Delhi High Court

Ex-Servicemen Welfare Union And Anr. vs Union Of India And Ors. on 29 January, 2016

Author:
S.Ravindra Bhat

Bench:
S. Ravindra Bhat
,
Deepa Sharma

* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 28.10.2015
Pronounced on: 29.01.2016

+ W.P.(C) 1335/2012

EX-SERVICEMEN WELFARE UNION AND ANR. ..... Petitioners
Through: Mr. Karan Singh Bhati with Mr. Dilip
Kumar, Advocates.

Versus

UNION OF INDIA & ORS. ..... Respondent
Through: Ms. Barkha Babbar with Ms. Dipanjali
Tyagi, Advocates.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MS. JUSTICE DEEPA SHARMA

MR. JUSTICE S. RAVINDRA BHAT

%
1. In this petition, the grievance urged is that of cut-off date (of
01.01.2009) envisioned by the order of the Cabinet Secretariat, Central
Government dated 16.10.2009 granting pension and pensionary benefits to
Special Frontier Force "SFF" personnel "at par with the Indian Army Group
'Y' PBORs". They further seek consequential directions that pre 01.01.2009
veterans/retirees of the SFF should be granted service pension in accordance
with the said order of 16.10.2009, disregarding the cut-off date. In short, the
petitioners' claim that by imposing the cut-off date for the reimbursement of
pensionary and other retirement benefits, the Central Government has
discriminated against the pre 01.01.2009 retirees.

W.P.(C) 1335/2012 Page 1
2. SFF was created in the wake of the Chinese aggression in 1962 and
was initially comprised only of Tibetans. Later Nepali Gurkhas too were
recruited in the SFF - from 1965. The SFF was not treated as part of the
Indian Army. In August 1971, for the first time, the Central Government
provided terminal benefits to members of the Force introducing gratuity @
one month's salary for each completed year of service to those serving for a
minimum of two years, by Memorandum dated 26.08.1971. By a
subsequent policy - embodied in the Cabinet Secretariat letter dated
20.11.1985, the Central Government enhanced the terminal benefits to 45%
of the commuted value of service pension admissible to Indian Army
personnel, to members of the SFF who completed at least 20 years service.
The relevant extract of the said order reads as follows: -

"......the President is pleased to sanction in addition to the
retirement benefits indicated in this Secretariat letter dated 26 th
August, 1971, a lumpsum payment to the leaders/trainees of SFF,
who retire rendering 20 years' or more of service equivalent to
the commuted value of 45% of service pension admissible to the
Army personnel. The amount of service pension will be as
specified in Annexure-II to Ministry of Defence letter
No.B/38069/AG/PS4 (a)/222/C/D (Pen/Services) dated 22nd
January, 1985, and Annexure IV to Ministry of Defence letter
No.B/33070/AG/PS4(a)/513/C/D (pen/service) dated 22nd
February 1985 and as may be revised from time to time in
respect of personnel shown against serial No.3 to 9 and serial
No.1 and 2 detailed below respectively. For this purpose, the
SFF personnel will be treated as equivalent to the Army rank
indicated in column 3 of the table below:
Sl.No. SFF Rank Army Rank
1. Rapon Hon. Captain

W.P.(C) 1335/2012 Page 2
2. Rupon Hon. Lt.

3. Pol. Leader Sub. Major (Group-D)

4. Asstt. Po. Leader/Coy. Leader Subedar (Group-D)

5. Dy. Leader Nb. Subedar (Group-D

6. Asstt. Leader Class.I Havildar (Group-D)

7. Asstt. Leader Class-II Naik (Group-D)

8. Asstt. Leader Class-III L/Naik (Group-D)

9. Trainees Sepoy (Group-D)

10. Tibetan Female Nursing Assistant
Male Nursing Assistants
(Group 'C')

*Added vide Cabinet Sectt Order
No.16/12/93-EA-II dated 22 Nov 94
An Illustration, how to work out the lumpsum payment on
pension commutation formula is enclosed for guidance.
The expenditure involved in payment of the lumpsum amount as
per para I above, will be debited to the Major Head "266 -
Pension and other retirement benefits commuted value of pension
"whereas the expenditure on payment of service gratuity in terms
of this Secretariat letter dated 26th August, 1971, will be
classified to the same Major Head, i.e., "266 - Pension and
other retirement benefits - Gratuities."
3. These orders will take effect from 6th of May,
1985."

W.P.(C) 1335/2012 Page 3
3. By another order - dated 23.05.1996 - the Central Government acting
through the Cabinet Secretariat enhanced the lump sum pensionary benefits
by including dearness allowance and interim relief components for the
purpose of calculation of the commuted value admissible at that time (i.e. at
the time of discharge of the SFF personnel). Furthermore, the said order
also sanctioned disability benefits to personnel for war injuries and for
injuries attributable to force service in the form of lump sum grants along
with death benefits to the next of kin. The relevant part of the said order
reads as follows:-

"2. The President is pleased to sanction Death Benefits to the
Next of Kin of SFF personnel, who die in service, and whose
death is attributable to service, in terms of Government of India,
Ministry of Defence letter No.1(5)/87/9/(Pension/Service) dated
30 October, 1987. Such benefits will be in the form of a lumpsum
grant worked out as under: -
(a) Death in Action: - Special Liberalized Family Award,
equivalent to the commuted value of Emoluments last drawn X
Purchase Value X 12.
(b) Death Attributable to Force Service: - Special Family
Award, equivalent to the commuted value of 50% of Emoluments
last drawn X Purchase Value X 12.
Note: - Emoluments as mentioned in (a) and (b) above will
include Basic Pay, Dearness Allowance and any interim relief
that may have been sanctioned by the govt., at that particular
time.
3. Consequent to the revision of scales of pay after the
recommendations of the Fifth Central Pay commission, the death
benefits described above shall be based on basic pay only.
4. The expenditure involved will be met out of the funds

W.P.(C) 1335/2012 Page 4
placed at the disposal of DACS, New Delhi and debitable to code
head No.1 Salareis."
4. It is in this background that the impugned order dated 16.10.2009 was
issued. The factual developments culminated into issuance of the impugned
order are best described in the Union of India's (hereafter referred to as "the
Union") counter affidavit. Relevant part of which is extracted below: -

"4. That acknowledging the outstanding contribution made
by the Force Personnel, the matter was taken up afresh with the
Cabinet Secretariat vide this office UO dated 27.04.2006 for
authorizing pensionary benefits to force personnel at par with
that of personnel of Indian Army. After protracted
correspondence, finally, the Cabinet Secretariat vide their Order
dated 16.10.2009 agreed to provide pensionary and other
benefits to force Personnel Below Officers Rank (PBOR) as
applicable to corresponding ranks of Indian Army, Group 'Y'
PBOR with effect from the date 01.01.2009. A copy of the Order
dated 16.10.2009 is annexed as Annexure P-4 to the Writ
Petition and is at page 32 of the paperbook.
5. That prior to 01.01.2009 Force Personnel were getting
lump sum terminal benefits i.e. gratuity and lump sum grant @
45% of commuted value of service pension admissible to Indian
Army personnel at the time of their discharge/retirement from
service. That normally such terminal financial benefits are
granted prospectively and not retrospectively unless the
retrospective grant is specifically mentioned in the Order. There
is no scope for making departure from this well settled principle
which has been the subject matter of numerous pronouncements
by the Hon'ble Supreme Court."
5. The impugned order extends complete parity with Indian Army
Group 'Y' personnel retiring after 20 years and to the extent relevant is
reproduced below: -

"16.10.2009

W.P.(C) 1335/2012 Page 5
ORDER

Subject: Extension of benefits to SFF-PBORs.

Sanction of the President is hereby accorded to extend the
following benefits to SFF PBOR (Leaders and Trainees) at par
with the Indian Army Group 'Y' PBORs.

(a) Grant of pension and other pensionary benefits of SFF
PBORs (Leaders/Trainees) as applicable to corresponding ranks
of Indian Army Group 'Y' PBORs.

b) Leave Encashment.
(c) Composite Transfer Grant.
(d) Leave Travel Concession.
(e) Special increment for opting small family norms.
(f) Transport Allowance.
(g) Compensation in lieu of Quarter.
(h) Children Education Allowance.
(i) Instructional Allowance.

(j) Parity in pay and allowances (including annual
increment) between SFF PBORs and Indian Army Group 'Y'
PBORs except grant of Military Service Pay.

2. The above benefits will be revised automatically as and
when these benefits are revised by the Ministry of Defence in
respect of Indian Army PBORs.

3. These orders will be applicable w.e.f. 01st January, 2009
to SFF PBORs. This supersedes earlier orders issued on the
above benefits in respect of SFF PBORs.

4. The expenditure involved will be met out of the funds
place at the disposal of Director of Accounts, Cabinet Secretariat
and debited to Head No.01-Salareis and 2071 - ORB -

Pensionary Benefits.

5. This has the approval of the Hon'ble Prime Minister vide
PMO ID No.860/24/P/4/2009-Pol dated 21st September, 2009."

Arguments on behalf of the petitioners

W.P.(C) 1335/2012 Page 6

6. Mr. Karan Singh Bhati, learned counsel reiterates the pleadings in the
petition and urges that the service rendered by SFF personnel is no less than
crucial for maintaining the territorial integrity and sovereignty of India than
that of Indian Army personnel. It was submitted that the SFF was created
keeping in mind the distinction between the Indian nationals and others and
the need to include the latter as members of the fighting force to guard the
nation's territories given their special physical attributes, their habits and
their ability to survive in very high altitude and extreme climate. In all
senses, the SFF is a military establishment and always functioned as such.
The organizations of Units of SFF are identical to that of Army Units. All
SFF personnel of Nepali origin who are members of the petitioners' Union
were made to understand that they would be part of the Indian Army like the
Nepali origin brethren. They participated in several operations. Though
their terms and conditions were initially unclear, the 24.12.1985 order
(hereafter referred to as "1985 order") made it clear that they would be
given retirement benefits and allowed to commute the value of 45% of the
service pension admissible to Indian Army personnel. Their equivalence
vis-à-vis Army ranks were also indicated in the said 1985 order. Learned
counsel also referred to the subsequent revision whereby the dearness
allowance, interim relief and disability benefits were spelt out - emphasizing
that these were in line with the benefits which were made available to the
Indian Army personnel.

7. It is submitted that between 1986 and 2009, former SFF personnel
submitted several representations seeking service pension and for treating
them at par with Army personnel. The need to do so was acknowledged by

W.P.(C) 1335/2012 Page 7
the impugned order whereby complete party with Indian Army personnel
was granted. At the same time, however, the Central Government imposed
the cut-off date of 01.01.2009 indicating that those discharged or retiring
from SFF after the said date only would be entitled to full pensionary
benefits at par in all respects with Indian Army retired personnel.

8. It is argued that the petitioners submitted a detailed representation
pursuant to a previous litigation before this Court (W.P.(C) 8273/2003
which was disposed of on 26.04.2011). They had clearly articulated the
demand for parity with SFF personnel who retired after 01.01.2009.
However, this was rejected by the order-dated 08.12.2011. The said letter
merely outlines what SFF personnel retiring prior to 01.01.2009 were given
and stated that improved terms and conditions with consequential benefits
"is an ongoing process and cannot be applied with retrospective effect".

9. Learned counsel relies upon the decisions reported as
D.S.Nakara and
Ors. v. Union of India1
;
K.J.S. Buttar v. Union of India and Anr2
;
Union of
India and Anr. v. Deoki Nandan Aggarwal3
;
State of Punjab v. Justice S.S.
Devan,4
and
Union of India and Anr. v. S.P.S. Vains (Retd
.) and Ors.5

The Union's contentions
(1983) 1 SCC 305;
(2011) 11 SCC 429
1992 Supp. (1) SCC 323
(1997) 4 SCC 569
2008 (9) SCC 125.

W.P.(C) 1335/2012 Page 8

10. The Union in its counter affidavit urges, and its counsel Ms. Barkha
Babbar argues- that the Central Government had approved pension to SFF
personnel who retired on or after 01.01.2009 based upon recommendations
of Committee of Secretaries after due deliberations. It is further submitted
that the request of the SFF personnel for grant of pension benefits was
projected to the Government during 1993-94 but was not acceded to at that
time. The case was again taken up on December 2008. These
recommendations were approved subsequently. It is argued that
improvement of terms and conditions- with consequential benefits, are an
ongoing process and that those retiring earlier cannot insisted upon the
additional benefits given to those who retire later. It is submitted, therefore,
that SFF personnel fall in a separate class and cannot expect the grant of
pensionary benefits at par with those retiring after 01.01.2009. The SFF
personnel retiring prior to that date were given adequate financial benefits in
the shape of lump sum pension benefits as full compensation, i.e., (i) 45% of
commuted value of service being as admissible to Army personnel with
dearness allowance on it and (ii) retirement gratuity @ one month's pay for
each completed year of service as compared which was higher than what is
ordinarily given to the Central Government employee, i.e., 15 days pay for
every completed year of service with a cap of 16½ months.

11. It is further submitted that the action of the Government in limiting
the said benefits to Government Employees who retired on or after
01.01.2009 due to financial constraints is neither arbitrary nor irrational nor
violates
Article 14
of the Constitution of India. The Supreme Court has held
in several judgments that financial constraint was a valid ground for fixation

W.P.(C) 1335/2012 Page 9
of cut-off date for grant of pension. That
Article 14
does not prohibit
reasonable classification, which is based on an intelligible differentia having
a rational relation to the object sought to be achieved. That
Article 14
of the
Constitution does not take away from the state or its instrumentality the
power of classification, which to some degree is bound to produce some
inequality.

12. It is further submitted that the SFF personnel are not equated with the
Army personnel as far as their pay and allowances, pensionary benefits and
other facilities are concerned. SFF personnel were aware of this at the time
of recruitment and had even signed a certificate to this effect at the time of
joining the service. The Union highlights that there was no parity in pay and
allowances between the Indian Army personnel and SFF personnel. SFF
personnel were brought at par in pay and allowances and pension with the
personnel of the Indian Army only with effect from 01.01.2009. Earlier they
were not entitled to even annual increments but were given biennial
increments instead of annual increments prior to 01.01.2009.

13. It is submitted that up to 31.12.2008 approximately 5727 personnel
were discharged from the SFF who had rendered more than 15 years of
service in SFF since its raising date. The Union also highlights the
following:

(a) Retired SFF Force personnel have been paid lump sum
terminal gratuity at the rate of one month's pay for each completed
years of service subject to the condition that they must have put in a
minimum of 2 years service in SFF. The maximum gratuity is
admissible for 16½ months only (i.e. at the rate of one fourth of

W.P.(C) 1335/2012 Page 10
emoluments for each completed six months period of qualifying
service) to the Force personnel retired on or after 01.01.2009.

(b) Such retired SFF Force personnel have also been paid lump
sum terminal benefits equivalent to the commuted value of 45% of
service pension as admissible to the Army personnel who retired after
rendering 20 years or more of service from 6th May 1985.

(c) From 23.05.1996, DA/IR was also admissible while calculating
the commuted value of pension given to the SFF personnel.

(d) Disability benefits were payable in the forms of lump sum grant
at the rate of commuted value of 50% of the emoluments last drawn
plus full disability element x purchase value x 12 in the case of War
Injury and commuted value of 45% of pension or service element plus
45% disability element x purchase value x 12 in the case of Disability
Attributable.

(e) In the case of death, of SFF Personnel their families/NOK had
also been paid death benefits in the form of lump sum benefits which
are as under: -

i. (i) Death in Action: - Special Liberalized Family Award,
Equivalent to the commuted value of Emoluments last drawn
x Purchase Value x 12.

ii. (ii) Death Attributable to Force Service: - Special Family
Award, equivalent to the commuted value of 50% of
Emoluments last drawn x Purchase Value x 12.

14. It is lastly argued that the provision of cut-off date cannot be termed
unreasonable or arbitrary. Learned counsel submits that in a number of

W.P.(C) 1335/2012 Page 11
cases it was ruled that fresh financial benefits conferred on the basis of
assessments of financial outlay from a given date taking into consideration
all relevant factors would per se not be arbitrary. Learned counsel relies
upon the decision reported as
Indian Ex-Services League & Ors. v. Union of
India6
;
Union of India & Ors. v. Lt. Mrs. E. Iacats7
;
State of Punjab v. Amar
Nath Goyal & Ors8
;
P.K.Kapur v. Union of India9
;
Govt. of A.P. v. N.
Subbarayudu & Ors10
and
Union of India v. N.K. Narikar (Civil Appeal
Nos.8433-8434
of 2009, decided on 24.05.2012).

Analysis & Conclusions

15. The foregoing discussion reveals uncontroverted facts. The petitioners
had served for varying periods for the Indian Army. They were not Army
regulars; nor are they Indian nationals. Yet, they stood at the border,
shoulder to shoulder with Indian Army personnel, to patrol and defend our
borders. The Indian Union gave them grudging and incremental recognition
for these services. The first time, on 26.08.1971 terminal benefit, restricted
to gratuity of one month for each completed year of service (subject to two
years' minimum service) was provided for. The order of 20.11.1985 stated
that the leaders/trainees of SFF, who retire rendering 20 years' or more of
(1991) 2 SCC 104
(1997) 7 SCC 334
(2005) 6 SCC 754
(2007) 9 SCC 425
(2008) 14 SCC 702

W.P.(C) 1335/2012 Page 12
service would be eligible for a lump sum payment equivalent, to the
commuted value of 45% of the service pension admissible to the Army
personnel. The amount of service pension was specified in Annexure-II to
Ministry of Defence letter dated 22nd January, 1985, and Annexure IV to
Ministry of Defence letter dated 22nd February 1985 "and as may be revised
from time to time". Those personnel entitled to these benefits were shown in
the said circular of 20.11.1985. This order also stated that "For this
purpose, the SFF personnel will be treated as equivalent to the Army rank
indicated in column 3 of the table below.." Thus, parity with Army
personnel in the various ranks provided for, was clearly spelt out. By the
subsequent order of 23.05.1996, - the Central Government increased the
lump sum pensionary benefits. It included dearness allowance and interim
relief components for the purpose of calculation of the commuted value
admissible at that time (i.e. at the time of discharge of the SFF personnel).
The said order furthermore, sanctioned disability benefits to personnel for
war injuries and for injuries attributable to force service in the form of lump
sum grants along with death benefits to the next of kin. Repeated
representations were apparently made for parity with Army personnel. It
was thereafter that the impugned order was issued. The said impugned order
significantly brought about parity with Army personnel. It permitted, inter
alia:

"Grant of pension and other pensionary benefits of SFF PBORs
(Leaders/Trainees) as applicable to corresponding ranks of
Indian Army Group 'Y' PBORs."

Other benefits and allowances too, were granted. However, the operation of
this parity was made effective from 01.01.2009. The petitioners complain of

W.P.(C) 1335/2012 Page 13
discrimination stating that as pre 2009 retirees, they are no different from
those entitled to the benefits of the impugned order. They submit that their
real claim is not with Army personnel; so long as differentiation with the
latter existed, they had no complaint. However, the establishment of
complete parity between Army personnel and these class of individuals who
performed similar functions in the past, meant that they too had to be given
identical benefits. In other words, the date based classification according to
the petitioners, is impermissible and undermines the mandate of
Article 14
,
the equality principle and the equal protection clause.

16. The respondents counter the claim stating that those who retired in the
past and secured benefits based on existing instructions and terms cannot be
equated with those retiring after 01.01.2009. They submit that the scheme
made effective from such date really is a new one and not an extension of
the existing one. If the scheme is a new one, the question of the State's
liability to include past employees does not arise. They also submit that
increased financial burden is a relevant consideration for the Union when it
designated a particular date for the operation of the impugned order and
scheme. It was lastly contended that the parity with Army personnel is not
an apt analogy because those who retired earlier were given lump sum
amounts vastly higher than the gratuity entitlement of army personnel.

17. Date based classifications have engaged considerable judicial
attention in the past three decades.
In the first of its series,
D.R. Nim v
Union of India11
the Supreme Court held that "the Central Government
AIR 1967 SC 1301

W.P.(C) 1335/2012 Page 14
cannot pick out a date from a hat and that is what it seems to have done in
this case-and say that a period prior to that date would not be deemed to be
approved.." The context of that decision was the period of service, which
the petitioner had served, but was ignored by the Central Government,
without any reason.

18. In D.S. Nakara12 the Supreme Court held that a date based
classification case which discriminated between two sets of pensioners
depending upon when they retired from service- ruled, through a
Constitution Bench, that a classification must be founded on an intelligible
differentia which should have a rational relation to the object sought to be
achieved. The Court has held that though a scheme can be prospective, the
benefit of liberalized pension scheme should be applied equally to all and
they are required to be paid the upward revision commencing from the
specified date. It was stated that:

"42. If it appears to be undisputable, as it does to us that the
pensioners for the purpose of pension benefits form a class,
would its upward revision permit a homogeneous class to be
divided by arbitrarily fixing an eligibility criteria unrelated to
purpose of revision, and would such classification be founded on
some rational principle? The classification has to be based, as is
well settled, on some rational principle and the rational principle
must have nexus to the objects sought to be achieved. We have
set out the objects underlying the payment of pension. If the State
considered it necessary to liberalise the pension scheme, we find
no rational principle behind it for granting these benefits only to
those who retired subsequent to that date simultaneously denying
the same to those who retired prior to that date.
foot note1 supra

W.P.(C) 1335/2012 Page 15

If the liberalisation was considered necessary for augmenting
social security in old age to government servants then those who,
retired earlier cannot be worst off than those who retire later.
Therefore, this division which classified pensioners into two
classes is not based on any rational principle and if the rational
principle is the one of dividing pensioners with a view to giving
something more to persons otherwise equally placed, it would be
discriminatory. To illustrate, take two persons, one retired just a
day prior and another a day just succeeding the specified date.
Both were in the same pay bracket, the average emolument was
the same and both had put in equal number of years of service.

How does a fortuitous circumstance of retiring a day earlier or a
day later will permit totally unequal treatment in the matter of
pension? One retiring a day earlier will have to be subject to
ceiling of Rs 8100 p.a. and average emolument to be worked out
on 36 months' salary while the other will have a ceiling of Rs
12,000 p.a. and average emolument will be computed on the
basis of last 10 months' average. The artificial division stares
into face and is unrelated to any principle and whatever
principle, if there be any, has absolutely no nexus to the objects
sought to be achieved by liberalising the pension scheme.

In fact this arbitrary division has not only no nexus to the
liberalised pension scheme but it is counter-productive and runs
counter to the whole gamut of pension scheme. The equal
treatment guaranteed in
Article 14
is wholly violated inasmuch
as the pension rules being statutory in character, since the
specified date, the rules accord differential and discriminatory
treatment to equals in the matter of commutation of pension. A
48 hours' difference in matter of retirement would have a
traumatic effect. Division is thus both arbitrary and
unprincipled. Therefore, the classification does not stand the test
of
Article 14.
43. Further the classification is wholly arbitrary
because we do not find a single acceptable or persuasive reason
for this division. This arbitrary action violated the guarantee of

Article 14...."

W.P.(C) 1335/2012 Page 16

19.
In
Dhan Raj & Ors. v. State of J & K & Ors13
, the appellants who had
retired from the services of their employer Corporation prior to 09.06.1981
claimed entitlement to pensionary benefits by virtue of a Government Order
dated 03.10.1986. The State's contention that the benefit could not be
extended to the appellants was rejected. It was held that:-

"14. Even otherwise, we do not find any justifiable criteria for
the State Government to draw the line between those who retired
earlier and those who retired after 9-6-1981. Both such set of
employees were equally placed in the same
Undertaking/Corporation temporary in character and all having
served in the organisations for more than 20 years. In fact, the
appellants have served with the Government for more than 30 to
40 years. The person serving for such a long period earns his
legitimate expectation. It is not something which he seeks with a
begging bowl.

It is inappropriate for a State Government to take up a stand to
get its own order to be held illegal, by giving restrictive
interpretation to deny benefit to its own employees who had
worked for such a long period.
In fact, in the Constitution Bench
decision of this Court in
D.S. Nakara v. Union of India
[1983 (1)
SCC 305] this Court held that criterion of date of enforcement of
the revised scheme entitling benefits of the revision to those
retiring after specified date while depriving the benefits to those
retiring prior to that date was violative of
Article 14.

Even otherwise, while considering the question of grant of
pensionary benefits the State has to act to reach the
constitutional goal of setting up a socialist State as stated and the
assurance as given in the Directive Principles of State Policy. A
pension is a part and parcel of that goal, which secures to a
person serving with the State after retirement of his livelihood.
To deny such a right to such a person, without any sound
[1998 (4) SCC 30]

W.P.(C) 1335/2012 Page 17
reasoning or any justifiable differentia would be against the
spirit of the Constitution. We find in the present case the stand
taken by the State Government to be contrary to the said spirit. In
the aforesaid D.S. Nakara this Court has very clearly recorded
the following:

"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."
20.
In
V. Kasturi v. Managing Director, State Bank of India & Anr.
the
Supreme Court observed as follows:

"22. If the person retiring is eligible for pension at the time of his
retirement and if he survives till the time of subsequent
amendment of the relevant pension scheme, he would become
eligible to get enhanced pension or would become eligible to get
more pension as per the new formula of computation of pension
subsequently brought into force, he would be entitled to get the
benefit of the amended pension provision from the date of such
order as he would be a member of the very same class of
pensioners when the additional benefit is being conferred on all
of them.
1998 (8) SCC 30

W.P.(C) 1335/2012 Page 18

In such a situation, the additional benefit available to the same
class of pensioners cannot be denied to him on the ground that
he had retired prior to the date on which the aforesaid additional
benefit was conferred on all the members of the same class of
pensioners who had survived by the time the scheme granting
additional benefit to these pensioners came into force. The line of
decisions tracing their roots to the ratio of
Nakara
case [1983
(1) SCC 305] would cover this category of cases".

21. The next case is
All India Reserve Bank Retired Officers Assn. v.
Union of India15
the Court observed:

"It must be realised that in the case of an employee governed by
the CPF (Contributory Provident Fund) Scheme his relations
with the employer come to an end on his retirement and receipt
of the CPF amount but in the case of an employee governed
under the pension scheme his relations with the employer merely
undergo a change but do not snap altogether.

That is the reason why this Court in
Nakara
case drew a
distinction between liberalisation of an existing benefit and
introduction of a totally new scheme. In the case of pensioners it
is necessary to revise the pension periodically as the continuous
fall in the rupee value and the rise in prices of essential
commodities necessitates an adjustment of the pension amount
but that is not the case of employees governed under the CPF
Scheme, since they had received the lump sum payment which
they were at liberty to invest in a manner that would yield
optimum return which would take care of the inflationary trends.

This distinction between those belonging to the pension scheme
and those belonging to the CPF Scheme has been rightly
emphasised by this Court in Krishena case [1990 (4) SCC 207]".

22.
State Bank of India v. L. Kannaiah & Ors16
, was with respect to the
fixation of cut-off date for applicability of a pension scheme. The minimum
1992 Supp. (1) SCC 664

W.P.(C) 1335/2012 Page 19
service prescribed was 20 years and cut-off date for such induction was
fixed as 01.01.1965. The Supreme Court held that minimum qualifying
service being the essential consideration, there was no rationale to exclude
employees confirmed earlier who had served more than 20 years. The Court
observed:-

"6. Para 5 of the circular stipulated that the age-limit (viz. not
being over 35 years) for admission to Pension Fund shall
continue. Thus the pensioned ex-service personnel were admitted
to pensionary benefits with effect from 1-1-1965 subject to the
restriction of the age-limit of 35 years (which was later on
enhanced to 38 years) on that date. As the date of confirmation of
the respondents was much earlier to 1-1-1965, the crucial date
for admission to the Pension Fund would be 1-1-1965.

On that date, the confirmed employee of the Bank should not
have exceeded 35 years of age. That is the combined effect of
Staff Circular No. 18 dated 8-4-1974 read with the Pension Fund
Rules referred to supra. The reason for prescribing the maximum
age-limit of 35 or 38, as the case may be, for the purpose of
induction into Pension Fund appears to be that the employee
would be able to render minimum service of 20 years as
contemplated by Rule 22 of the Pension Fund Rules. However,
there does not appear to be any rationale or discernible basis for
fixing the cut-off date as 1-1-1965, notwithstanding their earlier
confirmation in bank service.

True, a new benefit has been conferred on the ex-servicemen and
therefore, a cut-off date could be fixed for extending this new
benefit, without offending the ratio of the decision in
D.S. Nakara
v. Union of India
[1983 (1) SCC 305] but, there could be no
arbitrariness or irrationality in fixing such date. Minimum
qualifying service being the essential consideration, even
according to the Bank, there is no reason why the ex-servicemen
2003 (10) SCC 499

W.P.(C) 1335/2012 Page 20
like the respondents, who from the date of their confirmation had
put in more than twenty years of service, even taking the
retirement age as 58, should be excluded.

No reason is forthcoming in the counter-affidavit filed by the
Bank for choosing the said date. When it is decided to extend the
pensionary benefits to ex-servicemen drawing pension, the denial
of the benefit to some of the serving employees should be based
on rational and intelligible criterion. In substance, that is the
view taken by the High Court and we see no reason to differ with
that view".

23. SPS Vains17, considered
Nakara
(supra) and applied its ratio. It was
held that there could not be disparity of pension within the same rank. It was
held that:-

"29. The Constitution Bench (in D.S. Nakara [1983 (1) SCC
305]) has discussed in detail the objects of granting pension and
we need not, therefore, dilate any further on the said subject, but
the decision in the aforesaid case has been consistently referred
to in various subsequent judgments of this Court, to which we
need not refer. In fact, all the relevant judgments delivered on the
subject prior to the decision of the Constitution Bench have been
considered and dealt with in detail in the aforesaid case. The
directions ultimately given by the Constitution Bench in the said
case in order to resolve the dispute which had arisen, is of
relevance to resolve the dispute in this case also.

30. However, before we give such directions we must also
observe that the submissions advanced on behalf of the Union of
India cannot be accepted in view of the decision in
D.S. Nakara

case. The object sought to be achieved was not to create a class
within a class, but to ensure that the benefits of pension were
made available to all persons of the same class equally. To hold
otherwise would cause violence to the provisions of
Article 14
of
footnote 5 supra.

W.P.(C) 1335/2012 Page 21
the Constitution. It could not also have been the intention of the
authorities to equate the pension payable to officers of two
different ranks by resorting to the step-up principle envisaged in
the fundamental rules in a manner where the other officers
belonging to the same cadre would be receiving a higher
pension".

24. K.J.S. Buttar18, was a case where new retirement benefits were
introduced and measurement to calculate disability was changed pursuant to
recommendation made by the Fifth Pay Commission and same was
implemented with effect from 01.01.1996. The appellant was denied
retirement benefits on account of his retirement in 1979. The Court held the
treatment as discriminatory and highlighted that restriction of benefit to only
officers who were invalided out of service after 1.1.1996 violated
Article 14

of the Constitution and was unsustainable. In the case of liberalization of
existing scheme all pensioners are to be treated equally. The appellant was
entitled to all retirement benefits with effect from 1.1.1996. The Court stated
that:-

"11. In our opinion the appellant was entitled to the benefit of
Para 7.2 of the Instructions dated 31-1-2001 according to which
where the disability is assessed between 50% and 75% then the
same should be treated as 75%, and it makes no difference
whether he was invalided from service before or after 1-1-1996.
Hence the appellant was entitled to the said benefits with arrears
from 1-1-1996, and interest at 8% per annum on the same.

12. It may be mentioned that the Government of India, Ministry
of Defence had been granting war injury pension to pre-1996
retirees also in terms of Para 10.1 of the Ministry's Letter No.
1(5)/87/D(Pen-Ser) dated 30-10-1987 (p. 59, Para 8). The mode
Footnote 2 supra

W.P.(C) 1335/2012 Page 22
of calculation, however, was changed by the Notification dated
31-1-2001 which was restricted to post-1996 retirees. The
appellant, therefore, was entitled to the war injury pension even
prior to 1-1-1996 and especially in view of the Instructions dated
31-1-2001 issued by the Government of India. The said
instruction was initially for persons retiring after 1-1-1996 but
later on by virtue of the subsequent Notifications dated 16-5-
2001 it was extended to pre-1996 retirees also on rationalisation
of the scheme".

25. Kallakkurichi Taluk Retired Official Association, Tamil Nadu, etc. v
State of Tamil Nadu19 was a case where the Supreme Court had to consider
challenge to a dearness allowance component fixation formula, which had
the effect of lowering the pension of those retiring after 1.06.1988. It was
held that:

"31. Having given our thoughtful consideration to the
controversy in hand, it is not possible for us to find a valid
justification for the State Government to have classified
pensioners similarly situated as the appellants herein (who had
retired after 1.6.1988), from those who had retired prior thereto.
Inflation, in case of all such pensioners, whether retired prior to
1.6.1988 or thereafter, would have had the same effect on all of
them. The purpose of adding the component of 'dearness pay' to
wages for calculating pension is to offset the effect of inflation. In
our considered view, therefore, the instant classification made by
the State Government in the impugned Government order dated
9.8.1989 placing employees who had retired after 1.6.1988 at a
disadvantage, vis-à-vis the employees who retired prior thereto,
by allowing them a lower component of 'dearness pay', is clearly
arbitrary and discriminatory, and as such, is liable to be set
aside, as violative of
Articles 14
and
of the Constitution of
India."
2013 (4) SCR 883

W.P.(C) 1335/2012 Page 23
Thus, the general rule is that if an existing pension scheme is improved or
modified, all those to whom the scheme applied (regardless of their date of
superannuation) would be entitled to the benefit.

26. The respondents relied on
Govt. of A.P. v. N. Subbarayudu
2008 (14)
SCC 702. The Supreme Court held, in that decision, that:

"There may be various considerations in the mind of the
executive authorities due to which a particular cut off date has
been fixed. These considerations can be financial, administrative
or other considerations. The Court must exercise judicial
restraint and must ordinarily leave it to the executive authorities
to fix the cut off date. The Government must be left with some
leeway and free play at the joints in this connection.
In fact several decisions of this Court have gone to the extent of
saying that the choice of a cut off date cannot be dubbed as
arbitrary even if no particular reason is given for the same in the
counter affidavit filed by the Government, (unless it is shown to
be totally capricious or whimsical)"

State of Punjab Vs. Amar Nath Goel20
had confined pension benefits with
reference to a cut-off date. The Court held as follows:

"It is difficult to accede to the argument on behalf of the
employees that a decision of the Central Government/ State
Governments to limit the benefits only to employees, who retire
or die on or after 1.4.1995, after calculating the financial
implications thereon, was either irrational or arbitrary.
Financial and economic implications are very relevant and
germane for any policy decision touching the administration of
the Government, at the Centre or at the State level.......As we
have already noticed, 1.4.1995 was the date suggested by the
Fifth Central Pay Commission ("Pay Commission") in its Interim
Report. The Central Government took a conscious stand that the
consequential financial burden would be unbearable. It,
(2005) 6 SCC 754

W.P.(C) 1335/2012 Page 24
therefore, chose to taper down the financial burden by making
the benefits available only from 1.4.1995. It is trite that, the final
recommendations of the Pay Commission were not ipso facto
binding on the Government, as the Government had to accept
and implement the recommendations of the Pay Commission
consistent with its financial position. This is precisely what the
Government did. Such an action on the part of the Government
can neither be characterized as irrational, nor as arbitrary so as
to infringe
Article 14
of the Constitution."

27.
In
P.K. Kapur
(supra) the Supreme Court held that in matters of pay
or pension benefits, classification is permissible and that recommendations
of expert bodies such as Pay Commissions can be persuasive and acted upon
without offending
Article 14.

In
Mrs. Iacats
(supra) the Supreme Court
firstly explained developments after Nakara:

"This decision has been subsequently explained and
distinguished in a number of cases. In the case Dr. (Mrs.)
Sushma Sharma etc. etc. v. State of Rajasthan & Ors. (AIR 1985
SC 1367 at 1379) this Court cited with approval the observations
of this Court in Union of India & Anr. Etc. V. Parameswaran
Match Works Ltd. (AIR 1974 SC 2349) to the effect that the
choice of date as a basis of classification cannot always be
dubbed as arbitrary unless it is capricious or whimsical....The
respondent, therefore, cannot claim the benefit of a scheme
which came into operation from a date subsequent to the date of
her retirement. The respondent also did not contend either before
the High Court or in the grounds of appeal before us that a cut-
off date for grant of pensionery benefits is arbitrary or
unreasonable. Even otherwise in view of the fact that a study
team was first appointed and pursuant to its report certain
benefits were given after considering the report of the study
group would show that the cut-off date had a logical nexus with
the decision to grant these benefits on the basis of the report of
the study team. Fresh financial benefits which are conferred also
have to be based on proper estimates of financial outlay
required. Bearing in mind all relevant factors, if such a benefit is

W.P.(C) 1335/2012 Page 25
conferred from a given date, such conferment of benefits from a
given date cannot be considered as arbitrary or unreasonable."

28.
In
Indian Ex-Servicemen League
(supra), the Supreme Court
described the claim made before it, in the following terms:

"According to learned counsel for the petitioners, the result of
the decision in Nakara is that all retirees who held the same rank
irrespective of their date of retirement must get the same amount
of pension and this should be the amount which was calculated
and shown in the appendices to the Memorandum (Ex. P-2)
challenged in Nakara. Admittedly, the appendices to that
Memorandum specified the computation of pension for different
ranks of retirees on or after 1.4.1979 made on the basis of the
reckonable emoluments on 1.4.1979. It is also admitted that the
reckonable emoluments for corresponding ranks on earlier dates
were not the same to provide identical basis for recomputation of
pension according to the liberalised pension scheme of pre.
1.4.1979 retirees. In substance, even though learned counsel for
the petitioners do not say so, the arguments amount to the claim
of `one rank, one pension' for all retirees of the Armed Forces
irrespective of their date of retirement. It is also admitted that
prior to this liberalised pension scheme, the pension amount of
the earlier retirees from the same rank was not the same
irrespective of their date of retirement or in other words, the
principle of `one rank, one pension' did not apply earlier. It was
stated at the Bar that the demand of `one rank, one pension' is
pending consideration of the Government of India as a separate
issue. It is, therefore, clear that unless the petitioner's claim in
substance of `one rank, one pension' can be treated as flowing
from the relief granted in Nakara, the reliefs claimed in these
petitions though differently worded cannot be granted.

29. The Court had earlier noticed the issue in Nakara that there the
"liberalised pension formula introduced a slab system, raised the ceiling
and provided for a better average of emoluments for computation of pension
and the liberalised scheme was made applicable to employees governed by

W.P.(C) 1335/2012 Page 26
the Central Civil Services (Pension) Rules, 1972, retiring on or after the
specified date." It was then held that the liberalized formula of calculating
pension rates, which had been extended to pre-1979 retirees in line with

Nakara
(supra) and that consequently, the claim for one pension for all, was
untenable.

30. A reading of the decisions relied upon by the respondents reveals
firstly that ipso facto, the choice of a date would not be lightly interfered
with by courts on the ground of discrimination, unless it is plainly arbitrary.
N. Subbarayudu, Amar Nath Goel and P.K. Kapur (all decisions of smaller
benches) went on to suggest that Pay Commission recommendations are per
se not binding and that the State can designate a particular date for the
operation of a pension scheme.

31. All the decisions of the Supreme Court, right from Nakara emphasize
that a distinction between beneficiaries of a new pension scheme and
existing pensioners has to be kept in mind. If the benefit introduced is an
improvement of an existing scheme, it cannot exclude those who retired
earlier. The Supreme Court, in
Krishena Kumar v Union of India21

emphasized the distinction between pensioners and CPF retirees. However,
the formulation in Nakara that benefits of an improved or liberalized scheme
can be given to earlier retirees, was not disturbed. That was a Constitution
bench decision. In Indian Ex-Servicemen League - another Constitution
Bench decision, the same distinction between a new scheme and a mere
improvement was maintained.

Yet another Constitution Bench iterated the
same enunciation of law when it stated, in All India Reserve Bank
1990 (4) SCC 207

W.P.(C) 1335/2012
Page 27
Employees Association
(supra) that a "distinction between liberalisation of
an existing benefit and introduction of a totally new scheme" is to be kept in
mind, while considering grievances stemming from cut-off dates that
deprive pension benefits.

32. Does the impugned order introduce a new scheme, or is it an
improvement of an existing scheme, which, but for the cut-off date, would
have covered the members of the petitioner association who left
employment before 01.01.2009. If one sees the history and chronology of
the manner in which pensionary or terminal benefits were introduced, two
distinct phases are noticeable. The first phase was between 1971 and 1985.
During this period, there was no attempt to grant any but the bare minimum
benefits to the class of employees that the petitioner represents. The benefits
were only a months' pay for each completed year of service at the end of the
period of service. This changed significantly with the distribution of benefits
according to the order of 1985. This proclaimed the second phase where not
only was a specific reference made to benefits vis-à-vis Indian Army
personnel, even rank parity was declared for the purpose. What was granted
however, was not pension, but a lump sum amount equivalent to 45% of the
commuted value of pension that would be payable to an Army personnel
("commuted value of 45% of service pension admissible to the Army
personnel"). Even the head of expenditure is as follows:

"The expenditure involved in payment of the lumpsum amount as
per para I above, will be debited to the Major Head "266 -
Pension and other retirement benefits commuted value of pension
"whereas the expenditure on payment of service gratuity in terms
of this Secretariat letter dated 26th August, 1971, will be
classified to the same Major Head, i.e., "266 - Pension and

W.P.(C) 1335/2012 Page 28
other retirement benefits - Gratuities."22
There was an improvement or enhancement of the benefits, with increase in
the rates as a result in the inclusion of certain other components for
calculating the lump sum amounts, in 1996. It was in this background that
the impugned order granted complete parity between Army personnel and
those leaving the service of the Indian Government, but employed in the
border from amongst Nepali and Tibetan nationals, after 01.01.2009.

33. It is not disputed- indeed the Union admits it as much - that SFF
personnel have made "outstanding contribution" to the nation's defense and
security23. Their service and sacrifice is of the same order as Indian nationals
who are members of the Indian Army. They do not claim to belong to the
Indian Army; what they however demand is that retirement benefits and
pension given to members of the SFF who retire after 01.01.2009 too should
be given to them. Both these categories clearly form one class, i.e former
SFF personnel. In fact, in all likelihood most of them served together. The
fact that the long standing demand of SFF personnel for parity with Indian
Army personnel was conceded and given effect later, is what is impeding the
parity implicitly acknowledged by the impugned order.

34. The pre-existing scheme of retirement benefits entailed release of
amounts with reference to the commuted value of what was payable to
Indian Army personnel. In essence the earlier order of 1985 ordained the
parity, which had been lacking. What however, distinguished that regime
from the present one is the mode of disbursement. The Union chose one
Government letter dated 20-11-1985
Para 4 of the Union's counter affidavit, quoted earlier.

W.P.(C) 1335/2012 Page 29
mode, i.e disbursement of a lump sum amount. But significantly, what was
guaranteed was with reference to 45% of what the retired Indian Army
personnel was entitled to receive as the commuted value of his pension. If
the commuted pension value was ` 1000, a SFF retiree was entitled to `
450/-. In the Court's opinion, the Union's argument that the impugned
scheme introduces a new benefit altogether is without merit. The parity in
rank between Army personnel and SFF personnel was brought about in 1985
itself; that parity remains and endures. That parity would ordinarily have
meant disbursement of pension at par with what Army personnel were
entitled to; however, for its own convenience the Union sought to make one-
time payment choosing not to make out any further payouts. The situation
improved, when in 1996 various elements apart from the pay alone were
included for calculation of the lump sum amounts. However, the status of
SFF retirees as those entitled to treatment similar to Army personnel
continued. The new scheme is only an improvement, if viewed from this
perspective, because it enlarges and extends the benefits - much like the
1996 memorandum and includes a whole series of other monetary elements.
Besides, the mode of payout (from lump sum to monthly pension) is
changed. However, the essential parity of status and entitlement based on
that status, continues. In other words, the introduction of the scheme in 2009
is not a new one, but would really be a liberalized one extending the benefits
of the existing one; doing away with lump sum payments on the one hand,
and incurring the liability of monthly payouts.

35. This court is of the opinion that the introduction of 01.01.2009 as a
cut-off in the light of the above discussion, is impermissible classification.
There is no justification why this differentia is introduced, given that both

W.P.(C) 1335/2012 Page 30
pre and post 2009 SFF retirees performed the same duties and stood to
benefit in terms of rank parity with Army personnel, for purposes of
pensionary benefits, since 1985. Arguendo some basis for such differentia,
absolutely no rationale is shown for such differentiation with the object
sought to be achieved, i.e monthly payment of pension. The mere ipse dixit
that the Union would be burdened with greater monetary liability, rings
hollow if seen from the perspective that lump sum payment meant a larger
one-time payout, whereas monthly payment spreads liability rather than
aggregates it.

36. The above declaration that the introduction of the date, i.e 01.01.2009
would, however, not be dispositive of the petition. This court is also
conscious that the petitioners derived a one-time benefit -of a single sum
payout -and are now seeking parity with pensioners, who would not secure
such payouts, but rather be entitled to monthly pension. It is also a fact that
the petitioners had the benefit of the lump sum amounts, which had greater
value when they received it. In the circumstances, the court is of the opinion
that ends of justice would be sub-served if the respondents ensure that like in
the case of regular Army personnel, upon completion of the period of
commutation (15 years) in the petitioners' case, the amount commuted (i.e
45%) is restored. This would enure to the benefit of all parties, for the
reason that instead of directing repayment of amounts received with some
rate of interest (which would cause hardship to individuals) on the one hand
and directing the Union to make full payments to the petitioners who had
received lump sum payments in accordance with the prevailing scheme at
rates which were somewhat higher (especially gratuity calculation) than in
the case of Army personnel, - an option unforeseen by the Union and which

W.P.(C) 1335/2012 Page 31
would result in burdening it- payment of the proportion which was made in
proportion to the percentage of the commuted value would be the most apt
in the circumstances.

37. In the light of the above discussion, the writ petition has to succeed; a
direction is accordingly issued to the respondents to issue a Circular to the
effect that the commuted value (45% of the commuted equivalent of pension
of an Indian Army personnel) would be restored to all pre-01.01.2009
retirees, upon the completion of 15 years from the date of their
superannuation. This restoration shall be made effective from the date of the
scheme, i.e. 01.01.2009 and given to all those entitled to it, in accordance
with the records available with the respondents, within 4 months from today.
The SFF personnel would be entitled to the arrears, however, from
01.12.2011, i.e. proximate to the date of the rejection of the petitioners'
representation, leading to filing of the writ petition. This Court is aware that
even according to the respondents, approximately 5727 personnel were
discharged from the SFF who had rendered more than 15 years of service in
SFF since its raising date, as on 31.12.2008. The writ petition is allowed in
these terms. No costs.

S. RAVINDRA BHAT
(JUDGE)

DEEPA SHARMA
(JUDGE)
JANUARY 29, 2016

W.P.(C) 1335/2012 Page 32