UNION OF INDIA AND ORS A v.

G. VASUDEVAN PILLAY AND ORS. ETC. ETC .

DECEMBER 8, 1994

[KULDIP SINGH AND B.L. HANSARIA, JJ.] B

Service Law: Central Civil Services (Pension) Rules, 1972

Ex-Servicemen-Re-employment in civil post-Decision of Union of India not to allow Dearness Relief to them-Validity of-Denial of Dearness Relief on family pension on employment of dependents like C widows of ex-servicemen-Whether justified-Reduction of pay equivalent to enhanced pension of re-employed ex-servicemen holding civil posts on 1.1.1986-Held: Arbitrary and void

Constitution of India, 1950:

Articles 14, 16-Ex-Servicemen on re-employment-Fixation of pay- Decision of Union of India-Reduction of pay equivalent to enhanced pension of ex-servicemen holding civil posts on 1.1.1986-Held: classificaiton arbitarary and violative of

In these appeals by special leave, the questions that arose for E consideration were:

(1) Whethere the decision or the Union of India not to allow Dearness Relief (D.R.) on pension to the ex-servicemen on their reemployment in a civil post is in accordance with law or not;

(2) Whether denial of D.R. on family pension on employment of dependents like widows of the ex-servicemen is justified or not; and

(3) reduction of pay equivalent to enhanced pension of those exservicemen who were holding civil posts on 1. 1. 86 following their reemployment, is permissible or not.

On behalf of the appellant, it was contended that in view of what has been stated in clause (ii) of Rule 55-A of the Central Civil Services (Pension)Rules, 1972, as amended in 1991, no dearness relief would be permissible on the pension/family pension to the ex-servicemen on their ~pm~ H

A Alternatively it was contended that there were army instructions

which read with office Memorandum of Ministry of Finance would show that dearness relief on pension could not be paid even to exservicemen on their re-empoyment.

Disposing of the matter, this Court

HELD: 1. The ex-servicemen were rightly debarred from Dearness Relief on their pensions after they got themselves re-employed to any civil post under.the Government oflndia. (410 E)

2. Apart form what has been laid down in clause (ii) of Rule 55-A of the Central Civil Services (Pensions) Rules, 1972 there are materials on record to show that any person, including ex-servicemen, would not be entitled to Dearness Relief on pension on his re-employment to any department/office of the Central Government. [409 G]

3. Even if Dearnes Relief be an integral part of pension, there is no legal inhibition in dis-allowing the same in cases of those pensioners who get themselves re-employed after retirement. This catetgory of pensioners can rightfully be treated differently from those who do not get re-employed; and in the case of the re-employed pensioners it would be permissible in law to deny Dearness Relief on pension inasmuch as the salary to be paid to them on re-employment takes care of erosion in the value of the money because of rise in prices which lay at the back of grant of D.R., as they get Dearness Allowance on their pay which allowance is not avaibale to those who do not get re-employed.

(410 C, DJ

4. In some of the cases, there has been denial .of Dearness Relief on family pension on employment of dependents like widows of the exservicemen. This has to be sustained in view of what has been stated above regarding denial of D.R. on pension on re-employment inasmuch as the official documents referred on that point also mention about denial of D.R. on family pension on employment. The rationale is getting of Dearness Allowance by the dependents on their pay, which is drawn following employment, because of which Dearness Relief on family pension can justly be denied as has been rightly done. [410 F, G]

5. There is no logic and basis for classifying the re-employed persons on the basis of their being on employment on 1.1.86. The decision which held the field before the impugned Memorandum is not taking note of pension while fixing pay of the ex-servicemen on re- H. emplyment, which was based on good reasons, had no good reason for

its reversal, as enhanced pension was not confined to those who were in A employment on 1.1.86. The impugned decision is, therefore, arbitrary and is hit by Articles 14 and 16 of the Constitution, and hence declared void. (411 H, 412 A]

T.S. Thiruvengadam v. Secretary to Govenment of India, (1993] 2 SCC 174, distinguished.· B

CIVIL APPELLATE JURISDICITON: Civil Appeal Nos. 3543-46 of 1990 Etc. Etc.

From the Judgment and Order dated 31.10.89 of the Central Administrative Tribunal in Kerala in T.A.K. No. 404/87 420/87, 17/88 and C 388of1986.

Altaf Ahmed, Additional Solicitor General, K.K. Venugopal, M.N.

Krishnamani, N.N. Goswamy, P.P. Tripathi, K.V. Mohan, AK.Srivastava, B.S.Sehgal, A. Bhattacharjee, S.M. Hooda, B.K. Prasad, Raj Singh, Ms.

Indira Sawhney, Ms. A Katiyar, Ms. Shashi Kiran, Ms. Anjani Ayangri, D C.V.S. Rao, Wasim Qadri, K.M.K. Nair, V. Deepak, G. Prakash, Rajagopalan, Rejith, S. Srinivasan, Ms. Sushma Suri, Ms. Malini Poduyal, S.N. Terdo~ P.Parmeswaran, R. Venkataramani, P. Kesava Pillai, Ms.

Subhashini, V .K. Verma, Anis Ahmed Khan, Sudarsh Menon, Surya Kant, K.K. Mohan, B.S. Gupta, A Bhatacherjee S.R. Setia, N.S. Bisht, Mrs.

Revathy Raghavan, T.V.Ratnam and D.S. Mehta for the appearing parties.

The Jqdgment of the Court was delivered by

HANSARIA, J. This conglomeration of appeals (some of which arise because of leave already granted and some come into existence because of leave being granted) require us to decide three quesitons:

(1) Whether the decision of the Union of India not to allow Dearness Relief (D.R.) on pension to the exserviceman on their re-employment in a civil post is in accordance with law or not;

(2) Whether denial of D.R. on family pension on emplyment of

dependents like widows of the exservicemen is justified or not and G

(3) reduction of pay equivalent to enhanced pension of those exservicemen who were holding ci\'il posts on 01.01.86, following their reemployment, is permissible or not.

We would examine these questions seriatim.

2. Disallowing of D.R. on pension on re-employment.

To answer the above question involved in some of the appeals, the background leading to the aforesaid decision may be briefly noted. To start with there was no provision for payment of D.R. to the pensioners. Various representations were made to the Third Pay Commission seeking some B recommendations in this regard for protecting the pension of the Government employees from erosion on account of possible increases in the cost of living in future. The Commission considered this matter and also the question regarding the manner in which some relief could be provided to the future pensioners. After having noted the various suggestions which the Commission received in reply to its questionnaire, it recommended that C all future pensioners, irrespective of the amount of pension drawn by them, should be given relief @5% of their pension subject to a minimum of Rs. 5 per mensem and maximum of Rs.25. The Commission further recommended that the relief should be given as and when there is a 16point rise in the 12 monthly average of the All India Working Class Consumer Price Index. This recommendation of the Commission was D accepted by the Central Government vide its Office Memorandum of even no. dated 6th April, 1974, making the relief available to those employees belonging to Class II, III and IV, who retired from Services prior to 01.01.73, as well as those who retired afterwards.

3. A decision was, however, taken subsequently not to pay D.R. to re- E employed pensioners. This was made applicable to those ex-servicemen who had come to be reemployed in civil posts. Varous writ petitions and Original Applications were filed in different legal fora of the country, which came to be decided either by unhoding the validity of the decision or by taking a contrary view. The parties who Jost have preferred these appeals.

4. The learned Additional Solicitor General appearing for the Union of India submits that the decision merits our acceptance because of what hi; is been stated in clause (ii) of Rule 55-A of Central Civil Services (Pension)· Rules, 1972, as amended in 1991. We are, however, of the view that the decision cannot be so suported for the reason that the aforesaid Rules have G application to the persons who were members of Central Civil Services.

The ex-servicemen having apparently not been members of such Services, what has been provided in Rule 55-A(ii) cannot be invoked to deny D.R. on pension/family pension to the ex-serviceman on their re-employment.

5. Had the aforesaid been the only provision pressed into service to H deny the D.R. to the ex-serviceman, we would have had no difficulty in

U.O.I. v. G. V. PILLAY [HANSARIA, J.J 409

striking down the decision inasmuch as the ex-servicemen having been A allowed pension and D.R. on it in accordance with the conditions of service governing defence personnel, the provision contained in the aforesaid rule governing service condition of all together different class of servicemen could not have impinged on their right to get D.R. on the pension. Learned Additional Solicitor General, however, advances an alternative submission and the same is that there are even army instructions which, read with B Office Memoranda of Ministry of Finance, will show that Dearness Relief on pension cannot be paid even to ex-servicemen on their re-employment.

As this point could not be brought home to us well when the cases were heard, as relevant army instructions had not been brought on record, we, while reserving the judgment after close of hearing allowed filing of written submissions, which were does subsequently alongwith which large number C of documents were filed to establish the point urged in the Court.

6. A peursal of the documents shows that the Office Memorandum dated 1.8.1975 of the Ministry of Finance, Department of Expenditure, which stated that a re-employed Central Govenment pensior is not eligible to draw any relief during the period of re-employment, was made D applicable by the Ministry of Defence vide letter of even number dated 28.10.1975 to Armed Forces pensioners also. These documents are pages 17 and 18 of the written submission, in which it has also been stated that with formation of the Department of Pension and Pensioner's Welfare under Ministry of Personnel, Public Grievances and Pension, all orders E issued by the Ministry of Finance were made applicable to Armed Forces pensioners as well. A reference has then been made to Office Memorandum dated 22.4.1987 on the subject of grant of Dearness Relief to pensioners on the recommendations of the Fourth Central Commission, sub-para-V of Annexure-1 to which states that Dearness Relief will be suspended when the Central Government pensioner is re-employed in the department/office F of the Central Government.

7. The aforesaid shows that de hors what has been laid down in clause

(ii) of Rule 55-A of the aforesaid Pension Rules, there are materials on records to show that any person, including ex-serviceman, would not be entitiled to Dearness Relief on pension on his re-employment to any G department/office of the Central Government.

8. It has, however, been strenuously contended by learned counsel appearing for the re-employed ex-servicemen that pension being a right (and not a bounty) available to a retired employee as held in Nakara, AIR

(1983) SC 130, and DR being a part of Pension, right to receive the same H

could not have been infringed merely because the incumbent sought reemployment to take care of the hardship which he might have otherwise faced after retirement. To sustain the submission, strength is sought to be derived from the decision of the Kerala High Court in Narayanan v. Union of India, 1994 (1) KLT 897, in which a view has been taken that the DR became an integral part of pension, because of which it could not have been discontinued on re-employment. As against this, the view of the Delhi High Cout in Civil Writ No. 1699of1992 (disposed of on 23.2.1993) is that the DR is different from pension. For the disposal of the present cases it is not necessary to express any opinion on this aspect of the matter inasmuch as, according to us, even if Dearness Relief be an integral part of pension, we do not fmd any legal inhibition in disallowing the same in cases of those pensioners who get themselves re-employed after retirement. In our view this category of pentioners can rightfully be treated differently from those who do not get re-employed; and in the case of the re-employed pensioners it would be permissible in law to deny D.R on pension inasmuch as the salary to be paid to them on re-employment takes care of erosion in the :value of the money because of rise in prices, which lay at the back of grant of D.R., as they get Dearness Allowance on their pay which allowance is not available to those who do not get re-employed.

9. We, therefore, hold that the ex-serviceman were rightly debarred from Dearness Relief on their pensions after they got themselves reemplyed to any civil post under the Government of India

10. Denial of DR on family pension.

In some of the cases, we are concerned with the denial of Dearness Relief on family pension on employment of dependents like widows of the exservicemen. This decision has to be sustained in view of what has been stated above regarding denial of D.R. on pension on re-employment inasmuch as the official documents referred on that point also mention about denial of D.R. on family pension on employment. The rationale of this decision is getting of Dearness Allowance by the dependents on their pay, which is drawn following employment, because of which Dearness Relief on family pension can justly be denied, as has been done.

11. Reduction of enhanced pension from pay of those ex-servicemen who were holding civil posts on 0J,01.86 following their re-employment.

The aforesaid reduction, which is the subject matter of some appeals, is the fall out of Office Memorandum dated 11.9.87 according to which the H pay of the ex-servicemen who were in employment in a civil post as on

01.01.86 following their re-employment, is required to be reduced by an A amount equivalent to the enchanced pension made available pursuant to the report of the Fourth Pay Commission.

12. The ground of attack is that the aforesaid decision violates Articles 14 and 16 of the Constitution inasmuch as there is no rational basis for classifying the employees for the aforesaid purpose on the basis of their B being in employment on 01.01.86. This submission has been advanced because the reduction of the aforesaid nature has not been made in respect of those who have been in employment since 01.01.86 The additional affidavit filed on behalf of respondent no 1 in SLP (C) No. 17456/91 on 25.8.94 contains some names of those who were re-employed after 01.01.86 and are being paid both the revised pay and revised pension. This C factual position has been admitted in the aforesaid written submissions filed on behalfofthe Union oflndia inasmuch as it has been stated in page 9 that the pensioners who are re-employed after 01.01.86 enjoy the benefit of revised pay and also revised pension w.e.f. 01.01.86.

13. Reliance has been placed in support of aforesaid submission on a D two-Judge Bench decision of this Court, to which one of us (Kuldip Singh,.

J) was a party. That decision was in the case of T.S. Thiruvengadam v.

Secretary to Government of India, [1993] 2 SCC 174.

The facts of that case are, however, different inasmuch as there the Memorandum dated June 16, 1967 stating that revised pensionary benefits E would be made available only to those Central Government servants who have been absorbed in public sector undertakings after that date was not found to be constitutional because the very object of bringing to the existence the revised terms and conditions by the Memorandum was to protect the pensionary benefits which the Central Government servants had F earned before their absorption into the public sector undertakings. It was, therefore, held that restricting the applicability of the revised Memorandum only to those who are abosrbed after coming into force of the same would not only defeat the very object and purpose of the Memorandum but would be contrary to fair play and justice also.

14. Despite the aforesaid decision being of no aid in the present cases, we find no logic and basis for classifying the re-employment persons on the basis of their being on employment on 01.01.86. Indeed, no justification has been canvassed before us. The decision which held the field before the impugned Memorandum in not taking note of pension while fixing pay of

the ex-servicemen on re-employment, which was based on good reasons, H

A had no good reason for its reversal, as enhanced pension was not confined to those who were in employment on 01.01.86. The impugned decision is, therefore, arbitrary and is hit by Articles 14 and 16 of the Constitution. We, therefore, cieclare the same as void.

15. Our conclusions on the three questions noted in the opening B paragraph are that denial of Dearness Relief on pension/family pension in cases of those ex-servicemen who got re-employment or whose dependents got employment is legal and just. The decision to reduce the enhanced pension from pay of those ex-servicemen only who were holding civil posts on 01.01.86 following their re-employment is, however, unconstitutional.

16. The appeals are disposed of accordingly. I.A. Nos. 16, 30-46 in appeals (arising out of S.L.P (C) Nos. 1585-95/94) stand disposed of. No order as to costs.

G.N. •