Case: Sitikanatha Mishra Vs. Union Of India

The undisputed facts and legal issues involved in all these cases are as under:The insurance companies, who have been described hereinafter as "the Employers" were in financial difficulties and so as to cut their expenditure, the Employers framed a scheme named "General Insurance Employees Special Voluntary Retirement Scheme, 2004" (hereinafter referred to as "the Scheme"), so as to enable its employees to retire prematurely on certain conditions with some special benefits4. Normally a person gets pension when he retires from service after putting in the period of pensionable service as per his service conditions. All the employees, in the instant case, would be eligible to get pension if they retire from service after putting in 20 years of service5. As stated hereinabove, so as to curtail the expenditure, it was decided to reduce the number of employees and in pursuance of the Scheme, offers were invited from the employees who wanted to opt for voluntary retirement even before completion of the period of normal pensionable service6. As per the provisions of the Scheme, it was open to the employees to opt for retirement even on completion of 10 years of qualifying service, provided they had attained the age of 40 years. The Scheme had a limited duration of 60 days, during which the employees had to decide whether they wanted to opt for the Scheme. The employees opting for retirement under the Scheme were also to be given some additional benefits, namely, payment of 60 days salary for each completed year of their service or salary for the number of months of their remaining service, whichever was less. So far as determination of the amount of pension is concerned, as per the Scheme, five years service was to be notionally added to the service of the retiring employees and on that basis pension was to be paid to them7. In addition to the aforestated benefits, the retiring employees were also to get usual benefits under the provisions of the Payment of Gratuity Act, 1972 and the amount of Provident Fund, which they were otherwise entitled to8. Thus, the employees opting for voluntary retirement under the Scheme were to get benefit of ex gratia amount as well as benefit of additional pension which would result from the addition of the notional five years service9. Several employees took benefit under the Scheme and retired in pursuance of the aforestated Scheme in 200411. The issue involved in all these cases is whether after acceptance of voluntary retirement under the Scheme, such retired employees would be entitled to get benefit of the revision of pay, which was retrospectively given from 1st August, 2002 under the Notification dated 21st December, 2005, which was called the "General Insurance (Rationalisation of Pay Scales and Other Conditions of Officers) Second Amendment, 2005 and hereinafter referred to as "the Notification"12. The Employers denied the benefit of the said Notification or retrospective increase in the salary to the employees who had retired under the Scheme, whereas the said retired employees claimed that they should be given benefit of the retrospective increase in their pay and their pension should be revised because they were in service on 1st August, 2002 and had retired only in or after 200413. The High Court of Gujarat took a view that the employees who had retired under the Scheme were not entitled to any benefit of pay rise under the Notification as they had already retired in 2004 or 2005 and at the time when the salary had been revised, they had already severed the relationship with the Employers and were no more in employment14. On the other hand, the High Court of Himachal Pradesh held that the employees who had retired under the Scheme were entitled to the benefit of pay revision which had taken place by virtue of the Notification and therefore, their pension should be revised after considering revision in their pay.

Court's reasoning:
Under the Scheme, the employees were to get certain special benefits as they were to retire even before completion of the requisite period of service, which would have enabled them to get pension and the employees were also to get some special benefits like ex gratia payment of salary and additional weightage in calculation of pension payable to them33. Upon hearing the learned Counsel and upon going through the judgments rendered by different High Courts and the relevant provisions pertaining to the Scheme and the Notification dated 21st December, 2005, we are of the view that the employees who had taken benefit under the Scheme and had already retired would not be entitled to additional pension due to retrospective increase in pay in pursuance of Notification dated 21st December, 200534. There is no doubt that the Scheme had been framed by the Employers to see that their expenditure in long term is decreased by making one-time payment of additional amount to the employees opting for retirement under the Scheme. Strength of the staff was going to be reduced substantially due to voluntary retirement of several employees and the reduction in the staff was to result in reduction in the burden of salary and establishment expenditure. With the aforestated intention, which had been clearly revealed in the Scheme, the Employers had floated the Scheme and several employees of the Employers had taken due advantage of the Scheme by opting under the Scheme and by taking not only ex gratia payment of salary but also additional pension, which they would not have received otherwise. It is not in dispute that the employees opting for retirement under the Scheme were to get benefit of additional five years of service while calculating the pension. As stated hereinabove, the said benefit was substantial and the said benefit along with benefit of ex gratia payment, tempted number of employees who opted under the Scheme and retired happily after getting all retiral benefits35. Normally, retrospective rise in salary is given to those who are in service at the relevant time or who had retired in normal circumstances. The employees who had opted under the Scheme had not retired as per the normal conditions of service but had retired under the Scheme upon taking some special additional benefits36. It is also pertinent to consider Clause 5(2) of the Scheme, which has been reproduced hereinabove. According to the said clause, ex gratia amount was to be paid to the concerned employees on the date of his/her being relieved and it was clarified that in case of wage revision effected from a date prior to the date on which the said Scheme had been notified in the Official Gazette, the benefit of revised pay for the purpose of payment of ex gratia would be allowed. Meaning thereby, the employees who had opted under the Scheme and retired from service were entitled only to revision of ex gratia amount upon retrospective increase in the salary. Intention of the Employers is clearly revealed from Clause 5(2) of the Scheme. The intention was to give benefit only in relation to ex gratia amount and not in relation to the pension. Had the intention been to give benefit of additional pension also, the said fact would have been incorporated in the aforesaid clause. In normal circumstances when an employee retires from service, his relationship with the employer comes to an end. It is also a well settled legal position that after retirement, normally no disciplinary action can be initiated against the concerned employee. Similarly, the retired employee would not have any right of redetermination of his pension but only in cases where salary is revised with retrospective effect, the retired employee gets the benefit of additional pension and that too in certain cases37. In the instant case, it is crystal clear that the employees had already opted under the Scheme-under a specially made Scheme, which was framed only with an intention to reduce future expenditure of the Employers. If all these benefits are given to the persons who had already opted under the Scheme and had retired, the real purpose with which the Scheme had been framed would be frustrated38. We do not agree with the submission made on behalf of the employees that action of the Employers in not giving pay rise to the employees in pursuance of the Notification is discriminatory in nature. The employees who retired under the Scheme form a separate class of employees who were given many benefits, which are not given to employees retiring in normal course. If they all form a separate class, by no stretch of imagination it can be said that all those who retired under the Scheme and those who retired in normal course, are similarly situated. Thus, in our opinion, there is no violation of Article 14 of the Constitution of India in the instant case39. Similarly, there is no violation of the principle of equal pay for equal work. True, that those who retired under the Scheme did the same work which was being done by those who retired in normal course, but one cannot forget the fact that those who retired under the Scheme got substantially higher retirement benefits. In the circumstances, we do not accept the said submission alsoWe are of the view that an Employer can fix salary for its employees and we do not agree with the submission that the Notification was not issued properly or legally41. In the circumstances, we are of the view that the employees who had opted for retirement under the Scheme would not be entitled to additional pension upon revision of pay effected under the Notification dated 21st December, 2005.