Holding

The Railway Board's clarification that running allowance, already accounted for at retirement, should not be added again when fixing notional pay of pre‑1986 retirees is valid, and the benefit of running allowance is to be considered only once for pension computation.

Summary

The case concerned pension computation for railway "Running Staff" who retired before 1 January 1986. The Government issued an Office Memorandum on 10 February 1998 fixing the notional pay of pre‑1986 retirees as on that date, treating it as average emoluments for pension. A subsequent Railway Board clarification on 29 December 1999 stated that the running allowance, already accounted for at retirement, should not be added again when fixing the notional pay. The respondents challenged this clarification before the Central Administrative Tribunal, which quashed it; the matter reached this Court. The Court held that the Railway Board’s clarification is valid, that running allowance may be considered only once for pension calculation, and that the two groups of retirees are not a homogeneous class for Article 14 purposes. Consequently, the Tribunal’s order was set aside and the writ petition was allowed, without ordering recovery of any pension already paid.

Issues considered

Whether the Railway Board's clarification that running allowance should not be taken into account while fixing notional pay of pre‑1986 retirees is legally valid.
Whether running allowance can be added again for pension computation after the notional fixation of pay.
Whether the exclusion of running allowance violates the equality principle under Article 14 of the Constitution.
Whether a clerical error resulting in excess pension can be corrected without granting a right to the affected retirees.
Whether retirees of the same rank but retiring at different times constitute a homogeneous class for equal treatment.

Subjects

Running AllowancePensionRailwaysArticle 14Notional PayRetirement BenefitsEqualityCentral Administrative TribunalRule 2544(g)

Judgment

A UNION OF INDIA ...
v.
S.R. DHINGRA AND ORS.

DECEMBER 14, 2007
B
[A.K. MATHUR AND MARKANDEY KAT JU, JJ.]

~

Service Law:

c from Running Allowance-Given to 'Running Staff' in Railways, apart
salary-Pension for 'Running Staff' computed by taking into
account 'Running Allowance '-Respondents, 'Running Staff', are pre-
1986 retirees-Vide OM dated 10-2-1998, pay ofpre-1986 retirees
revised on notional basis on 1-1-1986-Clarification issued by Railway
Board that 'Running Allowance 'not to be taken into consideration at
D
the time ofre-fixation ofpay on notional basis on 1-1-1986- Quashed ,_
by Tribunal-Justification of-Held, not justified- 'Running ·1

Allowance' could be considered for computing pension only once-
Benefit of 'Running Allowance' already given to Respondents at the
time ofretirement could not be given again vide OM dated 10-2-1998
E -Clarification issued by Railway Board was valid-Indian Railway
Establishment Code-r. 2544(g).
Two sets ofemployees ofsame rank-Retiring at different points
oftime-Held: One set cannot claim benefit extended to the other set
r
F on ground that they are similarly situated-Though they retired with "
the same rank, they are not of the same class or homogeneous group
-Art. 14 has no application-Constitution of India, 1950-Art. 14..
'Running Staff in the Railways viz. drivers, guards, shunters
etc, who go along with the railway train, are entitled to an allowance
G called 'Running Allowance' apart from their salary. Computation of
pension after retirement in the Railways is made on the basis of
average emoluments plus a part of the Running Allowance which is
included in average emoluments in terms of Rule 2544(g) of the
Indian Railway Establishment Code.
H 746
UNION OF INDIA v. S.R. DHINGRA 747

The present dispute relates to pension for the Running Staff A
who retired prior to 1986.

In order to implement one recommendation of the 5th Pay
Commission to give parity to the pre-1986 retirees with the post 1986
retirees, the pay of the pre-1986 retirees was fixed as on 1.1.1986, B
however, the pay so fixed was treated as average emoluments. On
10.2.1998, an Office Memorandum was issued providing for fixation
of notional pay of all Government servants who retired prior to
1.1.1986 as on 1.1.1986. Due to certain doubts and confusion, a
clarification was sought as to whether running allowance was to be C
added again while fixing the pay notionally as per the OM dated
10.2.1998. On 29.12.1999, the Railway Board issued clarification that
running allowance was not to be taken into consideration at the time
ofre-fixation of pay on notional basis on 1.1.1986.

Respondents filed application before the Tribunal challenging D
the said clarification. Appellants contended that only the pay was to
be notionally fixed as per the OM dated 10.2.1998, and therefore,
there was no need to add running allowance again since Running
allowance would be added only if on the basis of pay so fixed the
average emoluments was to be recalculated and that the said course E
of recalculation of average emoluments was specifically excluded
by the said OM dated 10.2.1998. Tribunal allowed the application
ofrespondents and quashed the Railway Board's clarification dated
29.12.1999. Several writ petitions were filed thereagainst in the High
Court, one of which was transferred to this Court. F

Allowing the transfer case, the Court

HELD: 1.1. The benefit ofrunning allowance which has been
given to the respondent at the time ofretirement is not to be given
again vide Office Memorandum dated 10.2.1998. [Para 26) (754-H) G

1.2. The clarification of the Railway Board dated 29.12.1999
clarifying that the running allowance which was already taken into
account for pension and other benefits at the time of retirement is
not to be added to the pay of pre-1986 retirees revised on notional H
748 SUPREME COURT REPORTS (2007] 13 (Addi.) S.C.R.

-<
A basis as on 1.1.1986 is valid. It appears that due to a clerical error
the notional benefits of the respondents w.e.f.1.1.1986 was wrongly
fixed and such retired employees are getting excess pension. It is
well-settled that a mistake does not confer any right to any party,
and can be corrected. [Para 23] (754-B-C]
B
1.3. The benefit of running allowance has to be taken into
consideration for computing pension only once. It had been taken
into consideration while fixing the pension of the respondents at the
time of their retirement. It is riot required to be taken into account
again for any future calculation. [Para 24] (754-C-D]
c
1.4. When two sets of employees of the same rank retire at
different points of time, one set cannot claim the benefit extended
to the other set on the ground that they are similarly situated. Though
they retired with the same rank, they are not of the same class or
D homogeneous group. Hence Article 14 has no application. The
employer can validly fix a cut-off date for introducing any new
pension/retirement scheme or for discontinuance of any existing
scheme. What is discriminatory is introduction of a benefit
retrospectively (or prospectively) fixing a cut-off date arbitrarily
E thereby dividing a single homogenous class of pensioners into two
groups and subjecting them to different treatment.
[Para 25] (754-D-F]

Col B.J Akkara (Retd) v. Govt. ofIndia, [2006] 11SCC709; D.S.
Nakara v. Union ofIndia, (1983] 1SCC305; Krishna Kumar v. Union .
F
of India, [1990] 4 SCC 207; Indian Ex-Services League v. Union of -·
India, [1991) 2 SCC 104; V. Kasturi v. Managing Director, State Bank
of India, (1998] 8 SCC 30 and Union of India v. Dr. Vijayapurapu
Subbayamma, (2000] 7 SCC 662, relied on.
G Chairman, Railways Board and Ors. v. C.R. Rangadhamaiah and
Ors., [1997] 6 SCC 623, referred to.
~
-,
CIVIL ORIGINAL JURISDICTION : Transferred Case (Civil) No.
106 of 2006.

H A. Sharan, A.S.G., Kumar Rajesh Singh, Satyakarn, Amit Anand
UNION OF INDIA v. S.R. DHINGRA 749
.,. [MARKANDEY KATJU, J.]
., and B. Krishna Prasad for the Petitioner. A
R. Venkatramani, J.M. Khanna, Y. Raja Gopala Rao, Y. Ramesh
and Y. Vismai Rao for the Respondents.
The Judgment of the Court was delivered by
B
MARKANDEY KATJU, J. 1. Writ Petition No. 4648/2002 titled
Union ofIndia and Anr. v. S.R. Dhingra and Ors., was filed in the Delhi
High Court and was thereafter transferred to this Court by order dated
9.5.2006 in Transfer Petition (Civil) No. 278 of2005.
2. It appears that similar matters were pending before the Delhi High c
Court, Punjab & Haryana High Court and Central Administrative Tribunal
and further proceedings in those cases were ordered to be stayed awaiting
the judgment in the matter which was transferred to this Court by the order
dated 9.5.2006.
....
) 3. The facts of the case are that in the Railways there are certain
D
employees such as drivers, guards, shunters etc, who go along with the
railway train and are categoriz.ed as 'Running Staff'. Such staffs are entitled
to an allowance called 'Running Allowance' which is apart from their
salary. Computation of pension after retirement in the railways is made
E
on the basis of average emoluments plus a part of the running allowance
which is included in average emoluments in tenns of Rule 2544(g) of the
Indian Railway Establishment Code. The present dispute relates to the
pension for the running staff who retired prior to 1986.
\
4. Prior to its amendment Rule 2544(g) running allowance upto a F
maximum of75% of pay and other allowances was added to the pay for
computing pension. Subsequently, by notification dated 5.12.1988 Rule
2544 was amended, and the maximum limit of the running allowance was
fixed at 45% of the pay in the revised scale of pay. Thereafter by another
amendment this was raised to 55% of the average pay. G
,,
~

5. The validity of this amendment was challenged before the Central
Administrative Tribunal by means of a petition which was allowed by the
Emakulam Bench by the order dated 20.4.1990 and the impugned
notification was quashed to the extent that the amendment of Rule 2544(g) H
750 SUPREME COURT REPORTS [2007] 13 (Add!.) S.C.R.

A was given retrospective effect. ""
6. A contrary view was taken by another Bench of the Tribunal and
hence the matter was referred to a Full Bench, and the Full Bench agreed
with the view taken by the Ernakulam Bench.
B 7. The matter was then carried in appeal to this Court in Chairman,
Railways Board and Ors v. C.R. Rangadhamaiah and Ors., [1997] 6
sec 623 which gave its judgment on 25. 7.1997' upholding the decision
of the Full Bench of the Tribunal.
8. It may be mentioned that the Tribunal had struck down the
c retrospective operation of the notification dated 5.12.1988 issued in
exercise of the power of the President under the proviso to Article 309
of the Constitution whereby Rule 2544 of the Indian Railway
Establishment Code was amended with retrospective effect. In the
aforesaid decision this Court dismissed the appeals filed by the Union of
D
India and the Railway Administration and upheld the view taken by the
Full Bench of the Tribunal. -r
9. To implement the aforesaid decision of this Court the Railway
Board issued instructions on 14.10.1997 that the pension and other retiral
E benefits of the railway running staff who retired between 1.1.1973 to
4.12.1988 should be re-computed, and arrears on account of re-
computation of pension be paid to them accordingly.
10. In the meanwhile the Fifth Pay Commission report was rendered
F
and in implementation of some of the recommendations in respect of the .,•
.

pre-·1986 retirees the Department of Personnel & PW issued OM dated
27 .10.1997 that pension/family pension will be consolidated w.e.f.
1.1.1996 by adding together their existing pension/family pension,
dearness relief, interim relief! and interim reliefll and fitrnent weightage
of 40%. The said revision was to be done on the basis of existing pension.
G
It is not in dispute that the said relief was extended to the respondents
herein and all those similarly placed with the respondents. ~
'i

11. In order to implement another recommendation of the 5th Pay
Commission to give parity to the pre-1986 retirees with the post 1986
H retirees, it was decided to fix the pay of the pre-1986 retirees as on
UNION OF INDIA v. S.R. DHINGRA 751
[MARKANDEY KA TJU, J.]
1.1.1986. However, it was specifically provided that the pay so fixed A
would be treated as average emoluments. Accordingly, on 10.2.1998, a
further Office Memorandum was issued providing for fixation of notional
pay of all those Government servants who retired prior to 1.1.1986 as
on 1.1.1986. The pay was to be fixed on notional basis in the scale
revised with effect from 1.1.1986. It was provided that the notional pay B
so arrived as on 1.1.1986 shall be treated as average emoluments for
the purpose of calculation of pension and accordingly the pension shall
be calculated as on 1.1.1986 as per the pension formula then prescribed.
(The then formula was 50% of average emoluments. Thus 50% of the
pay notionally fixed was to be treated as pension of the respective pre- c
1986 retirees).
12. Learned Addi. Solicitor General, Shri Amarendra Sharan,
appearing for the appellants submitted that the OM dated 10.2.1998 is
very clear that what is to be fixed is the pay on notional basis, and pay,
according to the rules, does not include running allowance. However, D
mrming allowance is a relevant factor for calculating average emolu..111ents.
He submitted that the said OM clearly provides that the notional pay so
arrived at will be treated as average emoluments, meaning thereby that
all other elements provided in rule 2544 which otherwise could have been
added to pay for aniving at average emoluments were expressly excluded. E
He further submitted that the pay notionally fixed includes existing (pre
1986) basic pay, dearness pay, additional dearness allowance, ad hoc
dearness allowance, first and second installments of interim relief calculated
on basic pay plus 30% basic pay in the existing scale as pay element of
running allowance, and fitrnent weightage at the rate of20% of existing F
basic pay.
13. On 24.7.1998, it was clarified by the department that in cases
where the amount of revised pension anived at on the basis of notional
fixation of pay as on 1.1.1986 happens to be less than the amount of G
consolidated pension already drawn by pre-1986 retirees, there is no need
to revise the existing pension and issue a revised PPO.
14. Due to certain doubts and confusion, a clarification was sought
as to whether running allowance was to be added again while fixing the
H
752 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A pay notionally as per the OM dated 10.2.1998. On 29.12.1999, the ~

Railway Board issued clarification that numing allowaBce was not to be '
taken into consideration at the time of re-fixation of pay on notional basis
on 1.1.1986.

B
15. The said clarification was challenged by way of an Original
Application before the Central Administrative Tribunal by the respondents.
-
On 22.10.2000 the appellants (respondents in OA) contested the original
application of the respondents (appellants in OA) before the Central
Administrative Tribunal, Principal Bench, New Delhi by filing their detailed
counter reply dated 28.5.2001 in which preliminary objections were also
c raised regarding maintainability of the original applications. It was pointed
out that only the pay was to be notionally fixed as per the OM dated
10.2.1998, and therefore, there Wl!S no need to add running allowance
again since running allowance would be added only if on the basis of pay
so fixed the average emoluments was to be recalculated. The said course
D of recalculation of average emoluments was specifically excluded by the
said OM dated 10.2.1998. ·-c -
16. On 22.1.2002, the Central Administrative Tribunal, Principal
Bench, New Delhi passed an order allowing the O.A. of the respondents
E herein and quashed the Railway Board's clarification dated 29.12.1999.
Thereafter various writ petitions were filed in the Delhi High Court and
ultimately writ petition No. 4648/2002 was transferred to this Court by
order of this Court dated 9.5.2006 (as already stated above).
17. We have carefully perused the record and heard learned counsel
F
for the parties. l

18. Leaned counsel for the appellant submitted that the pension of
the respondents which was recomputed on the basis of the judgment of
this Court in Chairman, Railways Board and Ors. v. C.R.
G Rangadhamaiah and Ors., (supra) is fully protected and the respondents
will continue to take the benefits in future also. However, he submitted
that the pensionary benefits of the respondents who retired prior to .,
1'

1.1.1986 was to be determined by fixing notional pay w.e.f. 1.1.1986
and further pension was to be re-fixed w.e.£ 1.1.1986 without taking into
H consideration the running allowance as per the policy of the Railway Board
UNION OF INDIA v. S.R. DHINGRA 753
[MARKANDEYKATJU,J.]
for implementation of the recommendation of the 5th Central Pay A
Commission while revising the retiral benefits w.e.f. 1.1.1986. He
submitted that there was no infirmity in the policy issued by the Department
of Personnel & PW and adopted by the Railway Board, and subsequent
circulars issued by the Railway Board regarding release ofretiral benefits
to the employees who retired prior to 1.1.1986. B
19. Learned Additional Solicitor General submitted that. while fixing
the pension notionally, due to a clerical mistake it had been fixed at much
higher amount, and this error, when discovered, was later rectified and
the pension of the respondents was correctly revised w.e.f. 1.1.1986.
c
20. We have carefully considered the submission of the learned
counsels for the parties and we are in agreement with the submission of
the learned Additional Solicitor General.
21. In this connection it may be mentioned that the Railway Board
vide its letter dated 29 .12.1999 issued a clarification to the earlier D
instructions dated 10.2.1998 issued by the Department of Personnel &
PW, which is the nodal department of foe government of India for framing
policy instructions on pensionary matters.
22. It has also been clarified by the Department of Personnel & PW E
vide their O.M. No. 45/86/97-P&W (A) Pt. III dated 24.7.1998
circulated vide Railway Board's letter No. F(E)-III/98/PN-1/2 dated
2.9.1998 that ifthe pension revised on notional fixation of pay as on
1.1.1986 happens to be less than the pension already drawn by the
pensioner the same should not be reduced to their disadvantage. In the F
case of Medical Officers, the Department of Personnel & Pensioner's
Welfare have already clarified vide their OM No. 45/3/99-P&PW (A)
dated 12.10.1999 circulated vide Railway Board's letter No. F(E)-III/
98/PN-1 /29 dated 12.11.1999 that non-practising allowance which was
already taken into account for calculating the pension and other benefits G
at the time of retirement is not to be added to the pay of the pre-1986
retirees revised on notional basis as on 1.1.1986, as the same is not
permissible in terms of para No. 2 of their instructions dated 10.2.1998.
The nature of running allowance is similar to that of non-practising
allowance, and the Railway Board issued instructions dated 29 .12.1999 H
754 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A clarifying that running allowance is not to be added to the pay of pre-
..
>
1986 retirees revised on notional basis as on 1.1.1986.
23. We are of the opinion that the clarification of the Railway Board
dated 29.12.1999 clarifying that the running allowance which was already
taken into account for pension and other benefits at the time of retirement
B is not to be added to the pay of pre-1986 retirees revised on notfonal '
-
basis as on 1.1.1986 is valid. It appears that due to a clerical error the
notional bt'J}efits of the respondents w.e.f. 1.1.1986 was wrongly fixed
and such retired employees are getting excess pension. It is well-settled
that a mistake does not confer any right to any party, and can be corrected.
c
24. We are of the opinion that the benefit of running allowance has
to be taken into consideration for computing pension only once. It had
been taken into consideration while fixing the pension of the respondents
at the time of their retirement. In our opinion it is not required to be taken
D into account again for any future calculation.
,_,
'i
25. It is well settled that when two sets of employees of the same
rank retire at different points of time, one set cannot claim the benefit
extended to the other set on the ground that they are similarly situated.
Though they retired with the same rank, they are not of the same class or
E homogeneous group. Hence Article 14 has no application. The employer
can validly fix a cut-off date for introducing any new pension/retirement
scheme or for discontinuance of any existing scheme. What is
discriminatory is introduction of a benefit retrospectively (or prospectively)
fixing a cut-off date arbitrarily thereby dividing a single homogenous class
•
t
F of pensioners into two groups and subjecting them to different treatment
(vide Col B.J Akkara (Retd) v. Govt of India, [2006] 11 SCC 709,
D.S. Nakara v. Union of India, [1983] 1 SCC 305, Krishna Kumar
v. Union of India, [1990] 4 SCC 207, Indian Ex-Services League v.
Union ofIndia, [1991] 2 SCC 104, V Kasturi v. Managing Director,
G State Bank of India, [1998] 8 SCC 30 and Union of India v. Dr.
Vijayapurapu Subbayamma, [2000] 7 SCC 662). ~
;

26. In view of the above, we are of the opinion that the benefit of
running allowance which has been given to the respondent at the time of
H retirement is not to be given again vide Office Memorandum dated
UNION OF INDIA v. S.R. DHINGRA 755
[MARKANDEY KA TJU, J.]
10.2.1998. A
27. Accordingly Writ Petition No. 4648/2002 which has been
transferred to this Court is allowed and the order of the Central
Administrative Tribunal dated 22.1.2002 is set aside. This decision will
govern all similar matters pending in the High Courts or Tribunal.
B
28. However, any amount already paid to the respondents and other
.., similarly situated persons shall not be recovered from them.
29. The Transfer Case stands allowed.
B.B.B. Transfer case allowed. C