Kallakkurichi Taluk Retd.Off.Asso.& ... vs State Of Tamilnadu

1. The Government of Tamil Nadu has been issuing executive order from time to time to determine the composition of allowances to be added to pay for quantifying wages for calculating pension. It is the case of the appellants, that the State Government followed a consistent practice of treating ‘dearness allowance’ as ‘dearness pay’ for the computation of pension and other retiral benefits. Illustratively, we are informed, that by a Government Order dated 11.3.1970 the State Government included ‘dearness allowance’ at the rate then prevalent, as a component of wages for calculating average emoluments for determining pension, for those who retired on or after 26.2.1970. The instant Government Order dated 11.3.1970 was applicable to employees who retired between 26.2.1970 and 1.10.1970.

2. One R. Narasimachar who had retired on 21.11.1969 was not extended the benefit of ‘dearness allowance’ drawn by him at the time of his retirement, while computing his pension. This denial was because the Government order dated 11.3.1970, extended the benefit referred to above only to such employees who had/would retire on or after 26.2.1970. Dissatisfied with the aforesaid denial, he filed Writ Petition no.1815 of 1986 contending, that his pension should have been calculated by taking into consideration ‘dearness allowance’ which was being drawn by him at the time of his retirement, as ‘dearness pay’. A learned Single Judge of the High Court of Judicature at Madras (hereinafter referred to as, the High Court) allowed the aforesaid writ petition on 15.3.1990 by holding, that the State Government was not right in restricting the applicability of the Government Order dated 11.3.1970 only to employees who retired between 26.2.1970 and 1.10.1970. The learned Single Judge directed, that ‘dearness allowance’ which the appellant was drawing, at the time of his retirement, be treated as ‘dearness pay’ for calculating his pension. On 26.2.1991, the writ appeal filed by the State Government against the order dated 15.3.1990 (passed by the learned Single Judge allowing Writ Petition no.1815 of 1986), was dismissed.

3. Based on the aforesaid judgment dated 15.3.1990, which the State Government accepted, a clarificatory Government Order dated 4.12.1991, was issued. Under the Government Order dated 4.12.1991, even for employees who had retired prior to 1.12.1966, ‘dearness allowance’ actually drawn by them, at the time of their retirement,would be taken as ‘dearness pay’ for purposes of calculating pension. For employees retiring between 1.12.1966 and 25.2.1970, ‘dearness allowance’ upto the level obtaining in December, 1966 would be taken into consideration as ‘dearness pay’ for determining pension (and gratuity). It is therefore submitted, that ‘dearness allowance’ became a component of pension, for all employees who had retired upto 25.2.1970.

4. In order to place the sequence of facts in the correct perspective, it was further brought to our notice that the Government order dated 11.3.1970 was clarified by a subsequent letter dated 4.12.1991. As per the aforesaid order and letter, Government servants retiring from service on or after 26.2.1970, and upto 1.10.1970, ‘dearness allowance’ up to the level obtaining in December, 1966, was to be reckoned as ‘dearness pay’ for purposes of pension (and gratuity). Thereupon, through a subsequent Government order dated 4.12.1991, directions were issued for extending the benefit contemplated by the Government order dated 11.3.1970 and the Government’s letter dated 4.2.1991, even to those who had retired prior to 26.2.1970.

5. A Government order dated 4.12.1991 was then brought to our notice. It provided, that notional revised pension payable from 1.6.1988 would be encashable only with effect from 1.12.1991. It also provided, that those Government servants who had retired prior to 26.2.1970 but had died before 1.12.1991, would be ineligible for the benefits contemplated for retirees prior to 26.2.1970. However, if the concerned Government employee had died after 1.12.1991, the benefits contemplated for retirees prior to 26.2.1970 would be released to the legal heirs of such retirees. It is, therefore apparent, that for the benefits of the aforesaid Government order, the retirees under reference would be deprived of the actual monetary benefit payable to him, from the date of his or her retirement, till 30.11.1991 (as arrears of pension under the aforesaid Government orders were payable only with effect from 1.12.1991).

6. The aforesaid R. Narasimachar again assailed the Government order dated 4.12.1991, by contesting the determination of the State Government, in denying to him, the benefit of arrears from the date of his retirement (on 21.11.1969) till 30.11.1991, by filing Writ Petition no. 4038 of 1992 before the High Court. The aforesaid Writ Petition was allowed by the High Court. The High Court held, that monetary benefits could not be denied for the period preceding 1.12.1991. In other words, retirees before 1.12.1991 were held entitled to arrears from the date of their retirement till 30.11.1991. The cut off date (1.12.1991) for extending the benefit of arrears was accordingly set aside.

8. Based on the factual position narrated in the foregoing paragraphs, it clearly emerges, that ‘dearness allowance’ was taken as ‘dearness pay’ for employees retiring from government service, at all times, without any interruption, for the computation of retiral benefits including pension. The aforesaid narration also reveals, that the component of ‘dearness allowance’ to be treated as ‘dearness pay’ for being taken into consideration for calculating pension, was determined by the State Government, through Government orders issued from time to time. The narration recorded hereinabove pertains to employees whose date of retirement preceded 1.10.1970.

9. The factual position being recorded hereinafter relates to the period after 1.10.1970.

10. On 6.2.1974, a Dearness Allowance Committee was constituted, to inter alia make recommendations, of allowances which should be treated as a component of wages, for calculating pension of retired/retiring employees. On 7.7.1974, the Dearness Allowance Committee inter alia recommended, that ‘dearness allowance’ be treated as ‘dearness pay’ in full, for computing retiral benefits including pension. Accepting the recommendations of the Dearness Allowance Committee, the Finance Department, issued a Government Order dated 6.2.1975 directing, that ‘dearness allowance’ actually being drawn by employees retiring on or after 1.2.1975 be treated as ‘dearness pay’ for calculating average pay ( by taking not consideration 10 months wages, prior to the date of retirement), for calculating pension, (gratuity and travelling allowance). It would be relevant to mention, that at the aforesaid juncture, employees drawing pay upto Rs.299/-, were entitled to Rs.55/- as ‘dearness allowance’; and those drawing pay at Rs.300/- and above, were entitled to Rs.70/- as ‘dearness allowance’. Accordingly, by the Government Order dated 6.2.1975, the State Government, determined the component of ‘dearness allowance’ (Rs.55/- or Rs.70/-, as the case may be) to be taken into consideration, for calculating pension. The intention of the instant Government Order was, that employees retiring on or after 1.2.1975, should derive full benefit of, the merger of the then existing ‘dearness allowance’ into wages, as ‘dearness pay’ for computing pension. The Government order dated 6.2.1975 permitted employees retiring on or after 1.2.1975, an addition of ‘dearness allowance’ actually being drawn by them, (during the period of ten months, prior to the date of their retirement), by treating the same as ‘dearness pay’, for calculating average wages. The said average wage, would lead to the computation of pension actually payable.

11. K. Venkataraman filed Writ Petition no. 8237 of 1995 before the High Court with a prayer that ‘dearness allowance’ drawn by him for a period of ten months prior to the date of his retirement (on 30.6.1974) be treated as ‘dearness pay’ for calculating his pension. The benefit sought, had been denied because he had retired on 30.6.1974, whereas, the benefit of the Government order dated 6.2.1975 was extended only to such employees who had retired after 1.2.1975. The aforesaid Writ Petition came to be transferred to the Tamil Nadu Administrative Tribunal (hereinafter referred to as, the Administrative Tribunal). Before the Administrative Tribunal, the Writ Petition was renumbered as T.A. 845 of 1991. The Administrative Tribunal, by its order dated 1.4.1993, held that K. Venkataraman was entitled to the benefits extended to other pensioners, irrespective of the fact that he had retired (on 30.6.1974 i.e., prior to the cut off date (1.2.1975).

17. Original Application no. 1919 of 1991 was filed by Ambasamudaram, Taluk Pensioner Associations before the Administrative Tribunal. Likewise, a large number of other Original Applications (including OA no. 4952 of 1992, O.A. no. 2227 of 1992, O.A. no. 4265 of 1992, O.A. no. 4953 of 1992, OA no.2645 of 1994 and OA no.2646 of 1994) were filed before the Administrative Tribunal. Through the aforesaid original applications, the petitioners/applicants assailed the Government Order dated 30.4.1986 (issued in furtherance of the recommendations made by the Fourth Tamil Nadu Pay Commission), as well as, the Government Order dated 9.8.1989 (issued in furtherance of the recommendations made by the Fifty Tamil Nadu Pay Commission). All the aforesaid original applications were disposed of by the Administrative Tribunal vide a common order dated 6.5.1996. The operative part of the order passed by the Administrative Tribunal while disposing of the aforementioned original applications is being extracted hereunder:

19. The aforesaid factual/legal position is a historical narration of the inclusion of ‘dearness allowance’ as ‘dearness pay’ from time to time for computation of pension. What emerges from this narration is, that all pensioners (past, present and future) were equally granted the benefit of ‘dearness allowance’ as ‘dearness pay’ for calculating pension. Whenever a class of pensioners was discriminated against, for computation of pension, on the basis of dearness allowance/ pay judicial intervention restored the equation. The equation was then given effect to by the State Government from time to time. Clearly, judicial intervention repeatedly erased the classifications created between pensioners, on the basis of ‘dearness pay’.

21. The afore-stated challenge to the impugned Government order dated 9.8.1989 was raised before the Administrative Tribunal through an Original Application (O.A. no. 5771 of 2001) by an Association of retired Government employees. The aforesaid Original Application came to be transferred to the High Court, wherein it was renumbered as Writ Petition (T) no. 32045 of 2005. A learned Single Judge of the High Court allowed the aforesaid Writ Petition on 20.4.2006. The learned Single Judge held, that the State Government, in not extending benefits to members of the appellant Association, had discriminated against them. The impugned Government order dated 9.8.1989, to the extent that it did not confer the same benefits (based on the component of ‘dearness allowance’ treated as ‘dearness pay’), for employees who retired on or after 1.6.1988, was held as unsustainable. Writ Petition (T) no. 32045 of 2005 was accordingly allowed.

(iii) In so far as the third cited judgment is concerned, this Court in Amrit Lal Gandhi’s case (supra) examined an issue where, the increased death-cum-retirement gratuity could only be claimed by employees, who had retired after the cut off date (1.4.1995). Death-cum-retirement gratuity is a one time benefit, whereas, pension enures to retired employees for the entire length of their lives. Pension is therefore a continuing benefit. Death-cum-retirement gratuity, is a one time benefit, disbursed in accordance with to the rules prevalent at the time (of retirement). Herein also, the issue under consideration was not different measures for computing, a continuing retiral benefit, based on any cut off date. We are therefore of the view, that the instant judgment is also not relevant for the adjudication of the controversy in hand.

In view of the above, we are satisfied, that none of judgments relied upon by the learned counsel for the respondents, have any bearing to controversy in hand.

34. The instant appeals are accordingly allowed. The impugned order dated 17.12.2007 passed by the High Court is hereby set aside. The impugned Government Order dated 9.8.1989, to the extent that it extends to employees who retire on or after 1.6.1988, a lower component of ‘dearness pay’, as against those who had retired prior to 1.6.1988, is set aside, being violative of Articles 14 and 16 of the Constitution of India.

January 17, 2013.