in the revised scales of pay in terms
of the notification was to be made as under:
"10. Mode of payment of arrears:
E (a) The arrears of pay and allowances during the period from
1.1.1996 to 31.5.1999 shall be invested in the NSC VIII issue in
multiples of Rs.100 to the extent of 80% of the amount, the balance
amount being paid in cash.''
(b) In case of employees who cease to be in service due to death,
F
retirement or resignation the arrears shall be ful1~1 payable in cash.''
A further notification was issued on 8.8.2000, extending the AICTE
pay scales from 1.1.1996 to the teachers, librarians, etc. of the Government
Aided Colleges and Engineering Colleges, which was to the same effect.
G
Writ petitions were filed before the Kamataka High Court questioning
the said notifications dated 22.7.2000 and 8.8.2000. The said writ petitions
were allowed holding that the impugned notifications were illegal. The
learned Single Judge in his judgment opined that in view of the notification
H dated 22.7.1999, issued by the State ofKamataka, the re\ised scales of pay
U. RAGHA VENDRA ACHARYA v. STATE [SINHA, J.] 593
became applicable in respect of those teachers who had retired during the A
period from 1.1.1996 to 31.3 .1998 and they could not have been deprived
of the said benefit. It was held that the impugned notifications were arbitrary
as these resulted in discrimination between the teachers working in the
Government Colleges and the teachers working in the Non-Government
Colleges which would mean treating the equals unequally. It was further
opined that, in any event, the teachers of the Government Aided Colleges
B
as also the teachers of the Regional Engineering Colleges formed a class by
themselves and no discrimination could have been made between the
employees who retired prior to 31.3.1998 and those retiring subsequent
thereto.
c
The appeals preferred by the State of Karnataka against the said
judgment were allowed by the Division Bench of the Karnataka High Court,
holding as under:
"It is not disputed that method of calculation of pension, 50% of D
last pay drawn is same to all and there is no change in the method
of calculation. However, for the purpose of revised pension, cut off
date is fixed as 1.4.1998. As stated, the pensionary benefits were
uniformly revised in respect of all classes of teachers with effect
from 1.4.1998 and in view of this, the cut off date fixed on 1.4.1998
by inserting clauses 27-A & 31-A by orders dated 29.7.2000, E
7.8.2000 and 8.8.2000 in Government Order dated 15.11.1999
cannot be said to be bad. Therefore, the order of learned Single
Judge quashing the orders dated 29.7.2000, 7.8.2000 and 8.8.2000
in setting aside the grant of pension from 1.4.1998 on the ground
of discrimination vis-a-vis the Government employees, is not F
correct. Policy decision has been taken in fixing cut off date having
regard to expenditure involved, financial implications and other
relevant considerations. It cannot be said to be arbitrary or irrelevant
in fixing the cut off date which is applicable uniformly to all
categories of pensioners including Government servants which is in
consonance with Articles 14 and 16 of the Constitution and the G
impugned orders of the Government do not violate Articles 14 and
16 of the Constitution oflndia. Therefore, the order of the learned
Single Judge is liable to be set aside and accordingly set aside."
The review petitions filed thereagainst were dismissed. H
594 SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R.
A Mr. S.B. Sanyal, learned senior counsel appearing on behalf of the
appellants raised a short question in support of these appeals. Learned
counsel would submit that having regard to the fact that the appellants were
given the benefit of the revised scales of pay w.e.f. 1.1.1996, and, thus,
having acquired a vested right in relation thereto, the quantum of their
pensionary benefits must be computed on the basis of 50% of the last pay
B drawn and in that view of the matter although they had been given the benefit
of the revised pay scales from 1.1.1996, the pensionary benefits could not
have been directed to be given from 1.4.1998.
Mr. Sanjay R. Hegde, learned counsel appearing for the State of
C Kamataka, on the other hand, submitted that Rule 296 of the Rules was not
applicable to the case of the appellants herein as they were not Government
servants. It was contended that the action on the part of the State cannot be
said to be suffering from any infirmity whatsoever inasmuch as so far as the
employees of the State of Karnataka are concerned the benefit of the revised
scales of pay was given effect on and from 1.4.1998. According to the
D
learned counsel, although the State of Karnataka had given the benefits of
the revised scales of pay in terms of the recommendations of the UGC, with
retrospective effect from 1.1.1996, it was not obligatory on its part to extend
the retiral benefits thereof to the appellants also from the said date. Our
attention in this behalf has been drawn to the notification dated 24.12.1998
E issued by the UGC which reads as under:
"17 .0 Superannuation benefits:
17 .1.0 The benefit in service to a maximum of 3 years should be
provided for the teachers who have acquired Ph.D. Degree at the
F
time of entry so that, almost all teachers get full retirement benefits,
which are available after 33 years of service ,ubject to overall age
of superannuation;
17 .2.0 Other conditions with respect of superannuation benefits
G may be given as per the Central/State Government Rules."
In view of the rival contentions of the parties as noticed hereinbefore,
the question which arises for consideration before this Court is as to whether
the appellants having been given the benefit of the revised pay scales w.e.f.
H l. l .1996, could have been deprived of the retiral benefits calculated with
U. RAGHAVENDRA ACHARYA v. STATE [SINHA, J.] 595
.. effect therefrom. A
The fact that the appellants herein were treated to be at par with the
holders of similar posts in Government Colleges is neither denied nor
disputed. The appellants indisputably are governed by the UGC scales of
pay. They are entitled to the pensionary benefits also. They had been given
the benefits of the revision of scales of pay by I 0th Pay Revision Committee
B
w.e.f. 1.1.1986. The pensionary benefits payable to them on attaining the age
of superannuation or death were also stated to be at par with the employees
of the State Government. The State of Kamataka, as noticed hereinbefore,
for all intent and purport, has treated the teachers of the Government Aided
. Colleges and the Regional Engineering Colleges on the one hand and the c
teachers of the colleges run by the State itself on the other hand at par. Even
the financial rules were made applicable to them in terms of the notifications,
applying the rule of incorporation by reference. Although Rule 296 of the
Rules per se may not be applicable so far as the appellants are concerned,
it now stands admitted that the provisions thereof have been applied to the D
case of the appellants also for the purpose of computation of pensionary
benefits. Therefore there cannot be any doubt whatsoever that the term
"Emoluments" as contained in Rule 296 of the Rules would also apply to
the case of the appellants. Rule 296 of the Rules reads as under:
"296. In respect ofretirement or death while in service of Government E
Servants on or after first day of July, 1993, the term "Emoluments"
for the purpose of this Chapter means, the Basic pay drawn by the
Government servant in the scale of pay applicable to the post on
the date of retirement or death and includes the following, but does
not include pay and allowance drawn from a source other than the F
Consolidated Fund of the State,-
Note:- (a) Basic pay means the pay drawn in the time scale of pay
applicable to the post immediately before retirement or death." G
Note (a) appended to the Rule 296, states that basic pay would mean
the pay drawn in the time scale of pay applicable to the post immediately
before the retirement or death. Other rules being Rule 296B, 296C, 2960,
etc. specifying different dates of retirement or death used similar terminology. H
596 SUPREME COURT REPORTS (2006] SUPP. 2 S.C.R.
A Rule 297 provides that the tenn "average emoluments" means the average
calculated upon the last three years of service.
It is one thing to say that the State can fix a cut off date unless and
until the same is held to be arbitrary or discriminatory in nature, the same
would be given effect for carrying out the purpose for which it was fixed ..
B In this case, the cut-off date for all intent and purport had been fixed as
1.1.1996. It is, thus, not a case where cut-off date was fixed as 1.4.1998 as
the State merely intended to confer only same benefits. It is, thus, also not
a case like Transmission Corporation, A.P. Ltd. v. P. Ramachandra Rao &
Anr., (2006] 4 SCALE 362, where a section of the employees were excluded
c from being given the benefit of revised pension as they had retired prior to
the cut-off date.
The State while implementing the new scheme for payment of grant
of pensionary benefits to its employees, may deny the same to a class of
retired employees who were governed by a different set of rules. The
D extension of the benefits can also be denied to a class of employees if the
same is pennissible in law. The .::ase of the appellants, however, stands
absolutely on a different footing. They had been enjoying the benefit of the
revised scales of pay. Recommendations have been made by the Central
Government as also the University Grant Commission to the State of
E Karnataka to extend the benefits of the Pay Revision Committee in their
favour. The pay in their case had been revised in 1986 whereas the pay of
the employees of the State of Karnataka was revised in 1993. The benefits
of the recommendations of the Pay Revision Committee w.e.f. 1.1.1996, thus
could not have been denied to the appellants.
F
The stand of the State of Karnataka that the pensionary benefits had
been conferred on the appellants w.e.f. 1.4.1998 on the premise that the
benefit of the revision of scales of pay to its own employees had been
conferred from 1.1.1998, in our opinion, is wholly misconceived. Firstly,
because the employees of the State of Karnataka and the appellants, in the
G matter of grant of benefit of revised scales of pay, do not stand on the same
footing as revised scales of pay had been made applicable to their cases from
a different date. Secondly, the appellants had been given the benefit of the
revised scales of pay w.e.f. I .1.1996. It is now well settled that a notification
can be issued by the State accepting the recommendations of the Pay
H Re\ision Committee with retrospective effect as it was beneficent to the
U. RAGHA VENDRA ACHARYA v. STATE [SINHA, J.] 597
employees. Once such a retrospective effect is given to the recommendations A
of the Pay Revision Committee, the concerned employees despite their
reaching the age of superannuation in between the said dates and/or the date
of issuance of the notification would be deemed to be getting the said scales
of pay as on 1.1.1996. By reason of such notification as the appellants had
been derived of a vested right, they could not have been deprived therefrom
B
and that too by reason of executive instructions.
The contention of the State that the matter relating to the grant of
pensionary benefits vis-a-vis the revision in the scales of pay stands on
- different footing, thus, must be rejected.
Pension, as is well known, is not a bounty. It is treated to be a deferred
c
salary. It is akin to right of property. It is co-related and has a nexus with
the salary payable to the employees as on the date of retirement.
These appeals involve the question of revision of pay and consequent D
revision in pension and not the grant of pension for the first time. Only the
modality of computing the quantum of pension was required to be determined
in terms of the notification issued by the State of Karnataka. For the said
purpose, Rule 296 of the Rules was made applicable. Once this rule became
applicable, indisputably the computation of pensionary benefits was required
to be carried out in terms thereof. The Pension Rules envisage that pension
E
should be calculated only on the basis of the emoluments last drawn. No
order, therefore, could be issued which would be contrary to or inconsistent
therewith. Such emoluments were to be reckoned only in terms of the
statutory rules. If the State had taken a conscious decision to extend the
benefit of the UGC pay scales w.e.f. 1.1.1996, to the appellants allowing F
them to draw their pay and allowances in terms thereof, we fail to see any
reason as to why the pensionary benefits would not be extended to them from
the said date.
In fact the status of the appellants that they were at par with teachers G
of the Government colleges was not disputed. A Division Bench of the
Karnataka High Court in V.P. Babar & Ors. v. State of Karnataka (W.P.
Nos.32163-32208/1998) has clearly held so. It has not been disputed that the
said judgment has become final as the State of Kamataka did not prefer any
appeal thereagainst.
H
598 SUPREME COURT REPORTS [2006) SUPP. 2 S.C.R.
A The impugned orders furthermore is opposed to the basic principles of
law inasmuch as by reason of executive instructions an employee cannot be
deprived of a vested or accrued right. Such a right to draw pension to the
extent of 50% of the emoluments, computed in terms of the rules, w.e.f.
I. I. 1996, vested to the appellants in terms of Government notification read
with Rule 296 of the Rules.
B
As the amount calculated on the basis of the revised scales of pay on
and from 1.1.1996 to 31.3.1998 have not been paid to the appellants by the
State of Kamataka as ex gratia, and in fact was paid by way of emoluments
to which the appellants became entitled to in terms of their conditions of
C service, which in tum are governed by the statutory rules, they acquired a ....
vested right therein. If the appellants became entitled to the benefits of the
revised scales of pay, and consequently to the pension calculated on the said
basis in terms of the impugned rules, there would be reduction of pension
with retrospective effect which would be violative of Articles 14 and 16 of
the Constitution of India.
D
In Chairman, Railway Board and Ors. v. CR Rangadhamaiah and
Ors., [1997) 6 SCC 623, a Constitution Bench of this Court opined:
"Apart from being violative of the rights then available under
E Articles 31 (I) and 19( I )(f), the impugned amendments, insofar as
they have been given retrospective operation, are also violative of
the rights guaranteed under Articles 14 and 16 of the Constitution
on the ground that they are unreasonable and arbitrary since the said
amendments in Rule 2544 have the effect of reducing the amount
of pension that had become payable to employees who had already
F
retired from service on the date of issuance of the impugned
notifications, as per the provisions contained in Rule 2544 that were
in force at the time of their retirement."
The appellants had retired from service. The State therefore could not
G have amended the statutory rules adversely affecting their pension with
retrospective effect.
In Subrata Sen and Ors. v. Union of lndia and Ors .. [2001] 8 SCC 71,
a Division Bench of this Court applying the principles laid down in D.S.
H Nakaru v. Union of lndiu, [I 983] l SCC 305, observed :
U. RAGHAVENDRA ACHARYA v. STATE [SINHA, J.] 599
- "Jn our view the aforesaid para does not in any way support the
contention of the respondents. On the contrary, on parity of
reasoning, we would also reiterate that let us be clear about this
A
misconception. Firstly, the Pension Scheme including the liberalised
scheme available to the employees is non-contributory in character.
Payment of pension does not depend upon Pension Fund. It is the
B
liability undertaken_ by the Company under the Rules and whenever
becomes due and payable, is to be paid. As observed in Nakara case
[1983] l sec 305, 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 payment for the past services rendered. It is a social
welfare measure rendering socio-economic justice to those who in
the heyday of their life ceaselessly toiled for the employer on an
c
assurance that in their old age they would not be left in the lurch.
Maybe 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 the employer to pay monthly D
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 pensioners dividing the Pension Fund or
affecting the pro rata share on addition of new members to the
Scheme. As per Rule l quoted above, an employee would become E
a member of the Fund as soon as he 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 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 per the Rules and that liability is required to be F
discharged by the Union of India in lieu of its taking over of the
Company. The ri~hts of the employees (including retired) are
protected under Section 11 of the Burm ah Oil Company [Acquisition
of Shares of Oil India Limited and of the Undertakings in India of
Assam Oil Company Limited and the Burmah Oil Company (India G
Trading) Limited] Act, 1981."
Yet again, in State of West Bengal and Anr. v. W.B. Govt. Pensioners'
Associations and Ors., [2002] 2 SCC 179, this Court stated the law in the
following terms: H
600 SUPREME COURT REPORTS [2006) SUPP. 2 S.C.R.
A "Because the scales of pay had been revised from 1.1.1986, the
recomputation of pension for such employees as had been granted
the revised scales of necessity was limited to the same cut-off date.
All that the impugned Memorandum No.4056-F dated 25.4.1990
did was to recompute the benefits in favour of post-1.1.1986 retirees
according to the existing formula as provided by Memorandum
B No.7530-F and No.7531-F, both dated 6.7.1988. The same formula
continues to be applied to the pre-1986 pensioners is only on
account of the revision of pay scales and not on account of failure
of the State Government to equitably apply the liberalised Pension
-
Scheme formula. The quantum of the emoluments formed no part
c of the formula for grant of pension during 1986 to 1995."
Also see K.L. Rathee v. Union of India & Ors., (1997) 6 SCC 7 and Indian
Ex-Services League & Ors. v. Union of India, (1991) 2 SCC 104.
It is also trite that persons similarly situated cannot be discriminated
D against. See K. T. Veerappa & Ors. v. State of Karnataka & Ors., (2006) 4
SCALE 293.
For the reasons stated above, the impugned judgment cannot be
sustained and is accordingly set aside. The appeals are allowed with costs.
Counsel fee is assessed at Rs. 5,000 in each appeal.
v.s.s. Appeals allowed.
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