Special Leave Petition Civil Nos
14179 80 of 1985 385 From the Judgment and Order dated 1171985 of the Andhra Pradesh High Court in Writ Appeal No 1443 and 1467 of 1984
TU Mehta and A Subba Rao for the Petitioners
Dr YS Chitale TVSN Chari and Miss Vrinda Grover for the Respondent
The Judgment of the Court was delivered by THAKKAR J
Does that part of the provision which provides for payment of a larger amount of gratuity with prospective effect from the specified date offend Article 14 of the Constitution of India Whether gratuity must be paid on the stepped up basis to all those who have retired before the date of the upward revision with retrospective effect even if the provision provides for prospective operation in order not to offend Article 14 of the Constitution of India A Division Bench of the High Court of Andhra Pradesh says no 
In our opinion it rightly says so
The petitioners erstwhile Government employees who had retired before April 1 1978 inter alia claimed and contended before the High Court that they were entitled to the benefit to the Government order No 88 dated 26 March 1980 providing that b Retirement gratuity may be 13rd of pay drawn at the time of retirement for every 6 monthly service subject to maximum of 20 months pay limited to Rs30000
 The said order in so far as gratuity is concerned is made effective from 1st April 1978
Says the High Court Therefore we are now only concerned whether this GO Ms No 88 dated 26 3 1980 should be made applicable to the pensioners that retired prior to 1 4 1978 by revising their gratuity payable to them
The learned Advocate General contends that gratuity is something different from the other pensionary benefits like the pension and the family pension which are continuing ones
The Gratuity that accrued to the petitioners prior to 1 4 1978 was calculated on the then existing Rules and paid
In that way the pensioners retired prior to 1 4 1978 will form themselves into a distinct class for purposes of the pay 386 ment of benefit of gratuity from the others that retired after 1 4 1978 from which date the revised pension rules are made to be applied by the Government
On the other hand it is the contention of the writ petitioners that gratuity is a part and parcel of the pensionary benefits and the same cannot be looked separately from the other pensionary reliefs
The learned counsel for the Writ Petitioners no doubt cited two decisions 1 VP Gautama IAS Retd
vs Union of India SLJ 1984 1 120 2 MP Tandon vs State of UP  where their Lordships that decided the above two cases held that no distinction can be made in the pensionary benefits including death cum retirement gratuity benefit between the pensioners that retired prior to the stipulated date and after the stipulated date
In the decision DS Nakara vs Union of India AIR  their Lordships of the Supreme Court enunciated the principle as follows With the expanding horizons of socioeconomic justice the Socialist Republic and Welfare State which the country endeavours to set up and the fact that the old man who retired when emoluments were comparatively low are exposed to vegaries of continuously rising prices the falling value of the ruppe consequent upon inflationary inputs by introducing an arbitrary eligibility criteria being in service and retiring subsequent to the specified date  for being eligible for the liberalised pension scheme and thereby dividing a homogeneous class the classification being not based on any discernible rational principle and being wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being throughly arbitrary the eligibility for liberalised pension scheme of being in service on the specified date and retiring subsequent to that date in the memoranda Exs
P 1 and P 2 violated article 14 and is unconstitutional and liable to be struck down After thus enunciating the principle their Lordships have taken care to observe as follows But we make it abundantly clear that arrears are not re 387 quired to be made because to that extent the scheme is prospective In our opinion the arrears relating to gratuity benefit computed according to the Revised Pension Rules of 1980 may not be paid to the pensioners that retired prior to 1 4 1978 because at the time of retirement they are governed by the then existing Rules and their gratuity was calculated on that basis
The same was paid
Since the revised scheme is operative from the date mentioned in the scheme ie 1 4 1978 the continuing rights of the pensioners to receive pension and family pension must also be revised according to that scheme
But the same cannot be said with regard to gratuity which was accrued and drawn
The reason why their Lordships of the Supreme Court in Nakara s case refused to grant arrears to the pensioners that retired prior to the stipulated date would ipso facto apply for refusing to grant the revised gratuity since that would amount to asking the State Government to pay arrears relating to gratuity after revising them according to the new scheme for those that retired prior to 1 4 1978 and that would amount to giving retrospective effect to the AP Revised Pension Rules 1980 which came into effect from 29 10 1979 and in the case of Part II of those Rules from 1 4 1978
The scheme is prospective and not retrospective
Moreover we must remember that when the State Government appointed the Pay Revision Commissioner to review the then existing scales of pay under GO Ms No 745 General Administration Spl
A Department dated 3 11 1978 the Pay Revision Commissioner was asked to take into account while making his recommendation the economic conditions in the State the financial implications of his recommendations and the impact thereof on the resources avilable for the plan and other essential non plan expenditure
Surely the Pay Revision Commissioner when he made his recommendations to revise the pensionary benefits is not contemplating to make his recommendations retrospective
Otherwise he would have taken financial implications of those recommendations and the impact thereof on the resources available for plan and other essential non plan expenditure of the State
For this reason also we cannot direct the State Government to re 388 vise the gratuity benefit which was already paid to these petitioners who retired prior to 1 4 1978
The Supreme Court has clearly stated in Nakara s case that arrears are not required to be paid because to that extent the scheme is prospective
Similar is the case with regard to the case of gratuity that was accrued and paid prior to the stipulated day mentioned in the GO promulgating the Revised Pension Rules of 1980
 We fully concur with the view of the High Court
The upward revision of gratuity takes effect from the specified date April 1 1978 with prospective effect
The High Court has rightly understood and correctly applied the principle propounded by this Court in Nakara s case AIR 1983 SC 130
There is no illegality or unconstitutionality from the platform of Article 14 of the Constitution of India involved in providing for prospective operation from the specified date
Even if that part of the Notification which provides for enforcement with effect from the specified date is struck down the provision can but have prospective operation not retrospective operation
In that event if the specified date line is effaced it will operate only prospectively with effect from the date of issuance of the notification since it does not retrospectively apply to all those who have already retired before the said date
In order to make it retrospective so that it applies to all those who retired after the commencement of the Constitution on 26 January 1950 and before the date of issuance of the notification on 26 March 1980 the Court will have to re write the notification and introduce a provision to this effect saying in express terms that it shall operate retrospectively
Merely striking down or effacing the alleged offending portion whereby it is made effective from the specified date will not do
And this the Court cannot do
Besides giving prospective operation to such payments cannot by any stretch of imagination be condemned as offending Art 14
An illustration will make it clear
Improvements in pay scales by the very nature of things can be made prospectively so as to apply to only those who are in the employment on the date of the upward revision
Those who were in employment say in 1950 1960 or 1970 lived spent and saved on the basis of the then prevailing cost of living structure and pay scale structure cannot invoke article 14 in order to claim the higher pay scale brought into force say in 1980
If upward pay revision cannot be made prospectively on account of Article 14 perhaps no such revision would ever be made
Similar is the case with regard to gratuity which has already been paid to the petitioners on the then prevailing basis as it obtained at the time of their respective dates of retirement
The amount got crystallized on 389 the date of retirement on the basis of the salary drawn by him on the date of retirement
And it was already paid to them on that footing
The transaction is completed and closed
There is no scope for upward or downward revision in the context of upward of downward revision of the formula evolved later on in future unless the provision in this behalf expressly so provides restrospectively downward revision may not be legally premissible even
It would be futile to contend that no upward revision of gratuity amount can be made in harmony with Article 14 unless it also provides for payment on the revised basis to all those who have already retired between the date of commencement of the Constitution in 1950 and the date of upward revision
There is therefore no escape from the conclusion that the High Court was perfectly right in repelling the petitioners  plea in this behalf
For the sake of record we may mention that our attention was called to an order of a Division Bench of the High Court of Gujarat LPA 280 of 1983 dated 8983 per PD Desai Acting CJ which does not discuss the issues involved but is based on a concession said to have been made by the Advocate General who appeared for the State
And also to a decision of the Allahabad High Court MP Tandon vs State of UP and Punjab  Haryana High Court VP Gautama vs Union of India AIR SLJ 1984 1 120 In none ot these decisions the relevant passage from DS Nakara vs Union of India  was considered
Nor was the aspect regarding prospective operation considered on principle
The High Court considered it shocking and was carried away by the fact that an employee who retired even one day before the enforcement of the upward revision would not get the benefit if the specified date of enforcement was not effaced by striking down the relevant provision
But in all cases of prospective operation it would be so
Just as one who files a suit even one day after the expiry of limitation would lose his right to sue one who retires even a day prior to enforcement of the upward revision would not get the benefit
This cannot be helped there is nothing shocking in it unless one can say legislation can never be made prospective and nothing turns on it
These are the reasons which impelled us to dismiss the Special Leave Petition on 18 July 1986
APJ Petition dismissed


Summary:
The Government Order No 88 dated 26th March 1980 provided that retirement gratuity may be 13rd of pay drawn at the time of retirement for every 6 monthly service subject to maximum of 20 months pay limited to Rs30000
This order in so far as gratuity is concerned is made effective from 1st April 1978
The petitioners erstwhile Government employees who had retired before April 1 1978 filed petition under Article 226 in the High Court contending that gratuity is a part and parcel of the pensionary benefits and the same cannot be looked separately from the other pensionary reliefs and therefore they are also entitled to the benefit of gratuity retrospectively at the enhanced rate though they had retired before April 1 1978 and had been paid gratuity at the then prevailing rate
On behalf of the State the petition was contested and it was contended that gratuity is something different from the other pensionary benefits like pension and family pension which are continuing ones
The gratuity that accrued to the petitioners prior to 141978 was calculated on the then existing Rules and paid and the pensioners who retired prior to 141978 form themselves into a distinct class for purposes of the payment of benefit of gratuity from the others who retired after 141978 the date from which the revised pension rules are made applicable by the Government
The High Court dismissed the petition holding that the upward revision of gratuity takes effect from the specified date April 1 1978 with prospective effect
384 Dismissing the Special Leave Petition of the Pensioners  Association this Court  HELD 1
The upward revision of gratuity takes effect from the specified date April 1 1978 with prospective  effect
The High Court has rightly understood and correctly applied the principle propounded by this Court in Nakara s case wherein it was held that no arrears are required to be paid because to that extent the scheme is prospective
388B C VP Gautama IAS Retd
vs Union of India SLJ 19841 120 and MP Tandon vs State of UP 1984 Lab
IC677 referred to
DS Nakara vs Union of India AIR 1983SC 130 relied upon
There is no illegality or unconstitutionality involved in providing for prospective operation from the specified date
Even if that part of the Notification which provides for enforcement with effect from the specified date is struck down the provision can but have prospective operation not retrospective operation
In that event it will operate only prospectively with effect from the date of issuance of the notification since it does not retrospectively apply to all those who had already retired before the said date
388C E 3
In order to make the notification retrospective so that it applies to all those who had retired after the commencement of the Constitution on 26 January 1950 and before the date of issuance of the notification on 26 March 1980 the Court will have to re write the Notification and introduce a provision to this effect saying in express terms that it shall operate retrospectively
Merely striking down or effecing the alleged offending portion whereby it is made effective from the specified date will not do
And this the Court cannot do
Besides giving prospective operation to such payments cannot by any stretch of imagination be condemned as offending Article 14
388D F 4
Those who were in employment say in 1950 1960 or 1970 lived spent and saved on the basis of the them prevailing cost of living structure and pay scale structure cannot invoke Article 14 in order to claim the higher pay scale brought into force say in 1980
If upward pay revision cannot be made prospectively on account of Article 14 perhaps no such revision would ever be made
Similar is the case with regard to gratuity which has already been paid to the petitioners on the then prevailing basis as it obtaind at the time of their respective dates of retirement
And it was already paid to them on that footing
The transaction is completed and closed
388F H 389A