MANOJBHAI N.SHAH & ORS. Vs UNION OF INDIA & ORS.
Bench: ANIL R. DAVE,SHIVA KIRTI SINGH
Case number: Transfer Case (civil) 48 of 2010
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
TRANSFER CASE (CIVIL) NO. 48 OF 2010
Manojbhai N. Shah & Ors. Petitioners
Versus
Union of India & Ors. Respondents
WITH
T.C.(C)No.7/2011, T.C.(C)No.45/2010 T.C.(C)No.47/2010,T.C.(C)No.46/2010 T.C.(C)No.6/2011,T.C.(C)No.19/2011, T.C.(C)No.23/2011,T.C.(C)No.20/2011, T.C.(C)No.21/2011 SLP(C)No.10903/2011, T.C.(C)No.82/2011,T.C.(C)No.83/2011 T.C.(C)No.49/2010, T.C.(C)No.27/2014
& T.C.(C)No.28/2014
J U D G M E N T
ANIL R. DAVE, J.
1. A common legal issue was involved in several
writ petitions and appeals pending before different
High Courts and therefore, transfer petitions had
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been filed in this Court so that all pending cases
can be transferred to and decided by this Court.
2. Upon hearing the learned counsel and upon
perusal of the facts of the cases, this Court found
that substantial questions of general importance
were involved in the said cases and therefore, it
would be in the interest of justice if all the
cases are heard and decided together and therefore,
all these cases have been transferred to this
Court.
3. The issue involved in all these cases is with
regard to retiral benefits to be given to a special
class of retired employees of five nationalized
general insurance companies. The undisputed facts
and legal issues involved in all these cases are as
under:
The insurance companies, who have been
described hereinafter as “the Employers” were in
financial difficulties and so as to cut their
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expenditure, the Employers framed a scheme named
“General Insurance Employees Special Voluntary
Retirement Scheme, 2004” (hereinafter referred to
as “the Scheme”), so as to enable its employees to
retire prematurely on certain conditions with some
special benefits.
4. Normally a person gets pension when he retires
from service after putting in the period of
pensionable service as per his service conditions.
All the employees, in the instant case, would be
eligible to get pension if they retire from service
after putting in 20 years of service.
5. As stated hereinabove, so as to curtail the
expenditure, it was decided to reduce the number of
employees and in pursuance of the Scheme, offers
were invited from the employees who wanted to opt
for voluntary retirement even before completion of
the period of normal pensionable service.
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6. As per the provisions of the Scheme, it was
open to the employees to opt for retirement even on
completion of 10 years of qualifying service,
provided they had attained the age of 40 years.
The Scheme had a limited duration of 60 days,
during which the employees had to decide whether
they wanted to opt for the Scheme. The employees
opting for retirement under the Scheme were also to
be given some additional benefits, namely, payment
of 60 days’ salary for each completed year of their
service or salary for the number of months of their
remaining service, whichever was less. So far as
determination of the amount of pension is
concerned, as per the Scheme, five years’ service
was to be notionally added to the service of the
retiring employees and on that basis pension was to
be paid to them.
7. In addition to the aforestated benefits, the
retiring employees were also to get usual benefits
under the provisions of the Payment of Gratuity
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Act, 1972 and the amount of Provident Fund, which
they were otherwise entitled to.
8. Thus, the employees opting for voluntary
retirement under the Scheme were to get benefit of
ex gratia amount as well as benefit of additional
pension which would result from the addition of the
notional five years’ service.
9. Several employees took benefit under the Scheme
and retired in pursuance of the aforestated Scheme
in 2004.
10. After retirement of the aforestated employees,
the Employers revised pay scales of their employees
under Notification dated 21st December, 2005 giving
benefit of revision of pay retrospectively with
effect from 1st August, 2002, provided the employees
were in service on or after 1st August, 2002.
11. The issue involved in all these cases is
whether after acceptance of voluntary retirement
under the Scheme, such retired employees would be
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entitled to get benefit of the revision of pay,
which was retrospectively given from 1st August,
2002 under the Notification dated 21st December,
2005, which was called the “General Insurance
(Rationalisation of Pay Scales and Other Conditions
of Officers) Second Amendment, 2005 and hereinafter
referred to as “the Notification”.
12. The Employers denied the benefit of the said
Notification or retrospective increase in the
salary to the employees who had retired under the
Scheme, whereas the said retired employees claimed
that they should be given benefit of the
retrospective increase in their pay and their
pension should be revised because they were in
service on 1st August, 2002 and had retired only in
or after 2004.
13. The High Court of Gujarat took a view that the
employees who had retired under the Scheme were not
entitled to any benefit of pay rise under the
Notification as they had already retired in 2004 or
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2005 and at the time when the salary had been
revised, they had already severed the relationship
with the Employers and were no more in employment.
14. On the other hand, the High Court of Himachal
Pradesh held that the employees who had retired
under the Scheme were entitled to the benefit of
pay revision which had taken place by virtue of the
Notification and therefore, their pension should be
revised after considering revision in their pay.
15. Before dealing with the issue, it would be
apposite to find out the conditions on which the
employees were made to retire voluntarily under the
Scheme. Under the Scheme, the employees were to
get certain special benefits as they were to retire
even before completion of the requisite period of
service, which would have enabled them to get
pension and the employees were also to get some
special benefits like ex gratia payment of salary
and additional weightage in calculation of pension
payable to them.
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16. So far as the Scheme is concerned, the relevant
portion, with which we are concerned for the
purpose of deciding these cases, is as under:
“3. Eligibility:-
(1) All permanent full time officers will be eligible to seek special voluntary retirement under this Scheme provided they have attained the age of 40 years and completed 10 years of qualifying service as on the date of Notification.
(2) An employee who is under suspension or against whom disciplinary proceedings are pending or contemplated shall not be eligible to opt for the scheme;
Provided that the case of an officer who is under suspension or against whom disciplinary proceedings is pending or contemplated may be considered by the Board of the Company concerned having regard to the facts and circumstances of each case and the decision taken by the Board shall be final.
4. Period of operation:-
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This Scheme shall remain open for a period of sixty days from the date of notification in the Official Gazette. The company shall, however, have the right to prematurely close the scheme at any time if it thinks fit and its decision shall be final.
5. Amount of ex-gratia:-
(1) An employee seeking Special Voluntary Retirement under this Scheme shall be entitled to lower of the ex-gratia amount as given below, namely:-
Sixty days salary for each completed year of service,
OR
Salary for the number of months of remaining service.
(2) The ex-gratia shall be computed on the basis of his/her salary as on the date of relieving. In case wage revision is effected from a date prior to the date of this notification in the Official Gazette, the benefit of revised pay for the purpose of payment of ex-gratia will be allowed.
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6. Other Benefits:-
(1) An employee opting for the scheme shall also be eligible for the following benefits in addition to the ex-gratia amount mentioned in para 5, namely:-
(a) Provident Fund,
(b) gratuity as per Payment of Gratuity Act, 1972 (39 of 1972) or gratuity payable under the Rationalisation Scheme, as the case may be;
(c) pension (including commuted value of pension) as per General Insurance (Employees') Pension Scheme, 1995, if eligible. However, the additional notional benefit of the five years of added service as stipulated in para 30 of the said Pension Scheme shall not be admissible for the purpose of determining the quantum of pension and commutation of pension.
(d) Leave encashment
(2) An employee who is opting for the scheme shall not be entitled to avail Leave Travel Subsidy and also encashment
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of leave while in service during the period of sixty days from the date of notification of this scheme.”
17. The Notification dated 21st December, 2005, by
virtue of which pay scales and other terms and
conditions of service of certain employees had been
revised with retrospective effect contained the
following clauses which are necessary for our
purpose:
“1.
(1) This Scheme may be called the General Insurance (Rationalisation and Revision of Pay Scales and other conditions of service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme 2005.
(2) Save as otherwise provided in this Scheme, this Scheme shall be deemed to have come into force on the 1st day of August, 2002.
(3) This Scheme shall be applicable to all employees who were in whole-time service in Supervisory, Clerical and Sub-ordinate Staff cadres of the Corporation or Company as on, or after, the 1st day of August, 2002:
Provided that the employees whose resignations had been accepted or whose services had been terminated during the
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period from the 1st day of August, 2002 and the date of publication of this Scheme, shall not be eligible for the arrears on account of revision under this Scheme:
Provided further that the employees, who had sought special voluntary Retirement under:
(a) The General Insurance Employees’ Special Voluntary Retirement Scheme, 2004 (S.O.B.(E) dated the 1st January, 2004), in the case of company; or
(b) The General Insurance Corporation of India Employees’ Special Voluntary Retirement Scheme, 2004 (S.O. 454 (E) dated the 1st April, 2004) in the case of Corporation.
And have been relieved thereunder prior to the date of this notification shall not be eligible for any benefit arising from this Scheme other than that provided for by sub-paragraph 2 of paragraph 5 of the General Insurance Employees’ Special Voluntary Retirement Scheme, 2004, or, the General Insurance Corporation of India Employees’ Special Voluntary Retirement Scheme, 2004, as the case may be.
(4) Nothing contained in this Scheme shall entitle an employee to claim overtime allowance higher than what he had been entitled to prior to the publication of this Scheme.”
18. In the light of the aforestated Scheme and the
Notification, we have to consider whether the
employees who had opted for voluntary retirement
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under the Scheme are entitled to get the benefit of
additional pension on the basis of revised salary
in pursuance of the Notification.
19. The learned counsel appearing for the
employees, who had retired under the Scheme, had
vehemently submitted that pension is a right of an
employee for the services rendered in the past and
as the pension depends upon the last salary paid or
payable to the employee, the employee, who had
opted for the Scheme and retired, must be given
benefit of the revised pay and his pension must
also be enhanced accordingly.
20. It had been further submitted by the learned
counsel that upon retirement, though the
relationship between the employees and the
Employers had come to an end, the employees were
entitled to the amount of pension payable to them
as per the Scheme and also as per the General
Insurance (Employees) Pension Scheme, 1995. Simply
because an employee retires and the relationship of
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an employee and employer comes to an end would not
mean that such a retired employee would not get a
particular benefit from the employer if such a
benefit is given to other employees. It had been
further submitted that in the instant case even
though the employees had opted for retirement under
the Scheme, they are entitled to pension,
especially when there is a provision for payment of
pension in the Scheme. In the circumstances, there
cannot be any dispute with regard to the fact that
the employees are entitled to pension on the basis
of revised pay.
21. It had been further submitted by the learned
counsel appearing for the employees that the
employees had accepted retirement under the Scheme
as there was a specific provision in Clause 5(2) of
the Scheme that in case any wage revision is
effected from a date prior to the date of
Notification of the said Scheme in the Official
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Gazette, the benefit of revised pay for the purpose
of payment of ex gratia would be allowed.
22. It had been, therefore, submitted that the wage
revision had taken place in pursuance of the
Notification dated 21st December, 2005, and as the
pay revision was made with retrospective effect
from 1st August, 2002 and that the employees were
very much in service on 1st August, 2002, they were
entitled to the benefit of revision of the pay
scales under Notification dated 21st December, 2005.
23. It had been further submitted that the pension
is determined on the basis of the salary last drawn
and if the salary is revised, the pension should
also be revised accordingly. According to the
learned counsel, as there was an upward revision of
the salary with effect from 1st August, 2002,
determination of the amount of pension of the
employees who took benefit of the Scheme, should
also be re-determined on the basis of the revised
pay.
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24. So as to substantiate the submissions made
hereinabove, the learned counsel had relied upon
the judgment delivered in National Insurance Co.
Ltd. & Anr. Vs. Kirpal Singh [2014 (1) SCALE 320]
which lays down the law to the effect that even if
an employee has retired, he is entitled to the
benefit of subsequent upward pay revision and if a
retired employee is not given the benefit, the
action of the employer would be violative of
Article 14 of the Constitution of India.
25. It had also been submitted that by not revising
pay of the retired employees, the Employers had
also violated the principle of equal pay for equal
work because the retired employees had also done
same type of work in the past which was done by the
employees who had not retired.
26. In support of all the abovestated submissions,
several judgments were cited by the learned counsel
appearing for the employees who had retired under
the Scheme.
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27. On the other hand, the learned counsel
appearing for the Employers had submitted that the
purpose behind enactment of the Scheme was to see
that the financial burden of the Employers is
reduced in future by making one-time ex gratia
payment. It had been submitted that the employees
had accepted the offer given by the Employers with
regard to their retirement as a special case under
the scheme and as a result of retirement under the
Scheme, the employees were substantially benefitted
because they were given ex gratia payment to which
they were otherwise not entitled to and they were
also given additional amount of pension because a
notional period of five years had been added to the
number of years served by them.
28. In other words, if an employee had rendered
service for 13 years, for the purpose of
determination of his pension, it would be treated
as if he had worked for 18 years and in that event,
pension payable to the concerned employee would be
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much higher because an employee getting pension
upon completion of 13 years’ service and upon
completion of 18 years’ service cannot be the same.
It is an admitted fact that upon addition of five
more years of service, an employee would get
sizeable more amount of pension.
29. It had been thereafter submitted that upon
entire payment made by the Employers to the
employees who had opted for voluntary retirement
under the Scheme, the relationship of the employer
and the employee had come to an end and therefore
also the employees were not entitled to any
additional amount of pension.
30. It had also been submitted by the learned
counsel appearing for the Employers that the
employees, who retired under the Scheme, very well
knew that they were to get some additional benefits
under the Scheme and their relationship with the
Employers had come to an end upon their acceptance
of retirement under the Scheme. The benefit which
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had been given by the Employers under the
Notification dated 21st December, 2005 was only to
the employees who were in service at the relevant
time and had continued in service or the employees
who had retired in normal course on or after Ist
August, 2002.
31. Those who had retired under the Scheme had been
given additional benefits and as their relationship
with the Employers had come to an end, there was no
question of making payment of additional pension to
them.
32. It had been further submitted that no
discriminatory treatment was given to the employees
who had retired under the Scheme as they belonged
to a separate class and there was no violation of
principle of equal pay for equal work.
33. Upon hearing the learned counsel and upon going
through the judgments rendered by different High
Courts and the relevant provisions pertaining to
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the Scheme and the Notification dated 21st December,
2005, we are of the view that the employees who had
taken benefit under the Scheme and had already
retired would not be entitled to additional pension
due to retrospective increase in pay in pursuance
of Notification dated 21st December, 2005.
34. There is no doubt that the Scheme had been
framed by the Employers to see that their
expenditure in long term is decreased by making
one-time payment of additional amount to the
employees opting for retirement under the Scheme.
Strength of the staff was going to be reduced
substantially due to voluntary retirement of
several employees and the reduction in the staff
was to result in reduction in the burden of salary
and establishment expenditure. With the aforestated
intention, which had been clearly revealed in the
Scheme, the Employers had floated the Scheme and
several employees of the Employers had taken due
advantage of the Scheme by opting under the Scheme
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and by taking not only ex gratia payment of salary
but also additional pension, which they would not
have received otherwise. It is not in dispute that
the employees opting for retirement under the
Scheme were to get benefit of additional five years
of service while calculating the pension. As
stated hereinabove, the said benefit was
substantial and the said benefit along with benefit
of ex gratia payment, tempted number of employees
who opted under the Scheme and retired happily
after getting all retiral benefits.
35. Normally, retrospective rise in salary is given
to those who are in service at the relevant time or
who had retired in normal circumstances. The
employees who had opted under the Scheme had not
retired as per the normal conditions of service but
had retired under the Scheme upon taking some
special additional benefits.
36. It is also pertinent to consider clause 5(2) of
the Scheme, which has been reproduced hereinabove.
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According to the said clause, ex gratia amount was
to be paid to the concerned employees on the date
of his/her being relieved and it was clarified that
in case of wage revision effected from a date prior
to the date on which the said Scheme had been
notified in the Official Gazette, the benefit of
revised pay for the purpose of payment of ex gratia
would be allowed. Meaning thereby, the employees
who had opted under the Scheme and retired from
service were entitled only to revision of ex gratia
amount upon retrospective increase in the salary.
Intention of the Employers is clearly revealed from
clause 5(2) of the Scheme. The intention was to
give benefit only in relation to ex gratia amount
and not in relation to the pension. Had the
intention been to give benefit of additional
pension also, the said fact would have been
incorporated in the aforesaid clause. In normal
circumstances when an employee retires from
service, his relationship with the employer comes
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to an end. It is also a well settled legal
position that after retirement, normally no
disciplinary action can be initiated against the
concerned employee. Similarly, the retired employee
would not have any right of redetermination of his
pension but only in cases where salary is revised
with retrospective effect, the retired employee
gets the benefit of additional pension and that too
in certain cases.
37. In the instant case, it is crystal clear that
the employees had already opted under the Scheme
-under a specially made Scheme, which was framed
only with an intention to reduce future expenditure
of the Employers. If all these benefits are given
to the persons who had already opted under the
Scheme and had retired, the real purpose with which
the Scheme had been framed would be frustrated.
38. We do not agree with the submission made on
behalf of the employees that action of the
Employers in not giving pay rise to the employees
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in pursuance of the Notification is discriminatory
in nature. The employees who retired under the
Scheme form a separate class of employees who were
given many benefits, which are not given to
employees retiring in normal course. If they all
form a separate class, by no stretch of imagination
it can be said that all those who retired under the
Scheme and those who retired in normal course, are
similarly situated. Thus, in our opinion, there is
no violation of Article 14 of the Constitution of
India in the instant case.
39. Similarly, there is no violation of the
principle of equal pay for equal work. True, that
those who retired under the Scheme did the same
work which was being done by those who retired in
normal course, but one cannot forget the fact that
those who retired under the Scheme got
substantially higher retirement benefits. In the
circumstances, we do not accept the said submission
also.
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40. Some submissions were made by the learned
counsel for the employees regarding power of the
Employers in relation to issuance of the
Notification dated 21st December, 2005. We are of
the view that an Employer can fix salary for its
employees and we do not agree with the submission
that the Notification was not issued properly or
legally.
41. In the circumstances, we are of the view that
the employees who had opted for retirement under
the Scheme would not be entitled to additional
pension upon revision of pay effected under the
Notification dated 21st December, 2005.
42. All judgments directing the Employers to make
additional payment of pension to the employees
retiring under the Scheme are set aside and,
accordingly, all the transferred cases are finally
disposed of and Special Leave Petition (C) No.10903
of 2011 is dismissed.
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.......................J. (ANIL R. DAVE)
.......................J. (SHIVA KIRTI SINGH)
New Delhi January 07, 2015.
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