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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.5252-5255  OF 2018 (Arising out of SLP(Civil) Nos.7368-71 of 2017)

United Bank of India and others                      …… Appellants

VERSUS

United Bank of India Retirees’ Welfare Association and others etc.                       ..…. Respondents

JUDGMENT

Uday Umesh Lalit, J.

Leave granted.

2. These appeals by special leave are directed against (i) the common

Judgment and Final Order dated 26.09.2016 passed by the High Court at

Calcutta in APO Nos.315 and 316 of 2015; and (ii) against the order dated

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05.12.2016 passed by the High Court at Calcutta in RVWO Nos.57 and 58

of 2016 in aforementioned APO Nos.315 and 316 of 2015.  By its Judgment

and Orders under appeal, the High Court held that there was no justification

for  making  a  distinction  between  pre  November,  2002  retirees  and  post

November, 2002 retirees and the appellant must pay dearness relief to all

pensioners at the same rate.

3. A Memorandum  of  Settlement  dated  29.10.1993  was  entered  into

between the managements of  58 banks as represented by the Indian Banks’

Association on one hand and their workmen as represented by the All India

Bank Employees’ Association on the other.  Said  memorandum recited that

the  parties  had  agreed  to  introduce  pension  scheme  in  banks  for  the

workmen/employees in lieu of employers’ contribution to the provident fund

and  that  the  pension  scheme  so  agreed  was  to  be  broadly  on  Central

Government/Reserve  Bank  of  India  pattern.   Paragraph  6  of  the

memorandum dealt with Dearness Allowance relief to the pensioners and it

stipulated:

“Dearness relief to pensioners will be granted at such rates as may be determined from time to time in line with the Dearness Allowance formula in operation in Reserve Bank of India”

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4. In exercise of powers conferred by Clause (f) of sub-Section (2) of

Section  19  of  Banking  Companies  (Acquisition  and  Transfer  of

Undertakings) Act, 1970, the Board of Directors of the Union Bank of India

after  consultation  with  the  Reserve  Bank of  India  and with  the  previous

sanction  of  the  Central  Government  made  “Union  Bank  of  India

(Employees’)  Pension  Regulations,  1995  (hereinafter  referred  to  as  the

“Pension Regulations”).  Paragraph 2(d) defined “average emoluments” to

be  the  average  of  pay  drawn by  an  employee  during last  10  months  of

service in the bank while Para 2(s) defined “pay”. Para 37 of the Pension

Regulations was as under:

“Dearness Relief- (1) Dearness relief shall be granted on basic pension  or  family  pension  or  invalid  Pension  or  on compassionate allowance in accordance with the rates specified in Appendix II.”

Appendix  II  to  the  Pension  Regulations  dealt  with  Dearness

Allowance on basic pension.  It categorized employees as under:-

“(a) Those workmen who had retired on or after 01.01.1986 and before 01.11.1992 and those officers who had retired on or after 01.01.86 but before 01.07.1993.

(b)Those workmen who retired on or after 01.11.1992 and officers who retired on or after 01.07.1993 and

(c) Those employees who would retire on or after 01.04.1998.”

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Different rates of Dearness Allowance relief as percentage of basic

pension  were  prescribed  in  respect  of  aforesaid  three  categories  in  said

appendix II as under:

“APPENDIX-II (See Regulation 37)

Dearness relief on basic pension shall be as under:  

(1)  In  the  case  of  employees  who were  in  the  workmen cadre and who retired on or after the 1st day of January, 1986, but before the 1st day of November, 1992; and in the case of employees who were in the officers  cadre and who retired on‟ or after the 1st day of January, 1986, but before the 1st day of July, 1993, dearness relief shall be payable for every rise or be recoverable for every fall, as the case may be, of every 4 points over 600 points in the quarterly average of the all India Average Consumer Price Index for Industrial Workers in the series 1960 = 100. Such increase or decrease in dearness relief for every said four points shall be calculated in the manner given below:-  

Scale of basic pension (1)

The rate of dearness relief as a per month percentage of basic pension

(2) (i) Up to Rs.1250  (ii) Rs.1251  to  Rs.

2000

(iii) Rs.2001 to  Rs.2130

(iv)     Above Rs.2130

0.67 per cent. 0.67 per cent of Rs.1250 plus 0.55 per cent of basic pension in excess of  Rs.1250. 0.67 per cent of Rs.1250 plus 0.55 per  cent  of  the  difference  between Rs.2000 and Rs.1250 plus 0.33 per cent  of  basic  pension  in  excess  of Rs.2000. 0.67 per cent of Rs.1250 plus 0.55

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per  cent  of  the  difference  between Rs.2000 and Rs.1250 plus 0.33 per cent  of  the  difference  between Rs.2130 & Rs.  2000 plus 0.17 per cent  of  basic  pension  in  excess  of Rs.2130.

(2) In the case of employees who are in workmen cadre and who retire on or after 1st day of November, 1992; and in the case of employees who are in the officers’ cadre and who retire on or after 1st day of July, 1993, dearness relief shall be payable for every rise or be recoverable for every fall, as the case may be, of every 4 points over 1148 points in the quarterly average of  All  India  Average  Consumer  Price  Index  for  Industrial workers in the series 1960=100. Such increase or decrease in dearness relief for every said four points shall be calculated in the manner given below:  

Scale of basic pension Per month

(1)

The rate of dearness relief as a per month percentage of basic pension

(2) (i) Up to Rs.2400 (ii) Rs.2401  to  

Rs.3850

(iii) Rs.3851 to  Rs.4100

(iv)Above Rs.4100

0.35 per cent. 0.35 per cent of Rs.2400 plus 0.29 per cent of basic pension in excess of Rs.2400. 0.35 per cent of Rs.2400 plus 0.29 per  cent  of  the  difference  between Rs.3850 and Rs.2400 plus 0.17 per cent  of  basic  pension  in  excess  of Rs.3850. 0.35 per cent of Rs.2400 plus 0.29 per  cent  of  the  difference  between Rs.3850 and Rs.2400 plus 0.17 per cent  of  the  difference  between Rs.4100 & Rs.  3850 Plus 0.09 per cent  of  basic  pension  in  excess  of Rs.4100.

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3. In the case of employees who retire on or after the 1st day of April, 1998, dearness relief shall be payable for every rise  or  be recoverable  for  every fall,  as  the case  may be,  of every 4 points over 1616 points in the quarterly average of the All India Average Consumer Price Index for Industrial workers in the series 1960=100. Such increase or decrease in dearness relief  for  every  said  four  points  shall  be  calculated  in  the manner given below:  

Scale of basic pension Per month

(1)

The rate of dearness relief as a per month percentage of basic pension

(2) (i) Up to Rs.3380  (ii) Rs.  3381  to  Rs.

5420

(iii) Rs.5421 to  Rs.5770

(iv)      Above Rs.5770

0.25 per cent. 0.25 per cent of Rs.3380 plus 0.21 per cent of basic pension in excess of Rs.3380. 0.25 per cent of Rs.3380 plus 0.21 per cent of the difference between Rs.5420 and Rs.3380 plus 0.12 per cent of basic pension in excess of Rs.5420. 0.25 per cent of Rs.3380 plus 0.21 per cent of the difference between Rs.5420 and Rs.3380 plus 0.12 per cent  of  the  difference  between Rs.5770 & Rs. 5420 Plus 0.06 per cent of basic pension in excess of Rs.5770.

5. On  02.06.2005  a  Bipartite  Settlement  was  arrived  at  between  the

managements of 50 banks, represented by the Indian Banks’ Association on

one hand and their workmen, represented by the All India Bank Employees’

Association,  National  Federation  of  Bank  Employees,  Bank  Employees’

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Federation  of  India,  Indian  National  Bank  Employees’  Federation  and

National Association of Bank Workers on the other.  It was inter alia recited:

“(D) The AIBEA, NCBE, BEFI, INBEF and NOBW (hereafter jointly called the Unions) submitted their Charter of Demands on  various  dates  between  10th June  2002  and  5th September 2002  for  revision  in  wages  and  other  service  conditions  of workmen to IBA and requested for negotiations on the same, with a view to arriving at an amicable settlement.   

(E) Simultaneously, IBA also raised with the Unions, issues on  behalf  of  the  managements  of  banks  concerned,  to  be discussed and settled with a view to improving efficiency of operations,  customer  service,  utilisation  of  manpower, discipline and maintaining harmonious industrial relations.

(F) The  parties  initially  agreed  after  negotiations  that  the total quantum of wage increase arising out of a Settlement to be signed  in  this  regard  shall  be  Rs.1,288  crores  per  annum including the cost of superannuation benefits and accordingly exchanged minutes on 23rd November 2004  at Mumbai.  It is agreed that for the purpose of this settlement, the additional cost of pension be shared between the parties at the ratio as agreed and pension costed accordingly.”

Para 7 of the Settlement dealt with Dearness Allowance which was

provided at following rates: “1. (i) Subordinate Staff

0.18% of ‘pay’

(ii) Clerical Staff

(a) 0.18% of ‘pay’ upto Rs.9,650/- plus (b)0.15%  of  ‘pay’  above  Rs.9,650/-  and  upto

Rs.15,350/- plus

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(c) 0.09%  of  ‘pay’  above  Rs.15,350/-  and  upto Rs.16,350/-.

(d)0.04% of ‘pay’ above Rs.16,350/-.

2. On  and  from  1st February,  2005,  Dearness  Allowance shall be payable at 0.18% of Pay."

Para  38  provided  for  implementation  of  various  provisions  of  the

Settlement and insofar as “Dearness Allowance- Single Slab Rate (0.18% of

pay)”, the date of implementation was stated to be 01.02.2005.

6. On 02.06.2005 itself, a Joint Note with caption, “Salary Revision for

Officers–Conclusion  of  Discussions  between  the  Indian  Banks  and  the

Officers’ Association” was prepared. It recited, “The representatives of the

Officers’ Associations have also agreed that the existing service conditions

be modified to the extent what has been stated in Annexure I.” Annexure I to

the Joint  Note inter  alia  dealt  with Dearness  Allowance and the relevant

paragraph of said Annexure I was to the following effect:

“2) Dearness Allowance

(a) For  the  period  from  1st November  2002  to  31st January, 2005, Dearness Allowance shall be payable for every  rise  or  fall  of  4  points  over  2288  points  in  the quarterly average of the All India Average Working Class Consumer Price Index (General) Base 1960=100 at the following rates:

(i) 0.18% of ‘pay’ upto Rs.9,650/- plus

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(ii) 0.15% of  ‘pay’ above Rs.9,650/-  and upto Rs.15,350/- plus

(iii) 0.09% of ‘pay’ above Rs.15,350/- and upto Rs.16,350/-.

(iv) 0.04% of ‘pay’ above Rs.16,350/-.

(b) On  and  from  1st February,  2005,  Dearness Allowance shall  be payable for  every rise  or  fall  of  4 points over 2288 in the quarterly average of the All India Average Working Class Consumer Price Index (General) Base 1960=100 at 0.18 of Pay.”

7. The  Bipartite  Settlement  dated  02.06.2005  was  operational  for  a

period of five years from 01.11.2002.  Thereafter 9th Bipartite Settlement

was arrived at between the parties on 27.04.2010 and was made operational

for five years from 01.11.2007.  Clause 7(2) of the 9th Bipartite Settlement

was as under:-

“(i)  On and from 1.05.2005, in the case of employees who retired during the period 1.04.1998 to 31.10.2002, dearness relief shall be payable for every rise or be recoverable for every fall, as the case may be, of every four points over 1684 points in the quarterly average of the All India Average Consumer price Index  for  Industrial  Workers  in  the  series  1960=100.   Such increase or decrease in dearness relief for every said four points shall be calculated in the manner given below:

Scale of basic pension Per month

(1)

The  rate  of  Dearness  Relief payable  as  a  percentage  of  Basic Pension 0.24 per cent

(2) (i) Up to Rs.3550 0.24 per cent.

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(ii) Rs.3551  to  Rs. 5650

(iii) Rs.5651 to  Rs.6010

(iv)      Above Rs.6010

0.24 per cent of Rs.3550 plus 0.20 per cent of basic pension in excess of Rs.3550.

0.24 per cent of Rs.3550 plus 0.20 per cent of the difference between Rs.5650 and Rs.3550 plus 0.12 per cent of basic pension in excess of Rs.5650.

0.24 per cent of Rs.3550 plus 0.20 per cent of the difference between Rs.5650 and Rs.3550 plus 0.12 per cent  of  the  difference  between Rs.6010 & Rs. 5650 Plus 0.06 per cent of basic pension in excess of Rs.6010.

(ii) In  respect  of  retirees  for  the  period  01.11.2002   to 30.04.2005  for  whom  pension  has  been  revised  w.e.f. 01.05.2005 based on definition of pay in terms of Clause 6 of the Bipartite Settlement  dated 2nd June,  2005,  dearness  relief shall  be  payable  w.e.f.  01.05.2005  for  every  rise  or  be recoverable  for  every  fall  as  the  case  may be  of  every  four points over 2288 points in the quarterly average of All India Average  Consumer  Price Index for  Industrial  Workers  in  the series 1960=100@0.18% of the basic pension.

(iii) In respect of employees who retire on or after 1.05.2005, dearness relief shall be payable for every rise or be recoverable for every fall,  as the case may be, of every four points over 2288  points  in  the  quarterly  average  of  All  India  Average Consumer  price  index  for  Industrial  Workers  in  the  series 1960=100, at the rate of 0.18 per cent of basic pension.

(iv) In  respect  of  employees  who  retired  or  died  while  in service on or after 1.05.2005 Dearness Relief shall be payable at  0.18% of  the  basic  pension  or  family  pension  or  invalid pension  or  compassionate  allowance  as  the  case  may  be.

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Dearness Relief in the above manner shall be paid for every rise or fall of 4 points over 2288 points in the quarterly average of the  All  India  Average  Consumer  Price  Index  for  industrial workers in the series 1960=100.

Note:  The Dearness Relief as above shall be payable for the half year commencing from the 1st day of February and ending 31st day  of  July  on  the  quarterly  average  of  index  figures published for the months October, November and December of the previous year and for the half year commencing from 1st day of  August  and  ending  with  the  31st day  of  January  on  the quarterly average of the index figures published for the months of April, May and June of the same year.”

8.  Thus,  in  case  of  employees  who  had  retired  during  the  period

01.04.1998 to 31.10.2002, dearness relief at the rate of 0.24% was awardable

upto Rs.3550/- of basic pension per month and thereafter the percentage for

amounts in excess of Rs.3550/- was successively at reduced rates.  On the

other hand, in case of employees who retired during the period 01.11.2002 to

30.04.2005 the percentage of 0.18% was without any such tapering formula.

Further,  comparison  with  Appendix  II  as  originally  forming  part  of  the

Pension Regulations shows that with respect to three categories of retirees

the dearness relief was earlier computed on tapering formula.  The idea of

tapering  formula  under  the  Bipartite  Settlement  dated  27.04.2010  was

retained with respect to pre November 2002 retirees while the dearness relief

to post November 2002 retirees was to be at the flat rate of 0.18 %.

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Please refer to the instructions contained in paragraphs 2 (ii), (iii)  and  (iv)  of  circular CO.HRDD.No.G.97/7704/17.06.05/2007-08 dated February 1, 2008 with regard to payment of Dearness Relief in respect of employees retired before November 1, 2002.

2.  It has been decided that, with effect from March 1, 2008, in supersession of the above instructions, the Dearness Relief in respect  of  employees  who  retired/died  in  harness  before November  1,  2002,  may  be  paid  as  per  the  rates  indicated below:

Pension/family pension based on Rate of Dearness Relief for the period March 1, 2008 to

July 31, 2008.

Payscales  effective  from November 1, 1997 (CPI = 1684)

82.32%  of  pension/family pension.

Payscales  effective  from November 1, 1992 (CPI = 1148)

166.95% of  pension/family  pension

Payscales  effective  from November 1, 1987 (CPI=600)

411.38%  of  pension/family pension

3. The instructions contained in the “Note” at  the end of paragraphs  2(iii)  of  the  abovementioned  circular  will  stand modified to that extent.  You are requested to recalculate the Dearness Relief and make payment accordingly.

Yours faithfully,

(A.K. Sarangi) General Manager”

(B) CIRCULAR DATED 01.08.2008

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“RESERVE BANK OF INDIA www.rbi.org.in

CO.HRDD.No.G 46/1344/17.06.05/2008-2009 August 1, 2008

Shravana 10, 1929 (Saka)

The Principal Chief General Manager/ Regional Director/ Chief General Manager-in-Charge/ Chief General Manager/ General Manager (Officer-in-Charge), Principal, Reserve Bank of India __________________

Dear Sir,

Payment of Dearness Allowance/Dearness Relief

Based  on  All-India  Consumer  Price  Index  numbers  for Industrial Workers (base 1960 = 100) available for the quarter ended June 2008, rate of Dearness Allowance for the quarter August 2008 to October 2008 for employees in Classes I, III and IV, drawing pay in the scales of pay based on CPI = 2288, works out to 39.78% of pay, half of 79.56%.

2.  The  rates  of  Dearness  Relief  on  Pension/Family Pension/Ex-Gratia, for the period August 2008 to January 2009, shall be worked out as under:

(i)  On Pension based on the revised  pay scales  effective from November 1, 2002 – 39.78% of basic pension.

(ii) The rates of Dearness Relief in respect of employees who retired/died in harness before November 1, 2002:

Pension/family  pension based on  

Rate of Dearness Relief for the period August 2008 to January,

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2009 Pay-scales  effective  from November 1, 1997  (CPI = 1684)

89.28%  of  pension/family pension

Pay-scales  effective  from November 1, 1992  (CPI = 1148)

177.10%  of  pension/family pension

Pay-scales  effective  from November 1, 1987  (CPI = 600)

430.81%  of  pension/family pension

3. You  may  please  arrange  to  calculate  and  pay  the Dearness  Allowance  on  “Pay”  Dearness  Relief  on  Pension, Family  Pension  and  Ex-Gratia  amount,  on  the  above  basis, unless you receive instructions from Central Office contrary to above.

Yours faithfully,

(Neeraj Nigam) Deputy General Manager”

10. Since the benefit of grant of full compensation against price rise on

dearness relief as was extended by Reserve Bank of India, was not extended

to the retirees of United Bank of India who had retired prior to 01.11.2002,

Respondent Nos.1 to 4 herein preferred Writ Petition No.507 of 2012 in the

High Court at Calcutta.  It was submitted that though Reserve Bank of India

started  giving  full  compensation  against  price  rise  on  dearness  relief  to

retirees prior to 01.11.2002 vide circulars dated 01.04.2008, 01.08.2008 and

01.07.2010, the Appellant Bank continued to make distinction in terms of

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dearness relief on the basis of dates of retirement of the pensioners and that

such  action  on  part  of  appellant  was  clearly  opposed  to  para  6  of  the

Settlement  dated  29.10.1993.  Submitting  that  the  cut-off  date  fixed  by

Appellant Bank was in violation of Reserve Bank of India formula as well as

was  arbitrary  and  irrational,  the  respondent  Nos.1  to  4  claimed  full

compensation against price rise on dearness relief.  By way of example cases

of respondent Nos.3 to 4 were presented in para 30 of the petition in support

of  the  submission  that  the  retirees  prior  to  01.11.2002  were  getting

prejudiced.  Said para 30 of the petition is quoted here for ready reference.

“30.  The loss being suffered every month by the petitioner Nos. 3 and 4 for denial of RBI dearness relief formula on pension is as follows:-

Santipriya Roy

Date of Retirement 30.09.2002

Basic Pension Rs.7880/-

Dearness Relief per slab on slab basis

                              Rs.3550/- x 0.24% Rs.8,520/-

Next Rs.2100/- x 0.20 % Rs.4,200/-

Next Rs.360/-   x  0.12% Rs.432/-

Next Rs. 1870/- x 0.06%                                         Rs.1,122/-

                              Rs.7880/-                       Rs.14,274/-

Dearness Relief for full compensation against price rise

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Rs.7880/- x 0.24%            Rs.18,912/-

Difference per slab Rs.18,912/- (-) Rs.14,274/- =Rs.4,638/-

Total D.R. on Slab basis  Rs.14,274/- x 708 slab Rs.10,105.99

Total D.R. on 100%         Rs.18,912/- x 708 slab Rs.13,389.69

                                          ------------------------------------------

Difference =      Rs.3,283.70

                                          ------------------------------------------

Kalpataru Bhattachajee

Date of Retirement 31.10.2002

Basic Pension            Rs.5431/-

Dearness Relief per slab on slab basis

Rs.3550/- x 0.24% Rs.8,520/-

Next  Rs.1881/- x 0.20%                                         Rs.3,762/-

        Rs.5431/- Rs.12,282/-

Dearness Relief per slab for full compensation against price  rise.

Rs.5431/-   x 0.24%              Rs.13,034/-

Difference per slab Rs.13,034/- (-) Rs.12,282/- =Rs.752/-

Total D.R. on Slab basis Rs.12,282/- x 708 slab  Rs.8,695.65

Total D.R. on 100%        Rs.13,034/- x 708 slab  Rs.9,228.07

--------------------- Difference          Rs.532.42”

---------------------

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11. In the affidavit in reply filed on behalf of the appellants it was inter

alia submitted that Pension Regulations having come into force in 1995 the

settlement dated 29.10.1993 had no force and as such no benefit could be

drawn on the basis of Regulations or Circulars issued by Reserve Bank of

India.  It was further submitted that the distinction in respect of retirees prior

to 01.11.2002 was on the basis of a Bipartite Settlement dated 27.04.2010

and thus the genesis was stated to be in the agreement between the parties.   

12. The aforesaid writ petition was allowed by Single Judge of the High

Court vide judgment and order dated 04.03.2015.  It was observed that there

was nothing in Pension Regulations indicating that the Appellant Bank had

abandoned its policy as spelt  out  in para 6 of  the Settlement  of  1993 to

follow the rates of relief and formula adopted by Reserve Bank of India.

Relying upon the decision of this Court in D.S. Nakara  v. Union of India1,

it was observed that the classification made in the instant case denying the

benefit of full dearness relief to retirees prior to 01.11.2002 was arbitrary

and irrational.  The Single Judge however directed the Appellant  Bank to

take a reasoned decision with regard to grant  of 100% dearness relief  to

retirees prior to 01.11.2002.

1 (1983) 1 SCC 305

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13. The Judgment  and  order  passed  by  the  Single  Judge  directing  the

appellant  Bank  to  take  fresh  decision  was  questioned  by  the  respondent

Nos.1  to  4  by  filing  APO  No.315  of  2015,  while  the  appellant  bank

questioned the  decision  by filing  APO No.316 of  2015,  in  so  far  as  the

findings rendered and directions issued by the Single Judge were concerned.

Both these appeals were disposed of by the Division Bench on 26.09.2016.

The Division Bench relied upon the decision of this Court in  D.S. Nakara

(supra)  and  in  Kallakkurichi  Taluk  Retired  Officials  Association  Tamil

Nadu and others v. State of Tamil Nadu2 and observed as under:

“The  effect  of  the  joint  note  is  that  employees  who  retired before the cut-off date would get dearness relief at a lower rate than those who retired after that date.  The dearness relief paid is  relatable  to  the  cost  of  living  index  and  varies  in  direct proportion to the same.  It must be borne in mind that dearness relief  is  an  amount  paid  to  the  retirees  to  neutralise  the astronomical rise in prices.  The object of paying dearness relief is  the same,  irrespective  of  the  date  on which the employee retires.  Inflation hits the employees who retire before the cut- off date as hard as it does those who retire later.  Therefore the dearness relief cannot be different for two sets of retirees.”

It further observed as under:

“There is no dispute that the Bank Pension Regulations, 1995 have not been amended.  These Regulations have been framed in  consonance  and  under  the  powers  conferred  on  the  Bank

2 (2013) 2 SCC 772

20

under the Banking Companies Act.  They have a statutory force of law.  Clause 6 of the Pension regulations mandates that the dearness relief  will  be paid to the employees of  the member banks in  consonance  with that  paid  by the  Reserve  Bank of India to its employees.  Therefore a joint note cannot take away the right of employees to that dearness relief.”  

Holding the distinction between pre-November 2002 retirees and post-

November 2002 retirees to be unreasonable, arbitrary and discriminatory the

Division  Bench  directed  the  appellant  to  pay  the  dearness  relief  to  all

pensioners at the same rate.  The direction was issued in following terms:

“Therefore, we direct the Bank to comply with Regulation 6 of the  Pension Regulations  and to  pay pension to  the  pre-2002 retirees at the same rate as enjoyed by the post-2002 retirees, as has been paid to the retired employees of the Reserve Bank of India.  The judgment of the learned Single Judge is modified to that extent.”

14. The appellant  preferred  Review Applications  being RVWO Nos.57

and  58  of  2016  submitting  that  the  decision  dated  26.09.2016  required

certain typographical changes.  The Division Bench of the High Court vide

its order dated 05.12.2016 effected changes as stated therein and disposed of

the Review Applications.

21

15. The appellant bank being aggrieved, challenged the decisions dated

26.09.2016 and 05.12.2016 rendered by the Division Bench by filing these

appeals by special leave on or about 07.02.2017.  By that time, a decision

rendered by Division Bench of Madras High Court in Writ Appeal Nos.355

of 2013 and allied matters on 17.06.2013 was affirmed by this Court  by

dismissing appeals arising therefrom on 01.02.2017.   

16. At this stage it may be noted that Writ Petition Nos.50000-50002 of

2006 and allied writ petitions titled as A.B. Kasturirangan v. Canara Bank

etc. were allowed by Single Judge of Madras High Court by judgment and

order dated 14.12.2012.  The challenge was to the non-grant of benefit of

100% neutralization of dearness relief to retirees prior to 01.11.2002 on lines

similar to the challenge raised in the present matters.  It was observed by the

Single  Judge  that  the  Bipartite  Settlement  dated  02.06.2005  introduced

dearness relief at the slab rate of 0.18% of the basic pension; that the change

from tapering rate of slab rate was not an introduction of a new scheme but

was  a  modification  of  the  existing  one.   He  further  observed  that  the

classification introduced by the bank was artificial and arbitrary and was not

based on any rational principle and that the bank had virtually created class

within  a  class.   The  matter  was  carried  in  appeal.   While  allowing  the

22

appeals  and  setting  aside  the  decision  of  the  Single  Judge,  the  Division

Bench observed as under:

“… the settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction  in  the  matter  of  dearness  allowance  so  far  as  the award is concerned, it cannot be said that the settlement as a whole is  unfair  and unjust  and it  is  not  possible  to scan the settlement  in  bits  and  pieces  and  hold  some parts  good  and acceptable and others bad.  It has been further held that unless it can be demonstrated that the objectionable portion is such that it  completely  outweighs  all  the  other  advantages  gained,  the Court will be slow to hold a settlement as unfair and unjust and the settlement has to be accepted or rejected as a whole.

……..

… in the case on hand, the respondents are not covered by the 8th Bipartite  Settlement/Joint  Note and they were covered by earlier Bipartite Settlement/Joint Note and they are not eligible to get the benefits payable to the persons who are covered by the  8th Bipartite  Settlement/Joint  Note  as  they  were  made applicable  only  to  those  employees  who  were  in  service  on 01.11.2002.  The payment of pension and other related benefits are covered by the earlier Settlement/Joint Note and hence, it is not open to the respondents to contend that the benefits in the form of Dearness Allowance at 0.18% is to be given to them. In the considered opinion of this Court, the respondents are not covered under the 8th Bipartite Settlement/Joint Note and hence, the  above  cited  judgment  has  no  application  to  the  case  on hand.”

This  view was  under  challenge  in  Civil  Appeal  Nos.8420-8421  of

2013 and was affirmed by this Court on 01.02.2017.

23

17. The appellant in the present matters contended inter alia that the view

taken by Division Bench of Madras High Court was already affirmed by this

Court by dismissing the appeal therefrom on 01.02.2017; that the retirees

prior to 01.11.2002 could not claim same benefit/parity at par with those

who retired  after  01.11.2002;  that  the  dearness  allowance  payable to  the

pensioners was linked to the pay and pre 01.11.2002 retirees were being paid

pension or  dearness  relief  thereon as per  service conditions applicable to

them at the time of retirement; that the decision of this Court in D.S. Nakara

(supra) would not be applicable in the present case and that the High Court

was in error in relying upon para 6 of Settlement dated 29.10.1993 as said

settlement  had  worked  itself  out.   In  its  affidavit  in  reply  the  Retirees

Association  submitted  inter  alia  that  in  the  Bipartite  Settlement  dated

02.06.2005, 100% neutralization of dearness allowance was introduced for

the  first  time  by  doing  away  with  tapering  rate  of  payment  of  dearness

allowance and post 01.02.2005 dearness allowance was to be paid at a single

slab  rate  of  0.18%.   However,  by  subsequent  Bipartite  Settlement  dated

27.04.2010  a  distinction  was  made  between  pre  and  post  01.11.20002

retirees.  The respondents submitted that the view taken by the High Court

did not call for any interference.

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18. In this appeal, we heard Mr.  Dhruv Mehta, learned Senior Counsel

for  the  appellant  –  Bank  while  the  respondent  namely  Retirees  Welfare

Association was represented by Mr. V.K. Bali, learned Senior Counsel.  Mr.

A.S. Nambiar and Ms. V. Mohna, learned Senior Counsel appeared in IAs

51316 and 50769 respectively for interveners.

19. Before we deal with the controversy in the present matters, the law on

the point as laid down by this Court may be adverted to:

A] In  D.S. Nakara  & Others (supra) the principal question which arose

was, “is the date of retirement a relevant consideration for eligibility when a

revised formula for computation of pension is ushered in and made effective

from  a  specified  date.”3The  inquiry  was  limited  to  non-contributory

superannuation or retirement pension paid by government to its erstwhile

employee and for the purpose and object underlying it.4  In that case formula

for computation of pension was liberalized vide office memorandum dated

25.05.1979 but the benefit was restricted to those government servants who

were  in  service  on  31.03.1979  and  retired  on  or  after  that  date.    The

challenge was  to  arbitrary division  of  a  homogenous class  by fixing the

eligibility criteria unrelated to the purpose of revision.  In that context the

3 Para 2 of D.S. Nakara 4 Para 21 of D.S. Nakara

25

observations of  this Court  in Para 42 are relevant.   Said Para 42 was as

under:

“42. If it appears to be undisputable, as it does to us that the pensioners  for  the  purpose  of  pension  benefits  form a  class, would its upward revision permit a homogeneous class to be divided by arbitrarily fixing an eligibility criteria unrelated to purpose of revision, and would such classification be founded on some rational principle? The classification has to be based, as is well settled, on some rational principle and the rational principle must have nexus to the objects sought to be achieved. We have set out the objects underlying the payment of pension. If  the  State  considered  it  necessary  to  liberalise  the  pension scheme,  we  find  no  rational  principle  behind  it  for  granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that  date.  If  the  liberalisation  was  considered  necessary  for augmenting social security in old age to government servants then those who, retired earlier cannot be worse off than those who  retire  later.  Therefore,  this  division  which  classified pensioners  into  two  classes  is  not  based  on  any  rational principle  and  if  the  rational  principle  is  the  one  of  dividing pensioners with a view to giving something more to persons otherwise  equally  placed,  it  would  be  discriminatory.  To illustrate,  take  two persons,  one  retired  just  a  day  prior  and another a day just succeeding the specified date. Both were in the same pay bracket, the average emolument was the same and both had put in equal number of years of service. How does a fortuitous circumstance of retiring a day earlier or a day later will permit totally unequal treatment in the matter of pension? One retiring a day earlier will have to be subject to ceiling of Rs.8100 p.a. and average emolument to be worked out on 36 months’ salary while the other will have a ceiling of Rs.12,000 p.a. and average emolument will be computed on the basis of last 10 months’ average. The artificial division stares into face and is unrelated to any principle and whatever principle, if there be  any,  has  absolutely  no nexus  to  the  objects  sought  to  be achieved  by  liberalising  the  pension  scheme.  In  fact  this

26

arbitrary  division  has  not  only  no  nexus  to  the  liberalised pension scheme but it is counter-productive and runs counter to the  whole  gamut  of  pension  scheme.  The  equal  treatment guaranteed  in  Article  14  is  wholly  violated  inasmuch  as  the pension rules being statutory in character,  since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours’ difference in matter of retirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore, the classification does not stand the test of Article 14.”

B] The principle laid down in  D.S. Nakara  (Supra) was explained in

two decisions rendered by Constitution Benches of this Court in  Krishena

Kumar v.  Union of India and Others5 and in  Indian Ex-Services League

and Others  v.  Union of India and Others6.  Paragraphs 12 and 14 of the

latter decision in Indian Ex-Services League (Supra) were as under:

“12. The liberalised pension scheme in the context of which the decision was rendered in Nakara  provided for computation of pension  according  to  a  more  liberal  formula  under  which “average emoluments” were determined with reference to the last ten months’ salary instead of 36 months’ salary provided earlier yielding a higher average, coupled with a slab system and raising the ceiling limit for pension. This Court held that where the mode of computation of pension is liberalised from a specified date, its benefit must be given not merely to retirees subsequent  to  that  date  but  also  to  earlier  existing  retirees irrespective of their date of retirement even though the earlier retirees  would  not  be  entitled  to  any  arrears  prior  to  the specified  date  on the  basis  of  the revised  computation made according to the liberalised formula. For the purpose of such a

5 (1990) 4 SCC 207 6 (1991) 2 SCC 104

27

scheme  all  existing  retirees  irrespective  of  the  date  of  their retirement,  were  held  to  constitute  one  class,  any  further division  within  that  class  being  impermissible.  According  to that  decision,  the  pension  of  all  earlier  retirees  was  to  be recomputed  as  on  the  specified  date  in  accordance  with  the liberalised formula of computation on the basis of the average emoluments of each retiree payable on his date of retirement. For this purpose there was no revision of the emoluments of the earlier retirees under the scheme. It was clearly stated that ‘if the  pensioners  form a  class,  their  computation  cannot  be  by different  formula  affording  unequal  treatment  solely  on  the ground that some retired earlier and some retired later’. This according to us is the decision in Nakara  and no more.

14. Nakara  decision came up for consideration before another Constitution Bench recently in  Krishena Kumar v.  Union of India.  The  petitioners  in  that  case  were  retired  Railway employees  who  were  covered  by  or  opted  for  the  Railway Contributory  Provident  Fund  Scheme.  It  was  held  that  PF retirees and pension retirees constitute different classes and it was never held in Nakara  that pension retirees and PF retirees formed  a  homogeneous  class,  even  though  pension  retirees alone  did  constitute  a  homogeneous  class  within  which  any further  classification  for  the purpose of  a  liberalised pension scheme was impermissible. It was pointed out that in Nakara , it was never required to be decided that all the retirees for all purposes  formed  one  class  and  no  further  classification  was permissible.  We  have  referred  to  this  decision  merely  to indicate that another Constitution Bench of this Court also has read Nakara  decision as one of limited application and there is no scope for enlarging the ambit of that decision to cover all claims  made  by  the  pension  retirees  or  a  demand  for  an identical amount of pension to every retiree from the same rank irrespective  of  the  date  of  retirement,  even  though  the reckonable emoluments for the purpose of computation of their pension be different.”

28

C] In Union of India v. P.N. Menon and Others7  the challenge to

the cut off date and prayer for extension of similar relief of treating a portion

of dearness allowance as pay for the purpose of retirement benefits was the

subject matter.  While accepting the appeal and negating the challenge raised

by the concerned retirees, this Court in paragraphs 10 and 11 observed as

under:

“10. The concept of ‘dearness pay’ was evolved in respect of employees in different pay ranges with different percentages of the  dearness  pay.  Thereafter  the  pension  and  gratuity  were worked out and an option was given to persons, who retired on or after 30-9-1977 but not later than 30-4-1979, to choose either of the two alternatives — (i) to have their pension and death- cum-retirement gratuity calculated on their pay excluding the element of dearness pay as indicated in paragraph 2 of the said office memorandum; or  (ii)  to have their  pension and death- cum-retirement gratuity recalculated after  taking into account the element of dearness pay. If the stand of the respondents is to be accepted that this scheme should have been made available, without there being a cut-off date, to all including those who have retired even 20 to 25 years before the introduction of the scheme,  then,  according  to  us,  the  whole  scheme  shall  be unworkable, because it is linked with the payment of dearness allowance, which is based on the level of price index. Different institutions/departments have introduced the system of payment of  dearness  allowance  at  different  stages  to  mitigate  the hardship of their employees with the rise in the prices of the essential articles as a result of the inflation.

11. On behalf of the Union of India, it has been stated that in the aforesaid office memorandum dated 25-5-1979, 30-9-1977 was fixed as the cut-off date, with reference to the average cost of  living index at  272,  which fell  on 30-9-1977. It  has been

7 1994 (4) SCC 68

29

further stated that those who were entitled to the benefits of the said office memorandum, were given option either to opt for the revised  formula  or  retain  the  existing  formula.  Some  of  the persons entitled to the new formula opted to retain their existing position,  because  in  their  case  the  application  of  the  new formula would have resulted either in the reduction of the total pension or the increase which would have been only marginal. It has been said that under the office memorandum aforesaid, dearness allowance with reference to average price index level at 272 was treated as dearness pay for the purpose of pension for those who retired after 30-9-1977. It has also been pointed out that pensioners, who retired on or after 30-9-1977 with the benefits of dearness pay, became entitled to less dearness relief, as compared to those who retired before 30-9-1977 or retired after  30-9-1977,  but  had opted  not  to  get  the  benefit  of  the impugned office memorandum.”

D]. In State of Punjab v. Justice S.S. Dewan (Retired Chief Justice ) and

Others8  by way of  an amendment, the years put in by a judicial officer as

an advocate prior to his induction in judicial service were to be added for

computing length of service for the purpose of pension.    The question was

whether the State was justified in limiting this relief to those who retired

after  22.02.1990.   The  ratio  of  decision  in  D.S.  Nakara (Supra)  was

distinguished on the ground that the benefit conferred was a new benefit and

not an upward revision of the existing pension scheme. This Court found

that it was not a case of liberalization of the existing scheme but introduction

of  a  new retiral  benefit  and as  such the State  was  justified in  making a

8 (1997) 4 SCC 569

30

distinction between the sets of retirees and limiting the benefit to those who

retired after the cut off date.  The observations in paragraphs 6 and 7 quoted

hereunder are relevant:

“6. The  change  brought  about  by  the  amendment  is  that whereas in respect of death-cum-retirement benefits members of the Punjab Superior Judicial Service were earlier governed by  the  All  India  Services  (Death-cum-Retirement  Benefits) Rules,  now they  are  governed  by  the  Punjab  Civil  Services Rules.  Moreover,  now in  the  case  of  a  direct  recruit  to  the Punjab Superior Judicial Service the actual period of practice at the Bar not exceeding 10 years has to be added to his service for the purpose of determining the qualifying service. Formerly, that is, prior to 22-2-1990, qualifying service of a member of the Punjab Superior Judicial Service was the length of service rendered by him as a member of the Punjab Superior Judicial Service  and  also  as  a  Judge  of  the  High  Court,  if  he  was elevated to that position before retirement. Even in case of a direct  recruit  to  that  Service  his  standing  at  the  Bar  was irrelevant but now that period has to be added for determining the  qualifying  service.  Obviously,  this  enlargement  of  the period of qualifying service would lead to an increase in the quantum of pension. This has been regarded by the High Court and  as  contended  by  the  respondent,  liberalisation  of  the pension scheme. For that reason, it further held that benefit of a rule liberalising pension cannot be restricted to persons retiring subsequently  that  is  after  the  date  of  such  liberalisation otherwise it would amount to vicious discrimination violative of Article 14 of the Constitution. The High Court has also held that there is nothing in the language of the rule to suggest that the benefit  conferred by it  is confined to the persons retiring after 22-2-1990.

7. Therefore, what we have to consider is what is the nature of the change made by the amendment. Is it  by way of upward revision of  the existing pension scheme? Then obviously the

31

ratio of the decision in D.S. Nakara  case would apply. If it is held to be a new retiral benefit or a new scheme then the benefit of it cannot be extended to those who retired earlier.”

E] In  Col. B.J. Akkara (Retd.) v.  Government of India and Others9 The

principles to be considered in such matters were culled out in para 20 as

under:

“20. The principles relating to pension relevant to the issue are well settled. They are:

(a)  In  regard  to  pensioners  forming  a  class,  computation  of pension  cannot  be  by  different  formula  thereby  applying  an unequal treatment solely on the ground that some retired earlier and some retired later. If the retiree is eligible for pension at the time  of  his  retirement  and  the  relevant  pension  scheme  is subsequently  amended,  he  would  become  eligible  to  get enhanced pension as per  the new formula of  computation of pension  from the  date  when  the  amendment  takes  effect.  In such a situation, the additional benefit  under the amendment, made available to the same class of pensioners cannot be denied to him on the ground that he had retired prior to the date on which the aforesaid additional benefit was conferred.

(b) But all retirees retiring with a particular rank do not form a single class for all purposes. Where the reckonable emoluments as on the date of retirement (for the purpose of computation of pension) are different in respect of two groups of pensioners, who retired with the same rank, the group getting lesser pension cannot contend that their pension should be identical with or equal to the pension received by the group whose reckonable emolument was higher. In other words, pensioners who retire with the same rank need not be given identical pension, where

9 (2006) 11 SCC 709

32

their  average  reckonable  emoluments  at  the  time  of  their retirement were different, in view of the difference in pay, or in view of different pay scales being in force.

(c)  When  two  sets  of  employees  of  the  same  rank  retire  at different points of time, it is not discrimination if: (i) when one set retired, there was no pension scheme and when the other set retired, a pension scheme was in force; (ii) when one set retired, a voluntary retirement scheme was in force and when the other set retired, such a scheme was not in force; or (iii) when one set retired, a PF scheme was applicable and when the other set retired, a pension scheme was in force.

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 “homogeneous group”. 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 homogeneous  class  of  pensioners  into  two  groups  and subjecting them to different treatment.”

F] In  Kallakkurichi  Taluk Retired  Officials  Association,  Tamil  Nadu

and Others  v.  State of Tamil Nadu10  the effect of government orders as

regards pension was that employees retiring on or after 01.06.1988 were at a

disadvantage  as  against  those  who  had  retired  before  01.06.1988.

Paragraphs 38 and 39 of said decision are quoted hereunder:

10 (2013) 2 SCC 772

33

“38. The instant controversy should not be misunderstood as a determination of the total carry-home pension of an employee. All  the  government  orders  referred  to  above,  deal  with  the quantum of  “dearness  allowance”  to  be  treated  as  “dearness pay” for the calculation of pension. “Dearness pay” is one of the many components, which go into the eventual determination of  pension.  Therefore,  the  focus  in  the  adjudication  of  the present controversy must be on “dearness pay”, rather than on the eventual carry-home pension. The relevance and purpose of treating  “dearness  allowance”  as  “dearness  pay”,  has  been brought out in the foregoing paragraphs. Therefore, clearly, the object sought to be achieved by adding “dearness pay” to the wage of a retiree, while determining pension payable to him, is to remedy the adverse effects of inflation. The aforesaid object has to be necessarily kept in mind, while examining the present controversy. Any classification without reference to the object sought to be achieved, would be arbitrary and violative of the protection  afforded  under  Article  14  of  the  Constitution  of India,  it  would  also  be  discriminatory  and  violative  of  the protection  afforded  under  Article  16  of  the  Constitution  of India.

39. Having  given  our  thoughtful  consideration  to  the controversy in hand,  it  is  not  possible  for  us to find a  valid justification  for  the  State  Government  to  have  classified pensioners similarly situated as the appellants herein (who had retired  after  1-6-1988),  from  those  who  had  retired  prior thereto. Inflation, in case of all such pensioners, whether retired prior to 1-6-1988 or thereafter, would have had the same effect on  all  of  them.  The  purpose  of  adding  the  component  of “dearness pay” to wages for calculating pension is to offset the effect of inflation. In our considered view, therefore, the instant classification made by the State Government in the impugned Government Order dated 9-8-1989 placing employees who had retired after 1-6-1988 at a disadvantage, vis-à-vis the employees who  had  retired  prior  thereto,  by  allowing  them  a  lower component  of  “dearness  pay”,  is  clearly  arbitrary  and discriminatory, and as such, is liable to be set aside as violative of Articles 14 and 16 of the Constitution of India.”

34

20. In the light of the principles laid down by this Court as aforesaid, let

us now consider factual perspective in the present matters.  

21. At  the  outset  it  must  be  stated  that  Appendix  II  to  the  Pension

Regulations had categorized employees in three different segments and the

dearness relief payable on basic pension in respect of employees in these

three categories was on the basis of tapering formula which differed in each

of the categories.  In respect of those who were in the first category i.e. those

who had  retired  earliest,  the  dearness  relief  was  0.67% on the  first  slab

namely upto Rs.1250/- of basic pension.   The rate then tapered and finally

was 0.17% of basic pension in excess of Rs.2130/-.  At the same time in

respect of retirees in the second category, the rate of dearness relief was 0.35

per  cent  in  respect  of  first  slab  namely  upto  Rs.2400/-.   Here  also  the

dearness relief was on a tapering formula and finally was 0.09% of basic

pension in excess of Rs.4100/-.  The third category which was in respect of

employees who retired after 01.04.1998, the rate was 0.25% for the first slab

upto Rs.3380/-.  Going by the tapering formula, the rate was 0.06 per cent of

the basic pension in excess of Rs.5770/-.  If Clause 7(2) of the 9th Bipartite

Settlement  dated  27.04.2010  is  compared  with  the  last  category  of  the

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Appendix  II  of  the  Pension  Regulations,  there  is  hardly  any  change  in

respect  of  retirees  during  the  period  01.04.1998  to  31.10.2002.   Thus,

whatever benefit was conferred and was enjoyable by the employees who

retired before November 2002 was not taken away.

22. If  both  categories  dealt  with  by  9th Bipartite  Settlement  dated

27.04.2010 are further compared, the retirees prior to 01.11.2002 would be

entitled to dearness relief on a tapering formula where the initial slab upto

Rs.3550/- is to be governed by quotient of 0.24%.  The tapering formula

then ends with 0.06% of basic pension in excess of Rs.6010/-.  The starting

point  is  at  a  level  of  0.24% while  the  end point  tapers  to  0.06%.   The

maximum advantage is sought to be given to those who are getting basic

pension at lower levels of slab who would get the dearness relief at 0.24%.

As against this, the retirees after 01.11.2002 are to be given dearness relief at

a flat rate of 0.18% of the basic pension. Theoretically, the starting level for

the retirees prior to 01.11.2002 is at a higher level of 0.24% as against the

retirees after 01.11.2002.   It could possibly be said that for those who are

with basic pension in the region of Rs.6000/-,  on the basis  of a tapering

formula may well,  in the ultimate analysis,  average to the same level  of

0.18%.

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23. The parity that was sought in the petition was not so much regarding

applicability of same rate of 0.18% but was in respect of “flat rate” idea.

The illustrations given in para 30 of the writ petition that we have quoted

hereinabove bring home the point. The calculation of dearness allowance of

Rs.14274/- on basic pension of Rs.7880/- in the case of Santipriya Roy is in

keeping with tapering formula as  given in  the Bipartite  Settlement  dated

27.04.2010. The tabular chart then proceeds to calculate full compensation

on account of dearness allowance with slab rate of 0.24% on the entire basic

pension  of  Rs.7880/-  which  figure  comes  to  Rs.18912/-.   Thus  the

submission  was  that  the  dearness  relief  be  computed  on  0.24%  for  the

entirety of basic pension and not just for the first slab upto Rs.3550/-.  But

such  calculation  completely  disregards  that  rate  which  is  a  flat  rate

applicable in case of  post  01.11.2002 retirees is not 0.24% for the entire

amount of basic pension but at a different level of 0.18% and the threshold

requirement of quarterly average of the Index is also different.  If we were to

simply  borrow  the  same  rate  of  0.18%  in  the  case  of  retirees  prior  to

01.11.2002,  the  concerned  retirees  may  well  be  at  a  disadvantage.  For

instance, the basic pension of Rs.7880/- of said Santipriya Roy would yield a

figure of Rs.14184/- with flat rate of 0.18%. It will not therefore be correct

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to  adopt  and  apply  the  same rate  as  is  made  applicable  in  case  of  post

01.11.2002 retirees.  What is prayed for is also not the same rate but the

same  principle,  namely,  flat  rate  be  made  applicable  to  pre  01.11.2002

retirees as well but at a rate of 0.24%.

24.   Would  that  be  the  correct  approach?   The  tapering  formula

undoubtedly begins with 0.24% for the first segment of Rs.3550/- of basic

pension and then progressively steps down and finally reaches the level of

0.06% where the basic  pension is in excess of Rs.6010/-.  What is devised

by  way  of  such  tapering  formula  is  higher  rate  at  the  lower  levels  of

segments so that larger number of peoples would get maximum advantage

and the rate thereafter keeps stepping down.  Neither can we apply the rate

of 0.18% which will then cause great harm and damage to the retirees nor

can we adopt a flat rate of 0.24% for the entire amount of basic pension.

The benefit which is sought to be conferred by the tapering formula lies in

the averaging which comes to near about the same quantum as is given to

the post 01.11.2002 retirees.  At this stage it is noteworthy that no illustration

has  been  placed  on  record  to  submit  that  even  with  0.18%  dearness

allowance  those  who  retired  after  November  2002  walk  away  with

substantially greater advantage as against pre November 2002 retirees.  In

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any  case,  this  is  not  a  matter  where  a  section  of  employees  merely  on

account of date of retirement are being differentiated.  If we adopt a flat rate

of 0.24% as  is  being prayed for,  the class  of  retirees who retired before

01.11.2002 will stand conferred better rate than those employees who retired

after 01.11.2002.  Nor can we apply a flat rate of 0.18% for them.  Each

class is governed by distinct and different parameters.  These are all matters

of policy making.  The conferral of advantages of benefits on two different

classes of retirees has a completely distinct formula and rates and it would

not be possible to have a synthesis on any count or to put both the sets of

retirees on any common parameters.  Both classes are distinct and do not

form a homogenous group.  It would be extremely difficult and hazardous to

adopt a flat rate as is sought to be projected.  It is not a case of creating a

class within a class.

25. In our view any attempt to tinker with either the formula or the rate

would make the whole scheme unworkable as was cautioned by this Court in

the case of P.N. Menon and Others (supra).  As held in the case of Indian

Ex-Services League and Others  (supra) the decision of this Court in  D.S.

Nakara  (supra)  is  one  of  limited  application  and  there  is  no  scope  for

enlarging  the  ambit  of  that  decision  to  cover  all  schemes  made  by  the

39

retirees or a demand for an identical amount of pension irrespective of the

date  of  retirement.   The  reliance  on  the  resolutions/circulars  issued  by

Reserve  Bank  of  India  was  also  misplaced.   It  is  true  that  the  tapering

formula was done away with by Reserve Bank of India but that by itself

cannot  entitle  the  retirees  prior  to  01.11.2002  either  to  be  conferred  the

advantage at the same rate made applicable by Reserve Bank of India or at

the flat rate of 0.24% as was sought to be projected.

In our considered view, the assessment made by the Division Bench of

the Madras High Court was absolutely correct.  The settlement has to be

taken as a package deal and it  would be impossible to hold certain parts

good and acceptable  while finding other parts  to be bad.   Moreover,  the

recitals  D,  E and F  in  the  Bipartite  settlement  dated  02.06.2005 (quoted

hereinabove) show that a package deal was entered into and Rs.1288 crores

per  annum towards  all  the  benefits  was  set  apart  for  the  benefit  of  the

employees.  Any stepping up of benefit for a section of employees is bound

to inflate the figure of Rs.1288 crores per annum though that by itself is not

a ground that weighs with us.  In our view both the categories of retirees,

namely, pre November 2002 and post November, 2002  stand on different

footing, the parameters which govern the computation of dearness relief are

also on a different level.  The decisions rendered by the Single Judge as well

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as by the Division Bench of the High Court failed to appreciate these aspects

and in our view, the said decisions are completely erroneous.  

26. It may also be noted that the decision of the Division Bench of the

Madras High Court having been confirmed by this Court, the matter stands

concluded.   As  has  been  observed  in  paragraphs  32,  41  and  44  of

Kunhayammed and Others v. State of Kerala and Another11, once leave to

appeal  had been granted and the appellate  jurisdiction  of  this  Court  was

invoked the order passed in appeal would attract the doctrine of merger.  Be

that as it may, we are satisfied that the Bipartite Settlement did not create

any distinction which was inconsistent with the principles laid down by this

Court.

27. We therefore allow these appeals, set aside the judgments and orders

passed in the appeals and dismiss Writ Petition No.507 of 2012 preferred by

respondent Nos.1 to 4 herein.  No order as to costs.

………………………J. (Adarsh Kumar Goel)

11(2000) 6 SCC 359

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…………………..……J. (Uday Umesh Lalit)

New Delhi, May 16, 2018