SCA/572/2005 1/32 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 572 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= SUSHILABEN NAVINCHANDRA SHAH - Petitioner(s) Versus STATE OF GUJARAT & 2 - Respondent(s) ========================================================= Appearance : MR JD AJMERA for Petitioner(s) : 1, MS REETA CHANDARANA, AGP for Respondent(s) : 1 - 3. ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 07/07/2006 ORAL JUDGMENT 1. In the present petition, a retired school teacher has prayed for pensionary benefits in terms of the Government policy. Before deciding SCA/572/2005 2/32 JUDGMENT the controversies arising in the petition, short facts need to be noted. 2. The petitioner was employed as Assistant Teacher in one Seth Manilal Ranchhoddas High School which is a grant-in-aid school. The petitioner was appointed by an order dated 11.6.66. It is the case of the petitioner, to which no dispute has been raised by the respondents, that the date of birth of the petitioner is 9.5.1941. The age of the superannuation being 58 years, ordinarily the petitioner would have crossed the superannuation age on 8.5.1999. Due to her personal reasons, however, the petitioner was unable to continue in service. The petitioner was, therefore, desirous of retiring on voluntary retirement basis. The petitioner, therefore, addressed a letter to the school authorities on 24.2.1996 stating, inter alia, that having put in 30 years of service, because of her social circumstances, she wishes to take voluntary retirement with effect from 25.6.1997. Her request was accepted by the school authorities. The school authorities, therefore, SCA/572/2005 3/32 JUDGMENT passed a resolution on 5.3.1997 and recommended to the Government authorities that the request of the petitioner be accepted. Eventually, the petitioner was permitted to retire on voluntary retirement basis with effect from 25.6.1997. 3. It is the case of the petitioner that the Government issued a resolution dated 6th April 2002 and made pension scheme applicable to teaching staff of private aided primary schools. The pension scheme made effective by the Government resolution dated 6.4.2002 shall be hereinafter to be referred to as the “said pension scheme”. The said pension scheme was made effective from 1st January 1997. It is the case of the petitioner that the resolution itself envisaged that those teachers who retired after 1.1.97 would have an option to choose pension scheme. Such option was to be exercised within six months from the date of the resolution. Certain other provisions were also made in the said resolution in this regard, reference to which will be made at a slightly later stage. SCA/572/2005 4/32 JUDGMENT 4. It is not in dispute that pursuant to the said pension scheme, the petitioner applied to the authorities for being covered under the said pension scheme. It is the case of the petitioner that she had filled up her form opting for pension scheme well within the time permitted by the Government under the said pension scheme. Though the exact date on which the petitioner filled her form for being covered under the pension scheme is not on record, there is no dispute raised by the respondents about the fact that such option was sought to be exercised by the petitioner within the period of six months from the date of resolution as provided in the said pension scheme. 5. It is, therefore, the case of the petitioner that since she was in service on 1.1.97, and retired only thereafter, her option for pension ought to have been granted. The petitioner had all along shown willingness to surrender the employer's contribution towards provident fund as envisaged in the said pension scheme. In fact, the petitioner voluntarily deposited an SCA/572/2005 5/32 JUDGMENT sum of Rs.50,179/- being the employer's contribution to provident fund on 7th May 2003. To this aspect of the matter also, there is no dispute. 6. Despite the aforesaid factual background, the request of the petitioner for being covered by the said pension scheme came to be turned down by the authorities by the communication dated 21st June 2003. The reason stated in the said communication is that as per the resolution dated 6.4.2002 only those employees who had retired after 1.1.97 on superannuation could opt for pension and in case of employees retiring on voluntary retirement basis, such benefits cannot be extended. It is on this basis that the respondents turned down the request of the petitioner for being covered under the said pension scheme. 7. The petitioner attempted to resolve the dispute through an alternative redressel forum in the form of Lok Adalat. The attempt, however, failed. The petitioner has therefore filed the present petition challenging the said order SCA/572/2005 6/32 JUDGMENT dated 21st June 2003 passed by the respondents declaring that the petitioner is not entitled to be covered under the said pension scheme. 8. The reply filed by the respondents is along the predictable lines. Shortly stated, it is sought to be contended that the petitioner had retired on voluntary retirement basis on 25.6.1997 and the resolution dated 6.4.2002 would not apply to the petitioner because when the petitioner ceased to be in service with effect from 26.6.1997, there was no pension scheme available. It is contended that the scheme would have retrospective applicability between 1.1.97 and 6.4.2002 only qua those employees who retired on superannuation. The petitioner having accepted voluntary retirement, therefore, cannot seek pensionary benefits. 9. Before deciding the issues arising in this petition, it may be noted that it is by now well settled that pension is neither a bounty nor a matter of grace. It is held to be a right of an employee for having put in long number of years of satisfactory service. It is considered to be SCA/572/2005 7/32 JUDGMENT a deferred payment for years of rendering tireless service. In the backdrop of concept of welfare State, it is a measure of social security and reward for loyalty. These concepts have been refined and reiterated by the Hon'ble Supreme Court in series of decisions. In a recent decision in the case of K.S.R.T.C. V. K.O. Varghese, AIR 2003 SC 3966, the concept of pension was discussed by the Hon'ble Supreme Court at considerable length. It was observed that in a welfare State as a welfare measure, retiral benefit is grounded on consideration of State obligation to its citizens who having rendered service during the useful span of life must not be left to penury in their old age. It was further observed that pension is not only compensation for loyal service rendered in past, but pension has also a broader significance, in that it is a measure of socio-economic justice which inheres economic security in the foil of life when physical and mental powers start ebbing corresponding to aging progress. In para 19 of the decision, it was further observed that SCA/572/2005 8/32 JUDGMENT the discernible purpose thus underlying pension scheme or a statute introducing the pension scheme must inform interpretative process and accordingly it should receive a liberal construction and the Courts may not so interpret such statute as to render them obscure. The observations made by the Hon'ble Supreme Court in this regard may be noted at some length: “12. Before we deal with their respective contentions, it is necessary to appreciate the concept of pension. There are different classes of pensions and different conditions govern their grant. It is almost in the nature of deferred compensation for services rendered. There is a definition of pension in Article 366 (17) of the Constitution of India, 1950 (in short the "Constitution"), but the definition is not all pervasive. It is essentially a payment to a person in consideration of past services rendered by him. It is a payment to a person who had rendered services for the employer, when he is almost in the twilight zone of his life. 13. A political society which has goal to set up a welfare State, would introduce and has, in fact, introduced as a welfare measure wherein the retiral benefit is grounded on SCA/572/2005 9/32 JUDGMENT consideration of State obligation to its citizens who having rendered service during the useful span of life must not be left to penury in their old age. But, the evolving concept of social security is a later day development, and this journey was over a rough terrain. To note only one stage in 1856 a Royal Commission was set up to consider whether changes were necessary in the system established by the operative 1834 Act. The Report of the Commission is known as "Northoote-Trevelyan Report". The Report was pungent in its criticism when it says that : "in civil services comparable to lightness of work and the certainty of provision in case of retirement owing to bodily incapacity, furnish strong inducement to the parents and friends of sickly youth to endeavour to obtain for them employment in the service of the Government, and the extent to which the public are consequently burdened, first with the salaries of officers who are obliged to absent themselves from their duties on account of ill-health, and afterwards with their pensions when they retire on the same plea, would hardly be credited by those who have not had opportunities of observing the operation of the system. (See Gerald Rhodes Public Sector Pensions, pp. 18-19). 14. This approach is utterly unfair because in modern times public services are manned by SCA/572/2005 10/32 JUDGMENT those who enter at a comparatively young age, with selection through stiff competitive examinations and ordinarily the best talent gets the opportunity. 15. Let us, therefore, examine; as was done by this Court in D. S. Nakara v. Union of India (AIR 1983 SC 130) as to what are the goals that any pension scheme seeks to subserve. A pension scheme consistent with available resources must provide that the pensioner would be able to live: (i) free from want with decency, independence and self-respect, and (ii) at a standard equivalent at the pre- retirement level. This approach may merit the criticism that if a developing country like India cannot provide an employee while rendering service a living wage, how can one be assured of it in retirement? This can be aptly illustrated by a small illustration. A man with a broken arm asked his doctor whether he will be able to play the piano after the cast is removed. When assured that he will, the patient replied, "that is funny, I could not before". It appears that in determining the minimum amount required for living decently is difficult, selecting the percentage representing the proper ratio between earnings and the retirement income is harder. But it is imperative to note that as self-sufficiency declines the need for his attendance or institutional care grows. Many SCA/572/2005 11/32 JUDGMENT are literally surviving now than the past. We owe it is to them and ourselves that they live, not merely exist. The philosophy prevailing in a given society at various stages of its development profoundly influences its social objectives. The law is one of the chief instruments whereby the social policies are implemented and pension is paid according to rules which can be said to provide social security law by which it is meant those legal mechanisms primarily concerned to ensure the provision for the individual or a cash income adequate, when taken along with the benefit in kind provided by other social services (such as free medical aid) to ensure for him a culturally acceptable minimum standard of living when the normal means of doing so failed. See Social Security Law of Prof. Harry Calvert, p. 1) 1983 Lab IC 16. Viewed in the light of the present day notions pension is a term applied to periodic money payments to a person who retires at a certain age considered age of disability; payments usually continue for the rest of the natural life of the recipient. The reasons underlying the grant of pension very from country to country and from scheme to scheme. But broadly stated they are : (i) as compensation to former members of the armed forces or their dependants for old age, SCA/572/2005 12/32 JUDGMENT disability, or death (usually from service causes), (ii) as old age retirement or disability benefits for civilian employees, and (iii) as social security payments for the aged, disabled or deceased citizens made in accordance with the rules governing social service programmes of the country. Pensions under the first head are of great antiquity. Under the second head they have been in force in one form or another in some countries for over a century but those coming under the third head are relatively of recent origin, though they are of the greatest magnitude. There are other views about pensions such as charity, paternalism, deferred pay, reward for service rendered, or as a means of promoting general welfare (See Encyclopaedia Britannica Vol. 17, p. 575). But these views have become otiose. 17. Pension to civil employees of the Government and the defence personnel as administered in India appear to be a compensation for service rendered in the past. However, as held in Dodge v. Board of Education (1937 (302) US 74 : 82 Law Edn. 58) a pension is closely akin to wages in that it consists of payment provided by an employer, is paid in consideration of past service and the purpose of helping the recipient meet the expenses of living. This appears to be the nearest to our approach to pension with the SCA/572/2005 13/32 JUDGMENT added qualification that it should ordinarily ensure freedom from undeserved want. 18. 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 foil of life when physical and mental powers start ebbing corresponding to aging progress and, therefore, one is required to fall back on savings. One such saving in kind is when you gave your best in the heyday 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 an employee is earned by rendering long and sufficient service and. therefore, can be said to be a deferred portion of the compensation for service rendered. In one sentence one can say that the most practical raison de'etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and pecuniary if there is nothing to fall back upon. 19. The discernible purpose thus underlying pension scheme or a statute introducing the SCA/572/2005 14/32 JUDGMENT pension scheme must inform interpretative process and accordingly it should receive a liberal construction and the Courts may not so interpret such statute as to render them obscure (See American Jurisprudence 24.881). 20. From the aforesaid analysis three things emerge : (i) that pension is neither bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right subject to the statute, if any, holding the field, (ii) that the pension is not an ex gratia payment but it is a payment for the past service rendered; and (iii) it is a social welfare measure rendering socio- economic justice to those who in the heyday of their life ceaselessly toiled for employers on an assurance that in their ripe old age they would not be left in lurch. It must also be noticed that the quantum of pension is a certain percentage correlated to the emoluments earlier drawn. Its payment is dependent upon an additional condition of impeccable behaviour even subsequent to retirement. That is, since the cessation of the contract of service and that it can be reduced or withdrawn as a disciplinary measure. 21. In Corpus Juris Secundum, Vol. 70 at p. 423, it is stated that the title 'pension' includes pecuniary allowances paid periodically by Government to persons who have SCA/572/2005 15/32 JUDGMENT rendered services to the public or suffered loss or injury in the public service, or to their representatives; who are entitled to such allowances and rate and amount thereof; and proceedings to obtain and payment of such pensions. 22. In its strict sense a pension is not a matter of contract, and is not founded on any legal liability, it is a mere bounty or gratuity "springing from the appreciation and consciousness of the sovereign", and it may be given or withheld at the discretion of the sovereign. It may be bestowed on such persons and on such terms as the law-making body of the Government prescribes, and it is, at most, an expectancy granted by the law. The term "pension" has been compared and distinguished from "bonus", "compensation", "profits" and "retirement payment". A pension fund is to be distinguished from an annuity fund derived in part from voluntary contributions under a statutory option to contribute or refrain from contributing.” 10. With this background in mind, one may recall that in service jurisprudence, different kinds of retirements are envisaged. (i)Superannuation retirement takes place when an employee crosses the maximum age prescribed SCA/572/2005 16/32 JUDGMENT under the service rules beyond which he cannot remain in active service. (ii)Compulsory retirement is one of the penalties under different service regulations. It can be imposed on an employee upon a departmental inquiry on the basis of proved charges. For example, in Gujarat Civil Service (Discipline and Appeal) Rules, (rule 6(6)) compulsory retirement is provided as one of the major penalties. (iii) Premature retirement is a concept where the employer in terms of service regulations has power to order retirement of an employee upon crossing certain age or completion of certain number of years of service in public interest. Rule 161 of the BCSR gives such powers to the State Government with respect to its employees. Fundamental Rule 56J gives similar powers to the Central Government with respect to Central Government employees. (iv)Voluntary retirement is a concept where an employee upon completion of certain number of years of qualifying service can with the SCA/572/2005 17/32 JUDGMENT permission of the employer proceed on voluntary retirement. If the employee has put in sufficient number of years of service and is permitted to retire on voluntary retirement basis, he retains all the benefits of the service already put in and would be entitled to all post retiral benefits on the basis of number of years of service put in by him. (v)In certain service regulations, there is also a concept of retirement on medical grounds permitting the employee to seek pension called invalid pension even though the employee may not have put in sufficient number of qualifying years of service to seek pension under the normal rules. To this kind of retirement, we need not go into in the present petition. 11.Under the resolution dated 6.4.2002 making pension scheme available to the teaching staff of private aided primary schools, it is provided that the pension entitlement of such employees would be governed by the provisions in this regard contained in BCSR. If one, SCA/572/2005 18/32 JUDGMENT therefore, adverts to the relevant provisions contained in BCSR, it would be found that rule 251 of the BCSR provides for varieties of pensions. Rule 251 reads as follows:- “251. The following different classes of pension may be granted to Government servants or their families:- (1)Superannuation pension, which is a pension granted to a Government servant who retires from Government service at an age at which he is by rule entitled or required to retire. (2)Retiring pension, which is a pension granted to a Government servant who retires voluntarily, or is required by Government to retire from Government service after completing a prescribed period of duty and service or duty alone but before reaching the age of superannuation. (3)Invalid pension, which is a pension granted to a Government servant who retires from Government service, before reaching the age of superannuation, on account of mental or bodily infirmity. (4)Special additional pension, which is a pension granted to a Government servant in addition to a superannuation, retiring or SCA/572/2005 19/32 JUDGMENT invalid pension, in consideration of the nature of the duties which he has performed. (5)Compensation pension, which is a pension granted to a Government servant who is discharged from Government service, otherwise than on medical certificate and for no fault of his own, before earning a retiring or superannuation pension. (6)Wound or injury pension, which is a pension granted to a Government servant wounded or injured while in Government service. (7)Compassionate pension, which is a pension granted to a Government servant who is removed from Government service for misconduct, insolvency, or inefficiency. (8)Family pension, which is a pension granted to the family of a deceased Government servant.” Rule 252 of BCSR refers to superannuation pension and it reads as follows:- “252. A Government servant, who retires from pensionable service on or after attaining the age of superannuation fixed by the relevant clause of Rule 161, shall be granted a superannuation pension.” Rule 254 of the BCSR deals with retiring pension which reads as follows:- SCA/572/2005 20/32 JUDGMENT “254. Unless in any case it be otherwise distinctly provided in this sub-section, a Government servant shall be granted a retiring pension, if not being eligible for a superannuation pension, he is - (1)permitted to retire from pensionable service after completing 25 years of duty and 30 years of total service reckoned from the date of first appointment; or (2)required on the ground of inefficiency under Rule 165-A to retire from pensionable service after completing, reckoned from the date of first appointment - (a) 21 years of duty and 25 years of total service, if he was in service on or before the 3rd August 1931 and has no break in his service since that date or, (b) 23 years of duty and 27 years of total service, if he enters or has entered Government service after the 3rd August 1931 or having entered Government service, on or before that date has a break in his service since that date. Note : In the case of Government servants who are required to retire on grounds of inefficiency under clause (2) of this rule pension will be regulated according to column 2 of the particular scale in Ruldl 282 to which he is subject. SCA/572/2005 21/32 JUDGMENT Explanation – The “Proviso” and “Explanation” in Rule 282 apply here also. Note 2. See clause (3) in rule 245.” It can thus be seen that for the purpose of seeking pension, even under the BCSR, no distinction has been drawn between a person retiring on superannuation and a person retiring on voluntary retirement basis. The only difference is in the quantification of pension between two kinds of cases and the important consideration is that the person retiring on voluntary retirement basis can seek pension only if he or she had put in sufficient number of qualifying years of service. So far as the entitlement of pension in both kinds of retiring employees is concerned, there is no distinction drawn. 11.1In fact, even the cases of persons ordered to be retired on premature retirement by the Government in public interest, there is no distinction drawn at all when sub-rule (2) of rule 251 provides for retiring pension in both the cases wherein