:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.187 OF 2004 1. Union of India, through Secretary to the Govt.of India, Ministry of Personnel, Public Grievances & Pensions, 3rd floor, Loknayak Bhavan, New Delhi - 110 003. 2. Accountant General (A&E)-I, Maharashtra, Maharshi Karve Road, Churchgate, Mumbai 400 020. .. Petitioners v/s. T.Mukundan, s/o.Late O.Govinda Puduval, Resident of Mumbai and last empoyed as Accountant Officer, Office of the Accountant General (A-E) I, Maharashtra, Churchgate, Mumbai 400 020. .. Respondent Mr.Suresh Kumar with Ms.S.R.Kambli i/by Mr.T.C.Kaushik for the petitioners. Mr.R.R.Dalvi for respondent. CORAM : R.M. LODHA AND R.S. MOHITE, JJ. DATED : 29th March, 2005 ORAL JUDGMENT (Per R.M.Lodha, J.) The issue that arises for consideration in this writ petition is, whether Rule 48-B of Central Civil Services Pension Rules, 1972 (for short, ‘CCS Pension Rules, 1972’) providing for weightage of five years in qualifying service on voluntary retirement which took effect from 10th September, 1983 would also be applicable to the employees who took voluntary retirement before 10th September, 1983. :2: 2. The aforesaid issue arises in the facts and circumstances that we may briefly notice here. (i) T.Mukandan-the respondent joined service in the employment of the Central Government on 4.9.1952. He retired voluntarily as Accounts Officer on 20.9.1979. At the time of voluntary retirement, he had rendered the service of 27 years and 20 days. He was granted pensionary benefits taking into account his qualifying service at the time of retirement as per Rule 48-A of the CCS Pension Rules, 1972. (ii) Rule 48-B was inserted in CCS Rules, 1972 vide notification No.32/4/83-Pension Unit dated 28th August, 1983. The newly added Rule 48-B took effect from 10th September, 1983. (iii) The respondent herein in the light of newly added Rule 48-B claimed benefit thereunder and requested for recomputation of his pension by according him weightage of five years of qualifying service. (iv) The claim of the respondent ultimately came to be rejected by the order dated 2.4.2002 by the Secretary to the Government of Maharashtra, Ministry of Personnel, Public Grievances and Pensions holding :3: that he was not entitled to the benefits of Rule 48-B. (v) The respondent challenged the order dated 2.4.2002 by filing original application No.579/2002 before the Central Administrative Tribunal (for short, ‘the CAT’). Before the CAT, the present petitioners reiterated their stand that the present respondent was not entitled to the benefit claimed by him under Rule 48-B of CCS Pension Rules, 1972 since Rule 48-B is applicable prospectively and not retrospectively. (vi) The CAT heard the parties and vide order dated 29.8.2003 held that the present respondent was entitled to the benefit of Rule 48-B of CCS Pension Rules, 1972 and directed the present petitioners to pay the arrears of pension to him within four months from the date of the order. 3. It is not in dispute that the respondent retired voluntarily on 29.9.1979 and at the time of his retirement, he rendered the service of 27 years and 20 days. At the time of the retirement of the respondent, the existing rule 48-A provided for retirement on completion of 20 years qualifying service. Rule 48-A of the CCS Pension Rules, 1972 reads thus- :4: "48-A. 48-A. 48-A. Retirement Retirement Retirement on completion of 20 years’ on completion of 20 years’ on completion of 20 years’ qualifying qualifying qualifying service. service. service. (1) At any time after a Government servant has completed twenty years’ qualifying service, he may, by giving notice of not less than three months in writing to the Appointing Authority, retire from service. Provided that this sub-rule shall not apply to a Government servant, including scientist or technical expert who is- (i) on assignments under the Indian Technical and Economic Co-operation (ITEC) Programme of the Ministry of External Affairs and other aid programmes. (ii) posted abroad in foreign based offices of the Ministries /Departments, (iii) on a specific contract assignment to a foreign Government, unless, after having been transferred to India, he has resumed the charge of the post in India and served for a period of not less than one year. (2) The notice of voluntary retirement given under sub-rule (1) shall require acceptance by the Appointing Authority: Provided that where the Appointing Authority does not refuse to grant the permission for retirement before the expiry of the period specified in the said notice, the retirement shall become effective from the date of expiry of the said period. (3-A)(a) A Government servant referred to in sub-rule (1) may make a request in writing to the Appointing Authority to accept notice of voluntary retirement of less than three months giving reasons therefor; (b) On receipt of a request under Clause (a), the Appointing Authority subject to the provisions of sub-rule (2), may consider such request for the curtailment of the period of notice of three months on merits :5: and if it is satisfied that the curtailment of the period of notice will not cause any administrative inconvenience, the Appointing Authority may relax the requirement of notice of three months on the condition that the Government servant shall not apply for commutation of a part of his pension before the expiry of the period of notice of three months. (4) A Government servant, who has elected to retire under this rule and has given the necessary notice to that effect to the Appointing Authority, shall be precluded from withdrawing his notice except with the specific approval of such authority: Provided that the request for withdrawal shall be made before the intended date of his retirement. (5) The pension and [retirement gratuity] of the Government servant retiring under this rule shall be based on the emoluments as defined under Rules 33 and 34 and the increase not exceeding five years in his qualifying service shall not entitle him to any notional fixation of pay for purposes of calculating pension and gratuity. (6) This rule shall not apply to a Government servant who- (a) retires under Rule 29, or (b) retires from Government service for being absorbed permanently in an Autonomous Body or a Public Sector Undertaking to which he is on deputation at the time of seeking voluntary retirement. EXPLANATION.- For the purpose of this rule, the expression "Appointing Authority" shall mean the authority which is competent to make appointments to the service or post from which the Government servant seeks voluntary retirement." 4. It is also an admitted position that as per the :6: aforesaid Rule 48-A, the pension payable to the present respondent was computed and he has been paid pension accordingly. 5. Rule 48-B was inserted in CCS Pension Rules by notification dated 26th August, 1983 and that took effect from 10th September, 1983. The newly added Rule 48-B reads thus- "48-B. "48-B. "48-B. Addition Addition Addition to qualifying service on to qualifying service on to qualifying service on voluntary voluntary voluntary retirement retirement retirement (1) The qualifying service as on the date of intended retirement of the Government servant retiring under Rule 48(1) (a) or Rule 48-A or Clause (k) of Rule 56 of the Fundamental Rules or Clause (i) of Article 459 of the Civil Service Regulations, with or without permission shall be increased by the period not exceeding five years, subject to the condition that the total qualifying service rendered by the Government servant does not in any case exceed thirty-three years and it does not take him beyond the date of superannuation. (2) The weightage of five years under sub-rule (1) shall not be admissible in cases of those Government servants who are prematurely retired by the Government in the public interest under Rule 48(1)(b) or FR 56(j).] 6. By Rule 48-B, the weightage of five years of qualifying service has been made admissible to the Government servant retiring under Rule 48(1)(a) or Rule 48-A or Clause (k) of Rule 56 of the Fundamental Rules or Clause (i) of Article 449 of Civil Service Regulations. :7: 7. The concept of non-contributory pension has been elaborately dealt with and eloquently explained by the Constitution Bench of the Supreme Court in the case of D.S.Nakara and others v. Union of India, (1983) 1 SCC 305. In paragraph 19 of the report, the Supreme Court posed the questions: what is a pension? what are the goals of pension? what public interest or purpose, if any, it seeks to serve?........ and then proceeded to observe thus- "20. The antiquated notion of pension being a bounty, a gratuitous payment depending upon the sweet will or grace of the employer not claimable as a right and, therefore, no right to pension can be enforced through Court has been swept under the carpet by the decision of the Constitution Bench in Deokinandan Prasad v. State of Bihar wherein this Court authoritatively ruled that pension is a right and the payment of it does not depend upon the discretion of the Government but is governed by the rules and a government servant coming within those rules is entitled to claim pension. It was further held that the grant of pension does not depend upon anyone’s discretion. It is only for the purpose of quantifying the amount having regard to service and other allied matters that it may be necessary for the authority to pass an order to that effect but the right to receive pension flows to the officer not because of any such order but by virtue of the rules. This view was reaffirmed in State of Punjab v. Iqbal Singh. 27. 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 vary from country to country and from scheme to scheme. But :8: broadly stated they are (i) as compensation to former members of the Armed Forces or their dependents for old age, 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, rewards for service rendered, or as a means of promoting general welfare (see Encyclopaedia Britannica, Vol.17, p.575). But these views have become otiose. 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 potion 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. 31. From the discussion three things emerge: (i) that pension is neither a bounty nor a matter of grace depending upon :9: the sweet will of the employer and that it creates a vested right subject to 1972 Rules which are statutory in character because they are enacted in exercise of powers conferred by the proviso to Article 309 and clause (5) of Article 148 of the Constitution; (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 hey-day of their life ceaselessly toiled for the employer on an assurance that in their 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 average emoluments drawn during last three years of service reduced to 10 months under liberalised pension scheme. 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. 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 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. 46. By our approach, are we making the scheme retroactive? The answer is emphatically in the negative. Take a government servant who retired on April 1, 1979. He would be governed by the liberalised pension scheme. By that time he had put in qualifying service of 35 years. His length of service is a relevant factor for computation of pension. Has the :10: Government made it retroactive, 35 years backward compared to the case of a government servant who retired on March 30, 1979? Concept of qualifying service takes note of length of service, and pension quantum is correlated to qualifying service. Is it retroactive for 35 years for one and not retroactive for a person who retired two days earlier. It must be remembered that pension is relatable to qualifying service. It has correlation to the average emoluments and the length of service. Any liberalisation would pro tanto be retroactive in the narrow sense of the term. Otherwise it is always prospective. A statute is not properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing (see Craies on Statute Law, 6th Edn., p.387). Assuming the Government had not prescribed the specified date and thereby provided that those retiring pre and post the specified date would all be governed by the liberalised pension scheme, undoubtedly, it would also be governed by the liberalised pension scheme, undoubtedly, it would be both prospective and retroactive. Only 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. It could have been urged that it is an incentive to attract the fresh recruits. Pension is a reward for past service. It is undoubtedly a condition of service but not an incentive to attract new entrants because if it was to be available to new entrants only, it would be prospective at such distance of thirty-five years since its introduction. But it covers all those in service who entered thirty-five years back. Pension is thus not an incentive but a reward for past service. And a pension of an existing benefit stands on a different footing that a new retiral benefit. And even in case of new retiral benefit of gratuity under the Payment of Gratuity Act, 1972 past service was taken into consideration. Recall at this stage :11: the method adopted when pay scales are revised. Revised pay scales are introduced from a certain date. All existing employees are brought on to the revised scales by adopting a theory of fitments and increments for past service. IN other words, benefit of revised scale is not limited to those who enter service subsequent to the date fixed for introducing revised scales but the benefit is extended to all those in service prior to that date. This is just and fair. Now if pension as we view it, is some kind of retirement wages for past service, can it be denied to those who retired earlier, revised retirement benefits being available to future retirees only. Therefore, there is no substance in the contention that the court by its approach would be making the scheme retroactive, because it is implicit in theory of wages." 8. The judgment in the case of D.S.Nakara has come up for consideration before the Supreme Court time and again. In Krishena Kumar v. Union of India and ors., (1990)4 SCC 207, the Supreme Court with regard to D.S.Nakara in paragraphs 32 and 33 of the report observed thus- "32. In Nakara it was never held that both the pension retirees and the PF retirees formed a homogeneous class and that any further classification among them would be violative of Article 14. On the other hand the court clearly observed that it was not dealing with the problem of a "fund". The Railway Contributory Provident Fund is by definition a fund. Besides, the government’s obligation towards an employee under CPF Scheme to give the matching contribution begins as soon as his account is opened and ends with his retirement when his rights qua the government in respect of the Provident Fund is finally crystallized and thereafter no statutory obligation continues. Whether there still remained a moral obligation is a different matter. On the other hand under the Pension Scheme the government’s obligation does not begin until the employee retires when only it begins and it continues till the death of :12: the employee. Thus, on the retirement of an employee government’s legal obligation under the Provident Fund account ends while under the Pension Scheme it begins. The rules governing the Provident Fund and its contribution are entirely different from the rules governing pension. It would not, therefore, be reasonable to argue that what is applicable to the pension retirees must also equally be applicable to PF retirees. This being the legal position the rights of each individual PF retiree finally crystallized on his retirement whereafter no continuing obligation remained while, on the other hand, as regard Pension retirees, the obligation continued till their death. The continuing obligation of the State in respect of pension retirees is adversely affected by fall in rupee value and rising prices which, considering the corpus already received by the PF retirees they would not be so adversely affected ipso facto. It cannot, therefore, be said that it was the ratio decidendi in Nakara that the State’s obligation towards its PF retirees must be the same as that towards the pension retirees. An imaginary definition of obligation to include all the government retirees in a class was not decided and could not form the basis for any classification for the purpose of this case. Nakara cannot, therefore, be an authority for this case. 33. Stare decisis et non quieta movere. To adhere to precedent and not to unsettle things which are settled. But it applies to litigated facts and necessarily decided questions. Apart from Article 14 of the Constitution of India, the policy of courts is to stand by precedent and not to disturb settled point. When court has once laid down a principle of law as applicable to certain state of facts, it will adhere to that principle, and apply it to all future cases where facts are substantially the same. A deliberate and solemn decision of court made after argument on question of law fairly arising in the case, and necessary to its determination, is an authority, or binding precedent in the same court, or in other courts of equal or lower rank in subsequent cases where the very point is again in controversy unless there are occasions when departure is rendered necessary to vindicate plain, obvious principles of law and remedy continued injustice. It should be invariably applied :13: and should not ordinarily be departed from where decision is of long standing and rights have been acquired under it, unless considerations of public policy demand it. But in Nakara it was never required to be decided that all the retirees formed a class and no further classification was permissible." Krishena Kumar was the case of PF retiree. The Constitution Bench of the Supreme Court held in Krishena Kumar that PF retirees and pension retirees are two different classes and what was said in D.S.Nakara for the pension retirees would not be applicable to PF retirees. The Supreme Court observed that an imaginary definition of obligation to include all the government retirees in a class was not decided and could not form the basis for any classification for the purpose of the case in hand (Krishena Kumar). 9. In Indian Ex-Services League and ors. v. Union of India, (1991) 2 SCC 104, the Constitution Bench of the Supreme Court again considered the case of D.S.Nakara at quite some length since it was found that the matter was sequel to the decision in D.S.Nakara. The Constitution Bench after referring to the case of D.S.Nakara extensively, held that the case of D.S.Nakara has to be read as one of limited application and its ambit cannot be enlarged to cover all claims made by the pension retirees or a demand for an identical amount of pension to every retiree from the same rank irrespective of the date of :14: retirement, even though the reckonable emoluments for the purpose of computation of their pension would be different. The Constitution Bench, accordingly, with reference to the office memorandum dated May 25, 1979 issued by the Ministry of Finance, Government of India whereby the formula for computation of pension was made applicable only to the civil servants who were in service on March 31, 1979 and retired from service on or after that date was not interfered with. It was held that the claim made by the ex-servicemen was based on misreading of Nakara’s decision. The legal position highlighted in D.S.Nakara that where the mode of computation of pension is liberalised from a specified date, its benefit must be given not merely to the retirees subsequent to that date but also to earlier existing retirees irrespective of their date of retirement even though the earlier retirees would not be entitled to any arrears prior to the specified date on the basis of the revised computation made according to the liberalised formula, however, was not disputed. 10. The legal position that the benefits on liberalisation and the extent thereof given in accordance with the liberalised pension scheme have to be given equally to all retirees irrespective of their date of