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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.626-627 OF 2008

A.N. Sachdeva (dead) by LRs. & Ors. ... Appellants

Vs.

Maharshi Dayanand University, Rohtak & Anr. ... Respondents

J U D G M E N T

ARUN MISHRA, J.

1. The question involved in the present appeals is whether services rendered

by  the  appellants  in  Kurukshetra  University/Punjab  University  is  qualifying

service for the purpose of pension and can be added to the services rendered by

them  in  the  respondent  no.1,  i.e.  Maharshi  Dayanand  University,  Rohtak

(hereinafter called “M.D. University”).

2. The appellants  are  receiving pension after  their  retirement  from M.D.

University, however, it is confined to the services rendered by them in the same

university.   Deceased A.N. Sachdeva and Ram Parshad Saini were appointed in

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Punjab University. R.K. Tuteja, petitioner no.3 and Prem Kumar were appointed

as Lecturer and Clerk respectively. They were appointed without any break in

M.D. University.   

3. A.N. Sachdeva, since deceased was appointed as Steno-Typist in Punjab

University on 7.8.1961, thereafter  as Private Secretary to Vice-Chancellor in

M.D. University on 1.5.1976, promoted as Deputy Registrar in August, 1988

and retired from the service of M.D. University on 31.12.2000.

Ram Prashad Saini after rendering services from 16.11.1962 to 14.1.1975

in Punjab University was appointed as Asistant in Kurukshetra University on

15.1.1975 and served till 11.5.1977 and on 12.5.1977 he was appointed in M.D.

University and retired from service on 31.10.1999.

R.K.  Tuteja  was  appointed  as  Lecturer  in  Kurukshetra  University  on

29.7.1964,  served  uninterruptedly  till  20.8.1979  and  was  appointed  on

21.8.1979 in the same capacity  in  M.D. University  where he served till  his

retirement on 31.12.2001.

Prem Kumar Naveen was appointed Clerk in Kurukshetra University on

7.8.1961 and served till 6.10.1976 and next day on 7.10.1976 he was appointed

in M.D. University.  He retired on 28.2.2000.

4. The  services  of  the  said  employees  rendered  by  them  in  Punjab

University/Kurukshetra University  have not been counted as qualifying service

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for the purpose of pension  by the M.D. University.  Hence, the writ petition was

filed by them in the High Court  after  rejection of  their  representation.   The

appellants submitted that M.D. University had introduced pension scheme with

effect from 1.4.1995.  The appellants had opted for the same.  A memorandum

dated  24.12.2001  was  issued  by  the  Haryana  Government  for  counting  of

service  rendered  by  employees  of  Punjab  University/Kurukshetra

University/M.D. University as qualifying service for the purpose of pension.

5. Haryana Government issued a memorandum dated 7.1.2002 confining the

policy issued by it for the persons who retired after 7.1.2002, however, Finance

Department issued clarification dated 9.7.2003 that instructions contained in the

memorandum  dated  7.1.2002  are  not  applicable  to  the  employees  of  the

university because the pension schemes of the university are different.  Before

that a clarification had been issued by the Government of Haryana on 5.6.2002

mentioning  that  the  employees  of  the  Punjab  University  were  subsequently

allocated  to  Kurukshetra  University,  Rohtak  and  M.D.  University,  Rohtak

before its formation used to be regional centre of Kurukshetra University.  That

being the situation, decision was taken to treat the services rendered in Punjab

University/Kurukshetra  University  as  qualifying  service  for  the  purpose  of

pension on retirement from M.D. University, Rohtak.  It was also clarified that

as regards the services rendered by the employees elsewhere such as Central

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Government/  State  Government/Autonomous  Body,  the  same  is  not  to  be

counted towards qualifying service for the purpose of pension.   

6. The stand of the respondents is that the retiral benefits of the employees

are  governed  by  the  provisions  of  M.D.  University  Pension  Scheme,  1997

(hereinafter referred to as “Pension Scheme, 1997”).  The past services could

not have been treated as qualifying service for pension in view of Rule 4(vii) of

the  Pension  Scheme,  1997  introduced  with  effect  from  1.4.1995  in  lieu  of

Contributory Provident Fund.    Option was given to the employees to opt for

the contributory provident scheme or for the pension scheme.  In the pension

scheme 1997 there is no provision for counting previous service rendered by the

appellants  in  Punjab  University/Kurukshetra  University.   Reliance  had  been

placed on the clarification dated 5.6.2002 to contend that the employees who

continued  in  the  M.D.  University  on  allocation/absorption  with  change  of

employer were entitled to count their services for the purpose of pension.  As

the appellants were directly appointed in the respondent university, they were

not entitled to count the service qualifying for pension.

7. The Division Bench of the High Court by way of impugned order has

dismissed the writ application  on the ground that in view of Rule 4(vii) of the

Pension  Scheme  1997,  services  rendered  by  the  appellants  in  Punjab

University/Kurukshetra University cannot be counted.  Reliance has also been

placed  on  the  memorandum dated  7.1.2002.   As  the  appellants  had  retired

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before 7.1.2002, they are not entitled to count the past service rendered by them

in  the  aforesaid  universities  as  qualifying   service  for  pension  in  M.D.

University.   It  has  also  been  observed  that  pension  scheme  provides  for

constitution of corpus fund by transferring the university contribution alongwith

interest.  Even if memorandum dated 7.1.2002 is not applicable, as clarified by

the Finance Department, appellants cannot get the benefit as they had retired

prior to 7.1.2002.

8. It  was submitted on behalf of the appellants that  as per memorandum

dated 24.12.2001 and its clarification dated 5.6.2002, the appellants are entitled

to count the services rendered in Punjab University/Kurukshetra University as

qualifying service for the purpose of pension. It is only the service rendered in

other autonomous body etc. which is not to be counted towards the pensionary

benefits.  The appellants were receiving pension and liberalised pension scheme

has to be applied to the employees who had retired earlier.  It  is not a new

scheme, but an upward revision of existing benefits.  It is not a case of new

retiral  benefits.   Appellants  have  been  discriminated  vis-a-vis the  other

employees who had been absorbed/allocated in the services of M.D. University

from  Punjab  University/Kurukshetra  University,  inasmuch  as,  their  services

rendered in these universities have been counted as qualifying service for the

purpose of pension.  Even the services of the employees who have rendered

their  services  in  some  other  university  have  also  been  counted  towards

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pensionable services.  In one of such case of Dr. Jahan Singh, this Court did not

intervene in the special leave petition which was dismissed.  Even otherwise,

the classification sought to be created by the respondents is not impermissible in

view of Articles 14 and 16 and the services rendered by the appellants in Punjab

University/Kurukshetra University deserve to be counted as qualifying service

for the purpose of pension as has been done in the case of employees who have

been absorbed/allocated to M.D. University.

9. Per contra, the respondents would contend that the admissible benefits

under Pension Scheme, 1997 have already been extended to the appellants.  In

view of the clarification dated 5.6.2002, the services of the employees who had

been allocated/absorbed could have been counted, not the past services of the

employees  who  had  been  directly  appointed  in  M.D.  University,  appellants

stood  retired  before  7.1.2002  as  such  they  were  not  entitled  for  benefit  of

counting  of  past  services.   The  memorandum  was  not  having  retrospective

effect.  Even if, memorandum dated 7.1.2002 is not applicable, the appellants

are  not  entitled  for  the  benefit  under  the  Pension  Scheme,  1997.   Other

employees who have been given the benefit  for counting their past services,

namely, K.L.  Pahuja,  Yudhvir  Singh  Dahiya  and  Sunder  Singh  Dahiya  had

retired on 30.9.2003, 31.5.2002 and 31.10.2002 respectively whereas appellants

stood retired before 7.1.2002.  The decision in  the case of  Dr. Jahan Singh

cannot  be  applied  to  the  appellants  as  while  dismissing  the  special  leave

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petition, this Court has left the question of law open.  The employer’s share of

CPF has to be transferred to the pension fund.  It was a case of a new scheme as

such its benefits could not have been extended retrospectively.  The appellants

cannot claim equality and complain of discrimination.

10. It is not in dispute that the appellants had opted for pension under Pension

Scheme, 1997.  Para 4(vii) of the Pension Scheme, 1997 as has been relied upon

by the respondents reads thus:-  

“(vii) The period of service rendered by an employee in any State  Govt.  or  Govt.  aided  Private  College  or  in  any University/autonomous  body  against  aided  post  prior  to joining  in  the  University  shall  not  count  as  qualifying service for pensionary benefits.”

         However, it is not in dispute that vide memorandum dated 24.12.2001

issued  by  the  Government  of  Haryana,  the  pension  scheme  was  modified

inasmuch as the State Government has agreed for counting the services of the

employees of the Punjab University/Kurukshetra University on retirement from

M.D. University as qualifying service.  The memorandum dated 24.12.2001 is

extracted hereunder:-

“From

Higher Education Commissioner, Haryana Chandigarh.

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To

The Vice-Chancellor, M.D. University Rohtak.

Memo No.18/41-2001 UNP (1)

Dated : Chandigarh the 24.12.2001

Sub:  Implementation of Pension Scheme in M.D.U. Rohtak.

The State Govt. has considered and agreed for counting of service rendered  by  the  employees  of  the  University  in  Punjab University/Kurukshetra  University/M.D.  University  as  qualifying service for the purpose of pension subject to the following terms and conditions :

1. The service rendered by the said employees in these institutions is without any break and is continuous.

2. That  the  employer’s  share  of  the  CPF  in  respect  of  these employees has been transferred to  the pension fund even with respect to the service rendered in Punjab University/Kurukshetra University as required under the pension rules of the University. Further,  that  all  other  requirement  of  the  pension  rules  are fulfilled in respect  of  these employees.   Kindly take necessary action accordingly.

Sd/- Deputy Director, College-I, For Higher Education Commissioner,

Haryana, Chandigarh”.

Another  memorandum  dated  7.1.2002  was  issued  by  the  Government  of

Haryana on the basis of which certain incorporation was made in the Pension

Scheme 1997.   However, later  on,  the Finance Department  on 9.7.2003 has

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clarified that memorandum dated 7.1.2002 is not applicable to the employees of

the University.   

11. Yet  another  memorandum  dated  5.6.2002  has  been  referred  to  with

respect  to the counting of  the services of the Punjab University/Kurukshetra

University  into  M.D.  University  as  qualifying  service  for  the  purpose  of

pension.  Same is extracted hereunder :-

“From

Higher Education Commissioner, Haryana,      Chandigarh.

To

Registrar,

1. Kurukshetra University, Kurukshetra. 2. Maharshi Dayanand University, Rohtak.

Memo No.18/44-2001 UNP (1)

Dated : Chandigarh, the 6.6.2002

Subject:   Clarification  regarding  counting  of  previous service/foreign service towards Pension.

Kindly refer to the subject noted above.

(i) The  advice  issued  vide  letter  No.18/44-2001  UNP  (1)  dated 24.12.2001 was in respect of service rendered by the employees of Maharshi Dayanand University, Rohtak in Kurukshetra University, Kurukshetra  and Punjab  University.  It  is  as  well  as  known that initially,  it  was  Kurukshetra  University,  Kurukshetra  and  what constitutes  Maharshi  Dayanand  University,  Rohtak  now  was  a regional  centre  of  Kurukshetra  University,  Kurukshetra  earlier. Similarly  the  employees  also  has  rendered  service  in  the  Punjab

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University  and  were  subsequently  allocated  to  Kurukshetra University, Rohtak.  That being the situation the advice was with regard to that service which the employees had rendered initially in the Punjab University followed by Maharshi Dayanand University, Rohtak.  This pattern follows in the same manner as the employees of the joining  Punjab were allocated to Haryana Govt. at the time of the creation of the Haryana State.  Hence the service rendered by these employees who continued to remain in suit but there was a change of employer on account of division of jurisdiction after a period of  time.   In  their  case,  the previous service rendered was agreed  to  be  countable  for  the  purpose  of  pension  in  Maharshi Dayanand University, Rohtak.

(ii) To the extent the employees of Kurukshetra University, Kurukshetra fall in the same category, their service may also be counted for the purpose  of  pension  at  the  time  of  retirement  from  Kurukshetra University,  Kurukshetra  subject  to  fulfillment  of  the  conditions mentioned in letter dated 24.12.2001 (copy enclosed) in respect of Maharshi Dayanand University, Rohtak.

(iii) As regards service rendered by the employees elsewhere such as Central  Govt./State  Govt./Autonomous  Body,  the  same  is  not countable  for  the  purpose  of  pensionary  benefits  as  there  is  no provision  to  this  effect  in  the  pension  scheme  of  Kurukshetra University,  Kurukshetra.   In  case  the  Kurukshetra  University, Kurukshetra is keen to count such service for pensionary benefits, they should be advised to first consider amendment in their pension scheme  for  which  a  separate  self-contained  proposal  should  be submitted for approval of the State Govt.

      It  is,  therefore  requested  that  the  cases  may  be  decided accordingly.

            Sd/- 5.6.02             Deputy Director Colleges-I,

For Higher Education Commissioner,             Haryana, Chandigarh.”

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12. It  is  apparent  from the  memorandum  dated  24.12.2001  that  the  first

requirement to count the services rendered in Punjab University/Kurukshetra

University/M.D.  University  by  the  appellants  were  without  break  and

continuous.  It is also not in dispute that after rendering the services in Punjab

University/Kurukshetra University, the aforesaid employees had been directly

appointed on the very next day in M.D. University.  Earlier, the employees of

Punjab University  were allocated to  Kurukshetra  University  and it  is  not  in

dispute  that  present  M.D.  University  used  to  be  the  regional  centre  of

Kurukshetra University prior to its establishment as full-fledged University.   

13. Second requirement  of  the  memorandum dated  24.12.2001 is  that  the

employer’s share of  the CPF has to be transferred to the pension fund with

respect to services rendered in Punjab University/Kurukshetra University.  The

appellants had expressed their willingness in their representation to fulfil the

aforesaid requirement of the memorandum dated 24.12.2001 including all other

requirements of the pension scheme.

14. The question which arises for  consideration is  whether  it  is  a case of

upward  revision  of  existing  benefits  or  a  new  scheme  floated  by  the

respondents, while issuing the memorandum dated 24.12.2001.  

The appellants have placed reliance on a Constitution Bench decision of

this Court in D.S. Nakara & Ors. v. Union of India [1983 (1) SCC 305] in which

this  Court  has  laid  down  that  reasonable  classification  is  permissible.   The

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classification must be founded on an intelligible differentia and that must have a

rational relation to the object sought to be achieved. This Court has laid down

that even though the scheme is prospective, the benefit of liberalised pension

scheme should be applied equally to all and  they are required to be paid the

upward revision commencing from the specified date.   No arrears would be

payable.  This Court has laid down thus:-

“29. Summing  up  it  can  be  said  with  confidence  that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inheres economic  security  in  the  fall  of  life  when  physical  and mental prowess is ebbing corresponding to aging process and, therefore, one is required to fall back on savings. One such  saving  in  kind  is  when  you  give  your  best  in  the hey-day  of  life  to  your  employer,  in  days  of  invalidity, economic security by way of periodical payment is assured. The term has been judicially defined as a stated allowance or  stipend  made  in  consideration  of  past  service  or  a surrender  of  rights  or  emoluments  to  one  retired  from service.  Thus  the  pension  payable  to  a  government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation or for service rendered. In one sentence one can say that the most practical raison d’etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon.

x x x x x

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

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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 worst 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 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.

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Therefore,  the  classification  does  not  stand  the  test  of Article 14.

43. Further the classification is wholly  arbitrary because we do not find a single acceptable or persuasive reason for this division. This arbitrary action violated the guarantee of Article 14. The next question is what is the way out?

x x x x x

48. It  was  very  seriously  contended,  remove  the  event correlated  to  date  and  examine  whether  the  scheme  is workable. We find no difficulty in implementing the scheme omitting  the  event  happening  after  the  specified  date retaining  the  more  humane  formula  for  computation  of pension. It would apply to all existing pensioners and future pensioners. In the case of existing pensioners, the pension will have to be recomputed by applying the rule of average emoluments as set out in Rule 34 and introducing the slab system and the amount worked out within the floor and the ceiling.

49. But we make it abundantly clear that arrears are not required to be made because to that extent the scheme is prospective. All pensioners whenever they retired would be covered  by  the  liberalised  pension  scheme,  because  the scheme is a scheme for payment of pension to a pensioner governed  by  1972  Rules.  The  date  of  retirement  is irrelevant. But the revised scheme would be operative from the date mentioned in the scheme and would bring under its umbrella  all  existing  pensioners  and  those  who  retired subsequent to that date. In case of pensioners who retired prior to the specified date, their pension would be computed afresh and would be payable in future commencing from the specified  date.  No  arrears  would  be  payable.  And  that would take care of the grievance of retrospectivity. In our opinion, it would make a marginal difference in the case of past  pensioners  because  the  emoluments  are not  revised. The  last  revision  of  emoluments  was  as  per  the recommendation of the Third Pay Commission (Raghubar Dayal Commission). If the emoluments remain the same, the computation of  average emoluments under amended Rule

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34  may  raise  the  average  emoluments,  the  period  for averaging  being  reduced  from last  36  months  to  last  10 months. The slab will provide slightly higher pension and if someone reaches the maximum the old lower ceiling will not deny him what is otherwise justly due on computation. The words “who were in service on March 31, 1979 and retiring from service on or after that date” excluding the date for commencement of revision are words of limitation introducing  the  mischief  and  are  vulnerable  as  denying equality  and  introducing  an  arbitrary  fortuitous circumstance can be severed without impairing the formula. Therefore, there is absolutely no difficulty in removing the arbitrary and discriminatory portion of the scheme and it can be easily severed”.

15. In  M.C.  Dhingra  v. Union of  India  & Ors.  [1996  (7)  SCC 564],  the

question arose with respect to the counting of the previous service for  grant of

pension.   The  circular  dated  31.3.1982  which  came  up  for  consideration

provided the benefit thereof only to the persons retiring on or after the date of

issuance of circular was  held to be arbitrary.  This Court has laid down thus:-

“4. It  is  seen  that  though  the  appellant  had  retired  on 1-2-1973, since the question of tagging the previous service rendered in the State Government on temporary basis and the similar cases are pending, the Government had taken a decision  on  31-3-1982  to  tag  the  previous  service  for computation of the pension. Learned counsel appearing for the respondents contended that clause 4 of the abovesaid circular  is  one of  the conditions  which prescribes  that  it would be applicable to the government servants who retired from that date, namely, 31-3-1982. Since the appellant had retired on 1-2-1973, he is not eligible. We find no force in the  contention.  All  the  persons  who  rendered  temporary service  prior  to  their  joining  the  Government  of  India Service  have  been  given  the  benefit  of  fixation  of  the pension  payable  by  tagging  the  temporary  service.  The cut-off  date  is  arbitrary  violating  Article  14  of  the

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Constitution  of  India.  Having  grouped  all  the  similarly circumstanced employees, fixing the cut-off date and giving benefit to those who retired thereafter is obviously arbitrary. In similar circumstances, following the ratio in D.S. Nakara v. Union of India [1983 (1) SCC 305], this Court held in the case of  R.L. Marwaha v. Union of India [1987 (4) SCC 31 that such a restriction is arbitrary violating Article 14. On the  facts  and  circumstances,  we  find  that  the  restriction imposed in clause 4 of the circular is violative of Article 14. It is, therefore, unconstitutional. However, the appellant will be entitled to the pro rata pension from March 1982”.

16. In  State of Punjab v. Justice S.S. Dewan (Retd.) & Ors. [1997 (4) SCC

569], this Court held that benefit extended was new one. However, this Court

has observed thus:-

“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  ratio  of  the  decision  in  D.S.  Nakara  case [1983 (1) SCC 305] 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”.

17.  In State of Rajasthan & Anr. v. Prem Raj [1997 (10) SCC 317], this Court

rejected  the  submission  that  decision  in  D.S.  Nakara (supra)   has  given  a

complete go-by.  This Court has laid down thus:-

“12. In  State of W.B. v.  Ratan Behari Dey [1993 (4) SCC 62], this  Court  considered  the  question  whether  in providing  a  pension  scheme  the  State  could  fix  up  a particular date and make it applicable to those who retired on or after that date. The Court distinguished Nakara case [1983  (1)  SCC 305] by  holding  that  in  Nakara  case an

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artificial  date  had  been  specified  classifying  the  retirees governed by the same rules and similarly situated into two different classes depriving one such class of the benefit of the liberalised pension rules and that was held to be bad. Following  the  decision  of  the  Court  in  Krishena  Kumar case  [1990 (4)  SCC 207]  it  was held  that  the  State  can specify  a  date  with  effect  from  which  the  Regulations framed or amended conferring the pensionary benefits shall come  into  force  but  the  only  condition  is  that  the  State cannot  pick a date out  of  its  hat  and the date has to  be prescribed in a reasonable manner having regard to all the facts and circumstances.

13. In State of Rajasthan v. Sevanivatra Karamchari Hitkari Samiti [1995 (2) SCC 117] the provisions contained in Rule 268-H  of  Rajasthan  Service  Rules  came  up  for consideration  as  to  whether  the  aforesaid  provisions restructuring the rights of government servants in service on 29-2-1964 can be held to be violative of Article 14. The Court  applied the principle in  Krishena Kumar case and Indian Ex-Services League case [1991 (2) SCC 104] and held that the fixation of 29-2-1964 as the cut-off date with effect  from which  the  new liberalised  pension  scheme in Chapter  XXIII-A  was  introduced  cannot  be  said  to  be arbitrary or violative of Article 14 of the Constitution. As has been stated earlier for deciding the present controversy it is not necessary for us to further delve into the question as  to  the  extent  to  which  the  decision  of  this  Court  in Nakara case has been followed or explained. But suffice it to say that the contention of Mr Gupta, the learned counsel for the appellant, that the decision of this Court in Nakara case  has  been  given  a  complete  go-by  cannot  be sustained”.

18. In Dhan Raj & Ors. v. State of J&K & Ors. [1998 (4) SCC 30], this Court

considered the case where the appellants who had retired from the services of

Corporation prior to 9.6.1981 claimed to be entitled to pensionary benefits by

virtue of  G.O.  dated 3.10.1986.  The contention of  the State  that  the benefit

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could not be extended  to the appellants was rejected.  The relevant portion is

extracted hereunder:-

“14. Even otherwise, we do not find any justifiable criteria for the State Government  to draw the line between those who retired earlier and those who retired after 9-6-1981. Both such set of employees were equally placed in the same Undertaking/Corporation  temporary  in  character  and  all having served in the organisations for more than 20 years. In fact, the appellants have served with the Government for more than 30 to 40 years. The person serving for such a long  period  earns  his  legitimate  expectation.  It  is  not something  which  he  seeks  with  a  begging  bowl.  It  is inappropriate for a State Government to take up a stand to get  its  own order to  be held illegal,  by giving restrictive interpretation to deny benefit to its own employees who had worked for such a long period. In fact, in the Constitution Bench decision of  this  Court  in  D.S.  Nakara v.  Union of India [1983 (1) SCC 305] this Court held that criterion of date of enforcement of the revised scheme entitling benefits of the revision to those retiring after specified date while depriving the benefits  to  those retiring prior to  that  date was  violative  of  Article  14.  Even  otherwise,  while considering the question of grant of pensionary benefits the State has to act to reach the constitutional goal of setting up a socialist State as stated and the assurance as given in the Directive Principles of State Policy. A pension is a part and parcel of that goal, which secures to a person serving with the State after retirement of his livelihood. To deny such a right to such a person, without any sound reasoning or any justifiable  differentia  would  be  against  the  spirit  of  the Constitution. We find in the present case the stand taken by the State Government to be contrary to the said spirit.  In the  aforesaid  D.S.  Nakara this  Court  has  very  clearly recorded the following:  

“36. Having set out clearly the society which we propose to set up, the direction in which the State action  must  move,  the  welfare  State  which  we propose  to  build  up,  the  constitutional  goal  of

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setting up a socialist State and the assurance in the Directive Principles of State Policy especially of security in old age at least to those who have rendered useful service during their active years, it  is  indisputable,  nor  was  it  questioned,  that pension as a retirement benefit is in consonance with  and  in  furtherance  of  the  goals  of  the Constitution. The goals for which pension is paid themselves give a fillip and push to the policy of setting up a welfare State because by pension the socialist  goal  of  security  of  cradle  to  grave  is assured  at  least  when  it  is  mostly  needed  and least available, namely, in the fall of life.””

19. This Court in  Union of India & Ors. v. K.G. Radhakrishna Panickar &

Ors.  [1998 (5 SCC 111]  again considered the question  of  classification and

differential  treatment.   It  was  held  that  conferment  of  new  benefit  from  a

particular  date  cannot  be held to be violative of  Article  14.   The benefit  in

question was held to be a new benefit  conferred on the casual labour.  This

Court held that  :-

12. In its judgment dated 8-2-1991 the Tribunal has held that  exclusion  of  period  of  service  rendered  as  Project Casual Labour before they were regularly absorbed prior to 1-1-1981  results  in  such  employees  being  discriminated against  as compared to Project  Casual Labour who were employed  subsequently  and  whose  service  as  Project Casual  Labour  prior  to  absorption  is  counted  for  the purpose  of  qualifying  service.  The  said  finding  of  the Tribunal  is  based  on  the  decision  of  this  Court  in  D.S. Nakara [1983 (1) SCC 305]. In this regard, it may be stated that the Tribunal was in error in invoking the principle laid down in  D.S. Nakara in the present case. The decision in D.S.  Nakara has  been  considered  by  this  Court  in subsequent  decisions  and it  has  been laid  down that  the principle  laid down in  D.S.  Nakara can have application

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only  in  those  cases  where  there  is  discrimination  in  the matter of existing benefit between similar set of employees and  the  said  principle  has  no  application  where  a  new benefit is being conferred with effect from a particular date. In such a case the conferment of the benefit with effect from a particular date cannot be held to be violative of Article 14 of the Constitution on the basis that such a benefit has been conferred on certain categories of employees on the basis of a particular date. (See:  Krishena Kumar v. Union of India [1990 (4)  SCC 207];  State  of  W.B. v.  Ratan Behari  Dey [1993 (4) SCC 62] and  State of Rajasthan v.  Sevanivatra Karamchari  Hitkari  Samiti  [1995  (2)  SCC  117])  In  the present  case,  the  benefit  of  counting  of  service  prior  to regular employment as qualifying service was not available to casual labour. The said benefit was granted to Open Line Casual  Labour  for  the  first  time  under  order  dated 14-10-1980  since  Open  Line  Casual  Labour  could  be treated as temporary on completion of six months’ period of continuous service which period was subsequently reduced to  120  days  under  para  2501(b)(i)  of  the  Manual.  As regards Project Casual Labour this benefit of being treated as  temporary  became  available  only  with  effect  from 1-1-1981  under  the  scheme  which  was  accepted  by  this Court in  Inder Pal Yadav [1985 (2) SCC 648]. Before the acceptance of that scheme the benefit of temporary status was not available to Project Casual Labour. It was thus a new benefit which was conferred on Project Casual Labour under the scheme as approved by this Court in  Inder Pal Yadav and on the basis of this new benefit Project Casual Labour became entitled to count half of the service rendered as Project Casual Labour on the basis of the order dated 14-10-1980 after being treated as temporary on the basis of the  scheme  as  accepted  in  Inder  Pal  Yadav.  We  are, therefore,  unable to  uphold the  judgment  of  the Tribunal dated  8-2-1991  when  it  holds  that  service  rendered  as Project Casual Labour by employees who were absorbed on regular  permanent/  temporary  posts  prior  to  1-1-1981 should be counted for the purpose of retiral benefits and the said judgment as well  as the judgment in which the said judgment  has  been  followed  have  to  be  set  aside.  The judgments in which the Tribunal has taken a contrary view have to be affirmed.

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20. In V. Kasturi v. Managing Director, State Bank of India & Anr. [1998 (8)

SCC 30], this Court considered the prospective amendment and the question

whether earlier retirees were eligible for benefit of such amendment.  It was

held that where the amendment enhanced the pension or provided for a new

formula of pension even the earlier retirees who at the time of retirement were

eligible for pension and survived till the amendment would be eligible for the

benefit  from  the  date  it  came  into  effect,  however,  where  the  amendment

extended the benefit of the pension scheme to a new class of persons, the earlier

retirees at the time of retirement who were not eligible for pension cannot get

the benefit of amendment.  This Court has laid down thus:-

“22. If the person retiring is eligible for pension at the time of  his  retirement  and  if  he  survives  till  the  time  of subsequent amendment of the relevant pension scheme, he would become eligible to get  enhanced pension or would become eligible to get more pension as per the new formula of computation of pension subsequently brought into force, he  would  be  entitled  to  get  the  benefit  of  the  amended pension provision from the date of such order as he would be a member of the very same class of pensioners when the additional benefit is being conferred on all of them. In such a  situation,  the  additional  benefit  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 on all the members of the same class of pensioners who had survived by the time the scheme  granting  additional  benefit  to  these  pensioners came into force. The line of decisions tracing their roots to the ratio of  Nakara case [1983 (1) SCC 305] would cover this category of cases”.

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21. In Subrata Sen & Ors. v. Union of India & Ors. [2001 (8) SCC 71], this

Court has laid down thus:-

“18. Further, in  All  India  Reserve  Bank Retired  Officers Assn. v. Union of India [1992 supp. (1) SCC 664], Ahmadi, J. (as he then was), speaking for the Court in the aforesaid decision highlighted the observations in Nakara case [1983 (1) SCC 305] found at SCC p. 333 para 46 to the following effect:  “… the pension will have to be recomputed in the light of the formula enacted in the liberalised pension scheme and effective from the date the revised scheme comes into force. And beware that it is not a new scheme, it is only a revision of existing scheme. It is not a new retiral benefit. It is an upward revision of an existing benefit.  If  it  was a wholly new  concept,  a  new  retiral  benefit,  one  could  have appreciated an argument that those who had already retired could not expect it.”

     The Court further observed:

“It  must  be  realised  that  in  the  case  of  an  employee governed  by  the  CPF  (Contributory  Provident  Fund) Scheme his relations with the employer come to an end on his retirement and receipt of the CPF amount but in the case of  an  employee  governed  under  the  pension  scheme  his relations with the employer merely undergo a change but do not snap altogether. That is the reason why this Court  in Nakara case drew a distinction between liberalisation of an existing benefit and introduction of a totally new scheme. In the case of pensioners it is necessary to revise the pension periodically as the continuous fall in the rupee value and the rise in prices of essential commodities necessitates an adjustment of the pension amount but that is not the case of employees governed under the CPF Scheme, since they had received the lump sum payment which they were at liberty to invest in a manner that would yield optimum return which would take care of the inflationary trends. This distinction between those belonging to the pension scheme and those

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belonging to the CPF Scheme has been rightly emphasised by this Court in Krishena case [1990 (4) SCC 207]”.

22.  In John Vallamattom & Anr. v. Union of India [2003 (6) SCC 611], this  

Court considered the decision in D.S. Nakara (supra)  and has observed thus:-

“62. Article 14 of the Constitution states that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. The first part  of  Article  14  of  the  Constitution  of  India  is  a declaration of equality of civil rights for all purposes within the territory of India and basic principles of republicanism and there will be no discrimination. The guarantee of equal protection embraces the entire realm of “State action”. It would extend not only when an individual is discriminated against in the matter of exercise of his right or in the matter of imposing liabilities upon him, but also in the matter of granting privileges etc. In all these cases, the principle is the same,  namely, that  there should be no discrimination between  one  person  and  another  if  as  regards  the subject-matter of the legislation their position is the same. In my view, all  persons in similar circumstances shall  be treated alike both in privileges and liabilities imposed. The classification  should  not  be  arbitrary;  it  should  be reasonable  and  it  must  be  based  on  qualities  and characteristics and not any other who are left out, and those qualities or characteristics must have reasonable relations to the object of the legislation.

x x x x x

64. It has also been observed in the above judgment that in the  very  nature of  things,  the  society  being  composed  of unequals,  a  welfare  State  will  have  to  strive  by  both executive and legislative action to help the less fortunate in the society to ameliorate their condition so that the social and economic inequality in the society may be bridged and in  the  absence  of  the  doctrine  of  classification  such

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legislation is likely to flounder on the bedrock of equality enshrined in Article 14 of the Constitution”.

23. In State Bank of India v. L. Kannaiah & Ors. [2003 (10) SCC 499], this

Court considered fixation of cut-off date for applicability of pension scheme.

Minimum service was prescribed 20 years and cut-off date for such induction

was fixed  as 1.1.1965.  This Court held minimum qualifying service being the

essential consideration.  There is no rationale to exclude employees confirmed

earlier who have put in more than 20 years of service.  This Court has laid down

thus:-

“6. Para 5 of the circular stipulated that the age-limit (viz. not  being over 35 years)  for  admission to  Pension Fund shall  continue.  Thus  the  pensioned  ex-service  personnel were  admitted  to  pensionary  benefits  with  effect  from 1-1-1965 subject  to  the  restriction  of  the  age-limit  of  35 years (which was later on enhanced to 38 years) on that date.  As the date  of  confirmation of  the respondents  was much earlier to 1-1-1965, the crucial date for admission to the  Pension  Fund  would  be  1-1-1965.  On that  date,  the confirmed employee of the Bank should not have exceeded 35 years of age. That is the combined effect of Staff Circular No. 18 dated 8-4-1974 read with the Pension Fund Rules referred to supra. The reason for prescribing the maximum age-limit of 35 or 38, as the case may be, for the purpose of induction  into  Pension  Fund  appears  to  be  that  the employee would be able to render minimum service of 20 years  as  contemplated  by  Rule  22  of  the  Pension  Fund Rules. However, there does not appear to be any rationale or discernible basis for fixing the cut-off date as 1-1-1965, notwithstanding their earlier confirmation in bank service. True,  a  new  benefit  has  been  conferred  on  the ex-servicemen and therefore, a cut-off date could be fixed for extending this new benefit, without offending the ratio of

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the decision in D.S. Nakara v. Union of India [1983 (1) SCC 305]  but, there could be no arbitrariness or irrationality in fixing  such  date.  Minimum  qualifying  service  being  the essential consideration, even according to the Bank, there is no reason why the ex-servicemen like the respondents, who from the date of their confirmation had put in more than twenty years of service, even taking the retirement age as 58,  should  be excluded.  No reason is  forthcoming in the counter-affidavit  filed  by  the  Bank  for  choosing  the  said date. When it is decided to extend the pensionary benefits to ex-servicemen drawing pension, the denial of the benefit to some of the serving employees should be based on rational and  intelligible  criterion.  In  substance,  that  is  the  view taken by the High Court and we see no reason to differ with that view”.

24. In  Union of India & Anr. v. SPS Vains [2008 (9) SCC 125], decision of

this Court in D.S. Nakara has been followed.  It was held that there could not be

disparity of pension within the same rank.  It was held thus:-

“29. The Constitution Bench (in D.S. Nakara [1983 (1) SCC 305]) has discussed in detail the objects of granting pension and we need not, therefore, dilate any further on the said subject,  but  the  decision  in  the  aforesaid  case  has  been consistently referred to in various subsequent judgments of this  Court,  to  which  we  need  not  refer. In  fact,  all  the relevant  judgments  delivered  on  the  subject  prior  to  the decision  of  the  Constitution  Bench  have  been considered and dealt with in detail in the aforesaid case. The directions ultimately given by the Constitution Bench in the said case in  order  to  resolve  the  dispute  which  had  arisen,  is  of relevance to resolve the dispute in this case also.

30. However, before we give such directions we must also observe  that  the  submissions  advanced  on  behalf  of  the Union of India cannot be accepted in view of the decision in D.S. Nakara case. The object sought to be achieved was not to  create  a  class  within  a  class,  but  to  ensure  that  the benefits of pension were made available to all persons of

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the  same  class  equally.  To hold  otherwise  would  cause violence to the provisions of Article 14 of the Constitution. It could not also have been the intention of the authorities to equate the pension payable to officers of two different ranks by  resorting  to  the  step-up  principle  envisaged  in  the fundamental  rules  in  a  manner  where  the  other  officers belonging to the same cadre would be receiving a higher pension” .

25. In K.J.S. Buttar v. Union of India & Anr. [2011 (11) SCC 429], this Court

considered the question when some new retiral benefits were introduced and

measurement to calculate disability was changed pursuant to recommendation

made by the 5th Pay Commission and same was implemented with effect from

1.1.1996.  The appellant was denied retiral benefits on account of his retirement

in 1979. This Court held the treatment to be discriminatory and laid down that

restriction of benefit to only officers who were invalided out of service after

1.1.1996 is violative of Article 14 of the Constitution and hence illegal.  In the

case of liberalisation of existing scheme all pensioners are to be treated equally.

The appellant was entitled to all retiral benefits with effect from 1.1.1996.  This

Court has laid down thus:-

“11. In our opinion the appellant was entitled to the benefit of Para 7.2 of the Instructions dated 31-1-2001 according to which where the disability is assessed between 50% and 75% then the same should be treated as 75%, and it makes no difference whether he was invalided from service before or after 1-1-1996. Hence the appellant was entitled to the said benefits with arrears from 1-1-1996, and interest at 8% per annum on the same.

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12. It  may  be  mentioned  that  the  Government  of  India, Ministry of Defence had been granting war injury pension to  pre-1996  retirees  also  in  terms  of  Para  10.1  of  the Ministry’s Letter No. 1(5)/87/D(Pen-Ser) dated 30-10-1987 (p.  59,  Para  8).  The  mode  of  calculation,  however, was changed  by  the  Notification  dated  31-1-2001  which  was restricted  to  post-1996  retirees.  The  appellant,  therefore, was  entitled  to  the  war  injury  pension  even  prior  to 1-1-1996 and especially in view of the Instructions dated 31-1-2001  issued  by  the  Government  of  India.  The  said instruction was initially for persons retiring after 1-1-1996 but later on by virtue of the subsequent Notifications dated 16-5-2001  it  was  extended  to  pre-1996  retirees  also  on rationalisation of the scheme”.

26. Reliance has been placed by the respondents on a decision in  State of

Punjab & Anr. v. J.L. Gupta & Ors. [2000 (3) SCC 736] in which this Court

referring to the decision in State of Punjab & Ors. v. Boota Singh & Anr. [2000

(3) SCC 733] held that when financial implication is there, the benefit conferred

by notification dated 9.7.1985 can be claimed by those who retired after the date

of stipulation in the notification and those who have retired prior to the date of

stipulation, as the notifications are governed by different rules.  It was a case of

pensionary benefits, i.e., pension, gratuity/DCRG, internal gratuity.  Hence, the

decision is clearly distinguishable.  Moreover, in the instant case, employees are

governed by same set of rules.

27. Considering the principles enunciated under Articles 14 and 16 of  the

Constitution, and that the benefit is not an ex gratia payment but a payment in

recognition of past service, in our opinion, discrimination could not have been

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made between those employees who have been absorbed/allocated are entitled

to count their services as qualifying service for the purpose of pension and not

those who have been appointed directly. Fact remains that all these employees

have  served  in  Punjab  University/Kurukshetra  University/MD.  University

without any break.  M.D. University, prior to its establishment, was the regional

centre of Kurukshetra University.  Expectation had arisen to compute the period

of service rendered in Punjab University/Kurukshetra University which cannot

be unreasonably deprived of. Merely because a person has been appointed and

others  have  been  absorbed/allocated  makes  no  difference  as  to  the  service

rendered.  Even otherwise, it is a case of upward revision of benefit and the

classification  which is  sought  to  be  created  by the  aforesaid  method of  not

extending benefit to persons appointed directly and by fixing cut-off date cannot

be said to be intelligible one; same is discriminatory and thus, the appellants

would  be  entitled  for  the  benefit  from the  date  decision  has  been  taken on

24.12.2001  to  compute  the  previous  service  rendered  in  Punjab

University/Kurukshetra University as qualifying service.  In other words, they

would be entitled for  the benefit  prospectively from the date  of  issuance of

memorandum  dated  24.12.2001.   The  employees  have  expressed  their

willingness  to  deposit/adjustment  of  the  employer’s contribution  of  CPF  as

required in the memorandum dated 24.12.2001.  

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28. In yet another case of  M.D. University v. Dr. Jahan, this Court did not

interfere in the decision of the High Court of Punjab and Haryana at Chandigarh

on 26.5.2009 in LPA No.27 of 2006, however, the question of law was kept

open.  Hence, we have examined the case on merits and found the case of the

appellants on better footing as compared to Dr. Jahan and even otherwise the

appellants are entitled for the benefit.

29. In view of aforesaid discussion, the appellants are entitled for the benefit

of counting the services rendered in Punjab University/Kurukshetra University

as qualifying service for  the purpose of  pension subject  to fulfilment of  the

conditions specified in the memorandum dated 24.12.2001 etc. and in case the

amount payable by the appellants towards contributory provident fund is less

than  the  amount  payable  to  them  as  pension,  it  would  be  adjusted  by  the

respondents  without  insisting  for  its  refund from the amount  payable  to  the

appellants.  Let the exercise be completed within a period of three months from

today.   

30. The appeals are allowed, impugned judgment is set aside.  We leave the

parties to bear their own costs.  

..........................................J. (M.Y. Eqbal)

New Delhi;                      ..........................................J. August 10, 2015.                     (Arun Mishra)