Case: THE ALL MANIPUR PENSIONERS ASSN. REGD.NO.1315/1973 UNDER THE SOCIETIES REGISTRATION ACT BY ITS SECRE Vs. THE STATE OF MANIPUR

2. The facts leading to the present appeal in nutshell are as under:That the State of Manipur adopted the Central Civil Services (Pension) Rules, 1972, as amended from time to time. As per Rule 49 of the Central Civil Services Rules, 1972, a case of a government employee retired in accordance with the provisions of the rules after completing qualifying service of not less than 30 years, the amount of pension shall be calculated at 50% of the average emoluments subject to a maximum of Rs.4500/¬ per month. It appears that considering the increase in the cost of living, the Government of Manipur decided to increase the quantum of pension as well as the pay of the employees. That the Government of Manipur issued an office memorandum dated 21.4.1999 revising the quantum of pension. However, provided that those Manipur Government employees who retired on or after 1.1.1996 shall be entitled to the revised pension at a higher percentage and those who retired before 1.1.1996 shall be entitled at a lower percentage2.1 Feeling aggrieved by office memorandum dated 21.4.1999 providing two different revised pensions, viz, the higher percentage of revised pension to the government employees who retired on or after 1.1.1996 and the lower percentage of revised pension to those who retired on or before 1.1.1996, the appellant herein – All Manipur Pensioners Association approached the learned Single Judge of the High Court of Manipur by way of Writ Petition (C) No.1455 of 2000. It was the case on behalf of the original writ petitioners that all the pensioners who retired on or after 1.1.1996 and those who retired before 1.1.1996 form only one class as a whole and therefore the classification between those who retired on or after 1.1.1996 and those who retired on or before 1.1.1996 for the purpose of granting the benefit of revised pension is arbitrary, unreasonable and violative of Article 14 of the Constitution of India. It was submitted that the date of retirement cannot form the very criterion for classification. Before the learned Single Judge, heavily reliance was placed on the decision of this Court in the case of D.S. Nakara and others vs. Union of India, reported in (1983) 1 SCC 305.  The writ petition before the learned Single Judge was opposed by the State Government and the aforesaid classification was sought to be justified solely on the ground that considering the financial constraints of the State, the State was justified in granting revised pension differently to those who retired after 1.1.1996 and those who retired before 1.1.1996. It was the case on behalf of the State that considering the financial constraints of the State, the State was not in a position to extend the benefit of pension making the percentage given by the Government of India in its memorandum dated 17.12.1998 to the pre¬1996 pensioners and accordingly a decision was taken to extend the benefit of revised pension at certain percentage for the pre¬1996 pensioners and higher percentage for the post 1996 pensioners. Relying upon the decision of this Court in D.S. Nakaras case (supra), by the judgment and order dated 24.3.2005, the learned Single Judge allowed the writ petition and held the classification between those pensioners who retired prior to 1996 and those who retired after 1996 as arbitrary and violative of Article 14 of the Constitution of India and consequently directed the State Government to pay the revised pension uniformly to all the pensioners irrespective of any cut¬off date, i.e., those who retired pre¬1996 or those who retired post¬19962.2. Feeling aggrieved and dissatisfied with the judgment and order dated 24.3.2005 passed by the learned Single Judge in Writ Petition (C) No. 1455 of 2000, the State preferred appeal before the Division Bench of the High Court. By the impugned judgment and order dated 1.3.2016, the Division Bench of the High Court has allowed the said appeal and has quashed and set aside the judgment and order passed by the learned Single Judge by observing that a classification is permissible and cut¬off date can be pressed into service depending on financial resources of the State. The Division Bench has held that the cut¬off date fixed by the State government as 1.1.1996 for payment of revised pension to pre-1996 retirees and post¬1996 retirees cannot be termed to be unreasonable or irrational in the light of Article 14 of the Constitution of India and therefore need not be held to be invalid3. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the Division Bench of the High Court, the original writ petitioners have preferred the present appealIt is not in dispute that the State of Manipur has adopted the Central Civil Services (Pension) Rules to be applicable to the State of Manipur. Therefore, all the government servants retired in accordance with the provisions of the Pension Rules and after completing qualifying service are entitled to the pension/pensionary benefits. It appears that considering the increase in the cost of living, the State Government enhanced/revised the pension of its employees with effect from 1.1.1996 as in the case of Central Government employees. However, this revision in pension was done differently, viz., for employees who retired prior to 1.1.1996 and for employees who retired after 1.1.1996. Consequently, the State provided a lower percentage of increase to those who retired pre¬1996 and provided higher percentage of increase to those who retired post¬ 1996. The learned Single Judge of the High Court held that such a classification is not permissible in law keeping in mind the equality clause of the Constitution. However, on an appeal, by the impugned judgment and order, the Division Bench of the High Court has reversed the decision of the learned Single Judge and has observed and held that as in the present case the State does not have the financial resources to pay uniform pension to all the retired employees, the cut-off date fixed by the State Government as 1.1.1996 for payment of revised pension to pre¬ 1996 retirees and post¬1996 retirees cannot be termed to be unreasonable and irrational in the light of Article 14 of the Constitution of India. While passing the impugned judgment and order, the Division Bench of the High Court has not followed the decision of this Court in the case of D.S. Nakara (supra), considering some of the observations made by this Court in the subsequent decisions in the cases of R. Veerasamy (supra); Amar Nath Goyal(supra) and P.N. Menon (supra) to the effect that the decision in the case of D.S. Nakara (supra) is one of the limited application and there is no scope for enlarging the ambit of that decision to cover all schemes made by the retirees or a demand for an identical amount of pension irrespective of the date of retirement6.2 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the Division Bench of the High Court, the original writ petitioners – All Manipur Pensioners Association – employees/pensioners who retired pre¬1996 have preferred the present appeal.

Reasoning: 7.1 At the outset, it is required to be noted that in the present case, the State Government has justified the cut¬off date for payment of revised pension solely on the ground of financial constraint. On no other ground, the State tried to justify the classification. In the backdrop of the aforesaid facts, the aforesaid question posed for consideration before this Court is required to be considered7.2 It is not in dispute that the State Government has adopted the Central Civil Services (Pension) Rules, to be applicable to the State of Manipur. The State has also come out with the Manipur Civil Services (Pension) Rules, 1977. It is also not in dispute that subject to completing the qualifying service the government servants retired in accordance with the pension rules are entitled to pension. Therefore, as such, all the pensioners form only one homogeneous class. Therefore, it can be said that all the pensioners form only one class as a whole. Keeping in mind the increase in the cost of living, the State Government increased the quantum of pension and even pay for its employees. The State Government also enhanced the scales of pension/quantum of pension with effect from 1.1.1996 keeping in mind the increase in the cost of living. However, the State Government provided the cut-off date for the purpose of grant of benefit of revised pension with effect from 1.1.1996 to those who retired post¬1996 and denied the revision in pension to those who retired pre¬1996. The aforesaid classification between these pensioners who retired pre¬1996 and post-1996 for the purpose of grant of benefit of revision in pension is the subject matter of this appeal. As observed hereinabove, the aforesaid classification is sought to be justified by the State Government solely on the ground of financial constraint7.4 While the aforesaid decision of this Court in the case of D.S. Nakara (supra) was relied upon by the appellant herein and as such which came to be considered and followed by the learned Single Judge, the Division Bench considering some of the observations made in the cases of Hari Ram Gupta (supra); R. Veerasamy (supra); Amar Nath Goyal(supra) and P.N. Menon (supra), has observed and held that the decision of this Court in the case of D.S. Nakara (supra) is one of the limited application and there is no scope for enlarging the ambit of that decision to cover all schemes made by the retirees or a demand for an identical amount of pension irrespective of the date of retirement. However, by not following the decision of this Court in the case of D.S. Nakara (supra), considering some of the observations made by this Court in the aforesaid decisions, namely P.N.Menon(supra) and other decisions, the Division Bench of the High Court has not at all considered the distinguishable facts in the aforesaid decisions7.5 In the case of P.N. Menon(supra), the controversy was altogether different one. The factual position that needs to be highlighted insofar as P.N. Menon (supra) is concerned, is that the retired employees had never been in receipt of dearness pay when they retired from service and therefore the O.M. in question could not have been applied to them. This is how this Court examined the matter. This Court also noticed that prior to the O.M. in question, the pension scheme was contributory and only with effect from 22.9.1977, the pension scheme was made non¬ contributory. Since the respondent employees in the first cited case were not in service at the time of introducing the same they were held not eligible for the said benefit. Therefore, the said decision shall not be applicable to the facts of the case on hand, more particularly while considering and/or applying the decision of this Court in the case of D.S. Nakara (supra)7.6 In the case of Amrit Lal Gandhi (supra), pension was introduced for the first time for the University teachers based on the resolution passed by the Senate and Syndicate of Jodhpur University. The same was approved by the State Government with effect from1.1.1990. Therefore, the controversy was not between one set of pensioners alleging discriminatory treatment as against another set of pensioners. There were no pensioners to begin with. The retirees were entitled to provident fund under the existing provident fund scheme. The question of discrimination between one set of pensioners from another set of pensioners did not arise in the said decision. With the aforesaid facts, this Court observed that financial viability is a relevant issue7.7 Similarly, the decision of this Court in the case of Indian Ex¬ Services League (supra) also shall not be applicable to the facts of the case on hand. The facts in this case and the facts in the case of D.S. Nakara (supra) are clearly distinguishable. In the case of Indian Ex-Services League (supra), the dispute was with respect to PF retirees and Pension retirees and to that it was held that PF retirees and Pension retirees constitute different classes and therefore this Court distinguished the decision of this Court in the case of D.S. Nakara (supra). Therefore, the aforesaid decision shall not be applicable to the facts of the case on hand at all7.8 Similarly, the decisions of this Court in the cases of Hari Ram Gupta (supra) and Kallakkurichi Taluk Retired Officials Association, Tamil Nadu (supra) also shall not be applicable to the facts of the case on hand7.9 In view of the above, we are satisfied that none of the judgments, relied upon by the learned Senior Advocate for the respondent – State, has any bearing to the controversy in hand. The Division Bench of the High Court has clearly erred in not appreciating and/or considering the distinguishable facts in the cases of Hari Ram Gupta (supra); R. Veerasamy (supra); Amar Nath Goyal (supra); P.N. Menon (supra) and Amrit Lal Gandhi (supra)8. Even otherwise on merits also, we are of the firm opinion that there is no valid justification to create two classes, viz., one who retired pre-1996 and another who retired post¬1996, for the purpose of grant of revised pension, In our view, such a classification has no nexus with the object and purpose of grant of benefit of revised pension. All the pensioners form a one class who are entitled to pension as per the pension rules. Article 14 of the Constitution of India ensures to all equality before law and equal protection of laws. At this juncture it is also necessary to examine the concept of valid classification. A valid classification is truly a valid discrimination. It is true that Article 16 of the Constitution of India permits a valid classification. However, a very classification must be based on a just objective. The result to be achieved by the just objective presupposes the choice of some for differential consideration/treatment over others. A classification to be valid must necessarily satisfy two tests. Firstly, the distinguishing rationale has to be based on a just objective and secondly, the choice of differentiating one set of persons from another, must have a reasonable nexus to the objective sought to be achieved. The test for a valid classification may be summarised as a distinction based on a classification founded on an intelligible differentia, which has a rational relationship with the object sought to be achieved. Therefore, whenever a cut-off date (as in the present controversy) is fixed to categorise one set of pensioners for favourable consideration over others, the twin test for valid classification or valid discrimination therefore must necessarily be satisfied. In the present case, the classification in question has no reasonable nexus to the objective sought to be achieved while revising the pension. As observed hereinabove, the object and purpose for revising the pension is due to the increase in the cost of living. All the pensioners form a single class and therefore such a classification for the purpose of grant of revised pension is unreasonable, arbitrary, discriminatory and violative of Article 14 of the Constitution of India. The State cannot arbitrarily pick and choose from amongst similarly situated persons, a cut¬off date for extension of benefits especially pensionary benefits. There has to be a classification founded on some rational principle when similarly situated class is differentiated for grant of any benefit8.1 As observed hereinabove, and even it is not in dispute that as such a decision has been taken by the State Government to revise the pension keeping in mind the increase in the cost of living. Increase in the cost of living would affect all the pensioners irrespective of whether they have retired pre¬1996 or post-1996. As observed hereinabove, all the pensioners belong to one class. Therefore, by such a classification/cut¬off date the equals are treated as unequals and therefore such a classification which has no nexus with the object and purpose of revision of pension is unreasonable, discriminatory and arbitrary and therefore the said classification was rightly set aside by the learned Single Judge of the High Court. At this stage, it is required to be observed that whenever a new benefit is granted and/or new scheme is introduced, it might be possible for the State to provide a cut-off date taking into consideration its financial resources. But the same shall not be applicable with respect to one and single class of persons, the benefit to be given to the one class of persons, who are already otherwise getting the benefits and the question is with respect to revision9. In view of the above and for the reasons stated above, we are of the opinion that the controversy/issue in the present appeal is squarely covered by the decision of this Court in the case of D.S. Nakara (supra). The decision of this Court in the case of D.S. Nakara (supra) shall be applicable with full force to the facts of the case on hand. The Division Bench of the High Court has clearly erred in not following the decision of this Court in the case of D.S. Nakara (supra) and has clearly erred in reversing the judgment and order of the learned Single Judge.