UNION OF INDIA AND ORSversusG. VASUDEVAN PILLAY AND ORS. ETC. ETC .

                          UNION OF INDIA AND ORS                                 A
                                 v.
                G. VASUDEVAN PILLAY AND ORS. ETC. ETC .
..                             DECEMBER 8, 1994

                  [KULDIP SINGH AND B.L. HANSARIA, JJ.]                          B

         Service Law: Central Civil Services (Pension) Rules, 1972

         Ex-Servicemen-Re-employment in civil post-Decision of Union of
     India not to allow Dearness Relief to them-Validity of-Denial of
     Dearness Relief on family pension on employment of dependents like          C
     widows of ex-servicemen-Whether justified-Reduction of pay equivalent
     to enhanced pension of re-employed ex-servicemen holding civil posts on
     1.1.1986-Held: Arbitrary and void

         Constitution ofIndia, 1950:
                                                                                 D
          Articles 14, 16-Ex-Servicemen on re-employment-Fixation of pay-
     Decision of Union of India-Reduction of pay equivalent to enhanced
     pension of ex-servicemen holding civil posts on 1.1.1986-Held:
     classificaiton arbitarary and violative of

         In these appeals by special leave, the questions that arose for · E
     consideration were:

        (1) Whethere the decision ·or the Union of India not to allow
     Dearness Relief (D.R.) on pension to the ex-servicemen on their re-
     employment in a civil post is in accordance with law or not;
                                                                                 F
         (2) Whether denial of D.R. on family pension on employment of
     dependents like widows of the ex-servicemen is justified or not; and

         (3) reduction of pay equivalent to enhanced pension of those ex-
     servicemen who were holding civil posts on 1. 1. 86 following their re-
     employment, is permissible or not.                                      G
         On behalf of the appellant, it was contended that in view of what
     has been stated in clause (ii) of Rule 55-A of the Central Civil Services
     (Pension)Rules, 1972, as amended in 1991, no dearness relief would be
     permissible on the pension/family pension to the ex-servicemen on their
     ~~p~m~                                                                      H
                                         405
     406                  SUPREME COURT REPORTS            [1994] SUPP. 6 S.C.R

A        Alternatively it was contended that there were army instructions
     which read with office Memorandum of Ministry of Finance would
     show that dearness relief on pension could not be paid even to ex-
     servicemen on their re-empoyment.

           Disposing of the matter, this Court
B
          HELD: 1. The ex-servicemen were rightly debarred from Dearness
     Relief on their pensions after they got themselves re-employed to any
     civil post under.the Government oflndia. (410 E)
          2. Apart form what has been laid down in clause (ii) of Rule 55-A
     of the Central Civil Services (Pensions) Rules, 1972 there are materials
c    on record to show that any person, including ex-servicemen, would not
     be entitled to Dearness Relief on pension on his re-employment to any
     department/office of the Central Government. [409 G]
         3. Even if Dearnes Relief be an integral part of pension, there is no
    legal inhibition in dis-allowing the same in cases of those pensioners
D   who get themselves re-employed after retirement. This catetgory of
    pensioners can rightfully be treated differently from those who do not
    get re-employed; and in the case of the re-employed pensioners it would
    be permissible in law to deny Dearness Relief on pension inasmuch as
    the salary to be paid to them on re-employment takes care of erosion in
    the value of the money because of rise in prices which lay at the back of
E   grant of D.R., as they get Dearness Allowance on their pay which
    allowance is not avaibale to those who do not get re-employed.
                                                                   (410 C, DJ

         4. In some of the cases, there has been denial .of Dearness Relief on
    family pension on employment of dependents like widows of the ex-
F servicemen. This has to be sustained in view of what has been stated
    above regarding denial of D.R. on pension on re-employment inasmuch
    as the official documents referred on that point also mention about
  · denial of D.R. on family pension on employment. The rationale is
    getting of Dearness Allowance by the dependents on their pay, which is
    drawn following employment, because of which Dearness Relief on
G family pension can justly be denied as has been rightly done. [410 F, G]
       5. There is no logic and basis for classifying the re-employed
   persons on the basis of their being on employment on 1.1.86. The
   decision which held the field before the impugned Memorandum is not
   taking note of pension while fixing pay of the ex-servicemen on re-
H. emplyment, which was based on good reasons, had no good reason for
                  U.0.1. v. G. V. PILLAY [HANSARIA, J.]              407

its reversal, as enhanced pension was not confined to those who were in A
employment on 1.1.86. The impugned decision is, therefore, arbitrary
and is hit by Articles 14 and 16 of the Constitution, and hence declared
void. (411 H, 412 A]

    T.S. Thiruvengadam v. Secretary to Govenment of India, (1993] 2 SCC
174, distinguished.·                                                    B
    CIVIL APPELLATE JURISDICITON: Civil Appeal Nos. 3543-46 of
1990 Etc. Etc.

   From the Judgment and Order dated 31.10.89 of the Central
Administrative Tribunal in Kerala in T.A.K. No. 404/87 420/87, 17/88 and    C
388of1986.

    Altaf Ahmed, Additional Solicitor General, K.K. Venugopal, M.N.
Krishnamani, N.N. Goswamy, P.P. Tripathi, K.V. Mohan, AK.Srivastava,
B.S.Sehgal, A. Bhattacharjee, S.M. Hooda, B.K. Prasad, Raj Singh, Ms.
Indira Sawhney, Ms. A Katiyar, Ms. Shashi Kiran, Ms. Anjani Ayangri, D
C.V.S. Rao, Wasim Qadri, K.M.K. Nair, V. Deepak, G. Prakash,
Rajagopalan, Rejith, S. Srinivasan, Ms. Sushma Suri, Ms. Malini Poduyal,
S.N. Terdo~ P.Parmeswaran, R. Venkataramani, P. Kesava Pillai, Ms.
Subhashini, V .K. Verma, Anis Ahmed Khan, Sudarsh Menon, Surya Kant,
K.K. Mohan, B.S. Gupta, A Bhatacherjee S.R. Setia, N.S. Bisht, Mrs.
Revathy Raghavan, T.V.Ratnam and D.S. Mehta for the appearing parties.   E
    The Jqdgment of the Court was delivered by

    HANSARIA, J. This conglomeration of appeals (some of which arise
because of leave already granted and some come into existence because of
leave being granted) require us to decide three quesitons:
                                                                            F
     (1) Whether the decision of the Union of India not to allow Dearness
Relief (D.R.) on pension to the exserviceman on their re-employment in a
civil post is in accordance with law or not;

    (2) Whether denial of D.R. on family pension on emplyment of
dependents like widows of the exservicemen is justified or not and          G
    (3) reduction of pay equivalent to enhanced pension of those ex-
servicemen who were holding ci\'il posts on 01.01.86, following their re-
employment, is permissible or not.

    We would examine these questions seriatim.                              H
    408                  SUPREME COURT REPORTS             [1994] SUPP. 6 S.C.R

A         2. Disallowing ofD.R. on pension on re-employment.

         To answer the above question involved in some of the appeals, the
    background leading to the aforesaid decision may be briefly noted. To start
    with there was no provision for payment of D.R. to the pensioners. Various
    representations were made to the Third Pay Commission seeking some
B   recommendations in this regard for protecting the pension of the
    Government employees from erosion on account of possible increases in
    the cost of living in future. The Commission considered this matter and also
    the question regarding the manner in which some relief could be provided
    to the future pensioners. After having noted the various suggestions which
    the Commission received in reply to its questionnaire, it recommended that
C   all future pensioners, irrespective of the amount of pension drawn by them,
    should be given relief @5% of their pension subject to a minimum of Rs. 5
    per mensem and maximum of Rs.25. The Commission further
    recommended that the relief should be given as and when there is a 16-
    point rise in the 12 monthly average of the All India Working Class
    Consumer Price Index. This recommendation of the Commission was
D   accepted by the Central Government vide its Office Memorandum of even
    no. dated 6th April, 1974, making the relief available to those employees
    belonging to Class II, III and IV, who retired from Services prior to
    01.01.73, as well as those who retired afterwards.

        3. A decision was, however, taken subsequently not to pay D.R. to re-
E   employed pensioners. This was made applicable to those ex-servicemen
    who had come to be reemployed in civil posts. Varous writ petitions and
    Original Applications were filed in different legal fora of the country,
    which came to be decided either by unhoding the validity of the decision or
    by taking a contrary view. The parties who Jost have preferred these
    appeals.
F
        4. The learned Additional Solicitor General appearing for the Union of
    India submits that the decision merits our acceptance because of what hi;is
    been stated in clause (ii) of Rule 55-A of Central Civil Services (Pension)·
    Rules, 1972, as amended in 1991. We are, however, of the view that the
    decision cannot be so suported for the reason that the aforesaid Rules have
G   application to the persons who were members of Central Civil Services.
    The ex-servicemen having apparently not been members of such Services,
    what has been provided in Rule 55-A(ii) cannot be invoked to deny D.R. on
    pension/family pension to the ex-serviceman on their re-employment.

        5. Had the aforesaid been the only provision pressed into service to
H   deny the D.R. to the ex-serviceman, we would have had no difficulty in
                   U.O.I. v. G. V. PILLAY [HANSARIA, J.J             409

striking down the decision inasmuch as the ex-servicemen having been A
allowed pension and D.R. on it in accordance with the conditions of service
governing defence personnel, the provision contained in the aforesaid rule
governing service condition of all together different class of servicemen
could not have impinged on their right to get D.R. on the pension. Learned
Additional Solicitor General, however, advances an alternative submission
and the same is that there are even army instructions which, read with B
Office Memoranda of Ministry of Finance, will show that Dearness Relief
on pension cannot be paid even to ex-servicemen on their re-employment.
As this point could not be brought home to us well when the cases were
heard, as relevant army instructions had not been brought on record, we,
while reserving the judgment after close of hearing allowed filing of written
submissions, which were does subsequently alongwith which large number C
of documents were filed to establish the point urged in the Court.

     6. A peursal of the documents shows that the Office Memorandum
dated 1.8.1975 of the Ministry of Finance, Department of Expenditure,
which stated that a re-employed Central Govenment pensior is not eligible
to draw any relief during the period of re-employment, was made D
applicable by the Ministry of Defence vide letter of even number dated
28.10.1975 to Armed Forces pensioners also. These documents are pages
17 and 18 of the written submission, in which it has also been stated that
with formation of the Department of Pension and Pensioner's Welfare
under Ministry of Personnel, Public Grievances and Pension, all orders E
issued by the Ministry of Finance were made applicable to Armed Forces
pensioners as well. A reference has then been made to Office Memorandum
dated 22.4.1987 on the subject of grant of Dearness Relief to pensioners on
the recommendations of the Fourth Central Commission, sub-para-V of
Annexure-1 to which states that Dearness Relief will be suspended when
the Central Government pensioner is re-employed in the department/office F
of the Central Government.

     7. The aforesaid shows that de hors what has been laid down in clause
(ii) of Rule 55-A of the aforesaid Pension Rules, there are materials on
records to show that any person, including ex-serviceman, would not be
entitiled to Dearness Relief on pension on his re-employment to any G
department/office of the Central Government.

    8. It has, however, been strenuously contended by learned counsel
appearing for the re-employed ex-servicemen that pension being a right
(and not a bounty) available to a retired employee as held in Nakara, AIR
(1983) SC 130, and DR being a part of Pension, right to receive the same H
    410                   SUPREME COURT REPORTS              [1994] SUPP. 6 S.C.R

A    could not have been infringed merely because the incumbent sought re-
    employment to take care of the hardship which he might have otherwise
    faced after retirement. To sustain the submission, strength is sought to be
     derived from the decision of the Kerala High Court in Narayanan v. Union
    of India, 1994 (1) KLT 897, in which a view has been taken that the DR
    became an integral part of pension, because of which it could not have been
B   discontinued on re-employment. As against this, the view of the Delhi High
    Cout in Civil Writ No. 1699of1992 (disposed of on 23.2.1993) is that the
    DR is different from pension. For the disposal of the present cases it is not
    necessary to express any opinion ·on this aspect of the matter inasmuch as,
    according to us, even if Dearness Relief be an integral part of pension, we
    do not fmd any legal inhibition in disallowing the same in cases of those
c   pensioners who get themselves re-employed after retirement. In our view
    this category of pentioners can rightfully be treated differently from those
    who do not get re-employed; and in the case of the re-employed pensioners
    it would be permissible in law to deny D.R on pension inasmuch as the
    salary to be paid to them on re-employment takes care of erosion in the
    :value of the money because of rise in prices, which lay at the back of grant
D   of D.R., as they get Dearness Allowance on their pay which allowance is
    not available to those who do not get re-employed.

        9. We, therefore, hold that the ex-serviceman were rightly debarred
    from Dearness Relief on their pensions after they got themselves re-
    emplyed to any civil post under the Government of India
E
          10. Denial ofDR on family pension.

         In some of the cases, we are concerned with the denial of Dearness
    Relief on family pension on employment of dependents like widows of the
    exservicemen. This decision has to be sustained in view of what has been
F   stated above regarding denial of D.R. on pension on re-employment
    inasmuch as the official documents referred on that point also mention
    about denial of D.R. on family pension on employment. The rationale of
    this decision is getting of Dearness Allowance by the dependents on their
    pay, which is drawn following employment, because of which Dearness
    Relief on family pension can justly be denied, as has been done.
G
        11. Reduction of enhanced pension from pay of those ex-servicemen
    who were holding civil posts on 0J,01.86 following their re-employment.

         The aforesaid reduction, which is the subject matter of some appeals, is
    the fall out of Office Memorandum dated 11.9.87 according to which the
H   pay of the ·ex-servicemen who were in employment in a civil post as on
                        U.0.1. v. G. V. PILLA Y [HANSARIA, J.]                411
,   01.01.86 following their re-employment, is required to be reduced by an          A
    amount equivalent to the enchanced pension made available pursuant to the
    report of the Fourth Pay Commission.

         12. The ground of attack is that the aforesaid decision violates Articles
    14 and 16 of the Constitution inasmuch as there is no rational basis for
    classifying the employees for the aforesaid purpose on the basis of their        B
    being in employment on 01.01.86. This submission has been advanced
    because the reduction of the aforesaid nature has not been made in respect
    of those who have been in employment since 01.01.86 The additional
    affidavit filed on behalf of respondent no 1 in SLP (C) No. 17456/91 on
    25.8.94 contains some names of those who were re-employed after
    01.01.86 and are being paid both the revised pay and revised pension. This       C
    factual position has been admitted in the aforesaid written submissions filed
    on behalfofthe Union oflndia inasmuch as it has been stated in page 9 that
    the pensioners who are re-employed after 01.01.86 enjoy the benefit of
    revised pay and also revised pension w.e.f. 01.01.86.

        13. Reliance has been placed in support of aforesaid submission on a         D
    two-Judge Bench decision of this Court, to which one of us (Kuldip Singh,.
    J) was a party. That decision was in the case of T.S. Thiruvengadam v.
    Secretary to Government ofIndia, [1993] 2 SCC 174.

         The facts of that case are, however, different inasmuch as there the
    Memorandum dated June 16, 1967 stating that revised pensionary benefits E
    would be made available only to those Central Government servants who
    have been absorbed in public sector undertakings after that date was not
    found to be constitutional because the very object of bringing to the
    existence the revised terms and conditions by the Memorandum was to
    protect the pensionary benefits which the Central Government servants had F
    earned before their absorption into the public sector undertakings. It was,
    therefore, held that restricting the applicability of the revised Memorandum
    only to those who are abosrbed after coming into force of the same would
    not only defeat the very object and purpose of the Memorandum but would
    be contrary to fair play and justice also.
                                                                                     G
         14. Despite the aforesaid decision being of no aid in the present cases,
    we find no logic and basis for classifying the re-employment persons on the
    basis of their being on employment on 01.01.86. Indeed, no justification
    has been canvassed before us. The decision which held the field before the
    impugned Memorandum in not taking note of pension while fixing pay of
    the ex-servicemen on re-employment, which was based on good reasons,             H
    412                  SUPREME COURT REPORTS               [1994] SUPP. 6 S.C.R

A   had no good reason for its reversal, as enhanced pension was not confined
    to those who were in employment on 01.01.86. The impugned decision is,
    therefore, arbitrary and is hit by Articles 14 and 16 of the Constitution. We,
    therefore, cieclare the same as void.

        15. Our conclusions on the three questions noted in the opening
B   paragraph are that denial of Dearness Relief on pension/family pension in
    cases of those ex-servicemen who got re-employment or whose dependents
    got employment is legal and just. The decision to reduce the enhanced
    pension from pay of those ex-servicemen only who were holding civil posts
    on 01.01.86 following their re-employment is, however, unconstitutional.

C       16. The appeals are disposed of accordingly. I.A. Nos. 16, 30-46 in
    appeals (arising out of S.L.P (C) Nos. 1585-95/94) stand disposed of. No
    order as to costs.

    G.N.
                                                                                     •