Bhatnagar & Anr Vs. Union of India  INSC 37 (13 February 1991)
Kasliwal, N.M. (J) Kasliwal, N.M. (J) Ramaswamy, K.
1991 SCR (1) 356 1991 SCC (2) 266 JT 1991 (1) 443 1991 SCALE (1)208
of India: Articles 14 and 16. Central
Government employees absorbed in Central Public Sector Undertakings-Entitlement
of pensionary benefits-Central Civil Service (Pension) Rules, 1972: 0. MS.
dated 13.2.1976 and 22.10.1983-Validity of.
Law: Central Civil Service (Pension) Rules, 1972: Liberalised Pension Formula,
1979: 0. Ms. dated 13.2.1976 and 22.10.1983-Central Government pensioners-
Relief and adhoc relief on pension-Central Government employees absorbed in
Central Public Sector Undertakings-Retiring from Central Government service -
Commuted original pension-Whether eligible to be treated as Central Government
Civil Service (Pension) Rules, 1972:
of pension-Effect of.
petitioners, who were Central Government employees, on their absorption in a
Central Public Sector Undertaking, retired from Central Government service on
different dates prior to 31.3.1979, and commuted their original pension for a
lump sum as permissible under the Civil Service (Pension) Rules, 1972.
Central Government issued O.M. dated 13.2.1976, enabling an officer who
commuted a portion of his pension to be eligible for relief and ad hoc reliefs
on the full amount of his original pension, but persons who got themselves
absorbed in Public Sector Undertakings were not eligible to the said benefits.
Taking note,of the erosion in the value of the rupee, the Government, by O.M.
dated 25.5.1979, introduced the Liberalised Pension Formula, benefit of which,
by this Court's decision in D.S. Nakara's case was extended to all Central
Government pensioners irrespective of the dates of their retirement.
order to implement the said decision, the Government issued O.M. dated
22.10.1983, but the benefit was not given to those persons who got them-selves
absorbed in Central Public Sector Undertakings and received/opted to receive
commuted raise of 1/3rd of pension as well as 357 terminal benefits equal to
the commuted value of the balance amount of pension left after such
petitioners challenged the validity of the aforesaid O.Ms. dated 13.2.1976 and
22.10.1983 and contended that for the purposes of grant of the full benefit of
relief or ad hoc relief, the Rules do not make any distinction between an
officer who has sought commutation of a portion of his original pension and one
who has not sought any such commutation; and as the petitioners who opted for
commutation of their original pension in accordance with the Rules were being
arbitrarily and without just and reasonable cause deprived of the relief, the
aforesaid Office Memoranda were vitiated by an inherent discrimination and were
violative of Articles 14 and 16 of the Constitution.
facts of the appeal were identical to those of the petitions except that the
appellant came before this Court in appeal against the order of the High Court
which dismissed his writ petition.
question: whether the petitioners/appellants fell in the category of Central
Government pensioners for the purpose of entitlement to the benefit of the Liberalised
Pension Formula or did they fall in a different class altogether and were not
entitled to get any such benefit, Dismissing the writ petitions and the appeal,
1. Clause 5 of O.M. dated 22.10-1983 is clear that such Central Government employees
who got themselves absorbed under Central Public Sector Undertakings prior to
1.4.1979 and opted to receive commuted raise for 1/3rd of pension as well as
terminal benefit equal to the commuted value of the balance amount of pension
were not entitled to any benefit as they were not Central Government Pensioners
as on 1.4-1979. [362B-C] 2.Commutation brings about certain advantages. The
person who commutes his pension gets a lump sum which ordinarily he would have
received in the course of his spread over period subject to his continuing to
live The two advantages of the commutation are the-availability of a lump sum
and the risk factor. The allowance of Family Pension to such person does not
however make them entitled to get any benefit that is given to the pensioners
on account of Liberalised Pension Rules taking note of the fallen value of the
rupee. [362F-G, 363A-B]
the instant case, the petitioners had not only got 1/3rd of 358 their pension
commuted but exercised the option of getting the entire pension commuted and in
lieu thereof got a lump sum. Such persons cannot fall in the category of
Central Government pensioners for the purposes of getting benefit of the Liberalised
Pension Rules which can be made applicable only to Central Government
pensioners. [362G-H, 363A]
The petitioners fell in a different class altogether and were not entitled to
claim any benefit granted to the Central Government Pensioners. After getting a
lump sum in lieu of entire pension, they did not fall in the class of Central
Government pensioners and were not entitled to any benefit granted to such
pensioners. The case of the Central Government pensioners who got their 1/3rd
pension commuted also fail in a different class inasmuch as they got 2/3rd
pension, and after 15 years of such commutation or having attained the age of
70 years whichever was later, they became entitled to full pension. [363C-D]
"Common Cause" a Registered Society & Ors. v. Union of India, 
1 SCC 142, distinguished.
& Ors. v. Union of India,  2 SCR 165, referred to.
JURISDICTION: Writ Petition Nos.11757 & 11758 of 1984.
Article 32 of the Constitution of India).
Appeal No. 1124 of 1985.
K. Jagan Mohan Rao and Raju Ramachandran for the Petitioners.
Ms. A Subhashini and R.B. Mishra for the Respondent.
Judgment of the Court was delivered by KASLIWAL, J. The above writ petitions
and appeal are disposed of by one single order as identical question of law are
involved in these cases. In order to appreciate the controversy we would
narrate the facts of the writ petitions. Shri Des Raj Bhatnagar, Petitioner DES
No. 1 and Shri Ved Pal Seth, Petitioner No.2 were employees of the 359 Central
Government. The petitioner No. 1 after serving in various capacities in the
Department of food of the Central Government from 24.10.1941 to 31.8.1971 (29
years and 10 months) was permanently absorbed in Food Corporation of India as Assistant on 1st September, 1971 and retired from the Government
petitioner No. 2 after serving the Government in various capacities for the
period from 5.11.1947 to 8.2.1972 (20 years and 3 months) was permanently
absorbed on 9.2.1972 in Food Corporation of India as Sr. Asstt. Manager and retired from the Government service.
absorption in the Food Corporation of India, the petitioners were required to exercise either of the following two
Receiving the pro-rata monthly pension and death-cum-retirement gratuity as
admissible under the rules;
(b) Receiving the pro-rata gratuity and a lumpsum amount in lieu of pension
worked out with reference to commutation table obtaining on the date from which
the pension was to be admissible and under the option order.
office of the Pay and Accounts Officer, Ministry of Food and Agriculture
determined the original pension payable to the petitioners per mensem. The
petitioners were sanctioned original pensions in accordance with the provisions
of the Central Civil Service (Pension) Rules, 1972. In case of petitioner No. 1
the original pension was determined at Rs. 240 per mensem payable from 1st
September, 1971.In case of petitioner No. 2 the original pension admissible was
determined at Rs.287 per mensem payable from 9.2.1972.
petitioner No. I received his pension @ Rs.240 per mensem for the period from
1.9.1971 to 29.10.1972. Petitioner No. 2 received his pension @ Rs.287 per mensem
for the period from 9.2.1972 to 16.8.1972. Under the above Rules maximum of one
third of the amount of admissible pension could be commuted. However, in the
case of Government officers including Industrial Management Pool Officers who
were opting for permanent absorption in Public Sector Undertakings, an option
was given to commute the full amount of their original pension. The petitioner
No. I and petitioner No. 2 commuted their original pensions for a lumpsum of
Rs.35,568 and Rs.43,601 on 30.10.1972 and 17.8.1972 respectively.
The Third Central Pay Commission was required to make its recommendations in
the matter of providing relief to Government pensioners. The Pay Commission, in
order to secure Government pensioners against the continuing erosion in the
value of the rupees and to recommend appropriate measures for protecting the
pension of Government servants from such erosion on account of the possible
increase in the case of living in future and after having considered the
matter, recommended that irrespective of the amount of pension drawn by them,
pensioners should be given relief at the rate of 5% of their pension subject to
a minimum of Rs.5 per mensem and a maximum of Rs.25 per mensem. The relief at
those rates were recommended to be given to the Government pensioners as and
when there was a 16 point rise in the 12 months average of the All India
Working Class Consumer Price Index ( 1960- 100). The relief for the first time,
at these rates was to be paid when the 12th monthly average of this index
reached 216. The said recommendation made by the Pay Commission was duly
accepted by the Central Government.
Ministry of Finance Office Memorandum No. F. 22(8)- EV(A)/75 dated 13.2.1976
inter alia, provided that where an officer on his retirement commutes a portion
of his pension he is eligible for relief and ad hoc reliefs in pension on the
full amount of original pension as admissible to him.
the said O.M. the term 'Pension' includes for the purposes of ad hoc relief the
commuted portion of pension, if any. The case of the petitioners is that
according to these Rules, an officer who has commuted any part of this pension
and an officer who has not opted for any commutation both receive the full
quantum of relief and ad hoc relief on full amount of original pension. It has
thus been contended that for the purposes of grant of the full benefit of
relief or ad hoc relief the Rules do not make any distinction between an
officer who has sought commutation of his original pension and one who has not
sought any such commutation. The petitioner and other Government servants who
opted for commutation of their original pension in accordance with the Rules
are being arbitrarily and without just and reasonable cause are deprived of the
relief and ad hoc relief on commutation in pursuance of the Office Memorandum
dated 13.2.1976. Though, an officer who commutes one third of his pension gets
relief and ad hoc relief on the basis of original amount of his pension but
whereas an officer commutes whole of his original pension is deprived of the
entire amount of the relief or ad hoc relief. The petitioners have thus
contended that aforesaid Office Memorandum dated 13.2.1976 is vitiated by an
inherent discrimination and is violative of Articles 14 and 16 of the
The petitioners have further submitted that they are entitled to the aforesaid reliefs
granted to all other Government pensioners, and the amount of relief to which
pensioners are entitled and has been denied to them under the impugned Office
Memorandum dated 13.2. 1976 works out to Rs. 13,592 and Rs. 15,040 in case of
petitioner No. 1 and petitioner No. 2 respectively upto 29.2.1984. The Ministry
of Finance in their Office Memorandum No.
dated 10.10.1983 has sanctioned the grant of relief and ad hoc reliefs to
Government servants who retired prior to 10th September, 1979 @ 92.5% of their original pension
subject to minimum of Rs.93 and maximum of Rs.463 with effect from 1st July, 1983. This has been done by taking in
view the decline in the purchasing power of the rupee and the original sanction
being insufficient and meagre to sustain the pensioners.
from the above the petitioners have submitted that they are also entitled to
the benefit of Liberalised Pension Formula of 1979,which was introduced vide
the Finance Ministry's Office Memorandum No. F. 19(37)/EV/79 dated 25.5-1979,
in respect of the approved pensionable service rendered by them in the Central
Government as admissible to other pensioners who retired from Government
service between 17.4.1950 to 31.3.1979. The said Memorandum was made applicable
only to those Government servants who retired from service on or after
this Court in D.S. Nakara & Others v. Union of India,  2 SCR 165 held
that all Central Government pensioners governed by the Central Civil Service
(Pension) Rules, 1972 were entitled to pension w.e.f. 1.4.1979 as computed
under the Liberalised Pension Formula irrespective of the date of their
retirement. Placing reliance on the above decision it has been claimed that
there should be no discrimination between the applicability of the Liberalised
Pension Formula to pre 31.3.1979 pensioners and there is no just and reasonable
cause in denying such benefit to the petitioners under the impugned Office
Memorandum No. F. 1(3)/EV/83 dated 22.10.1983.
5 of the Office Memorandum dated 22.10.1983 reads as under:
Government employees, who got themselves absorbed under Central Public sector
undertaking/autonomous bodies prior to 1.4.1979 and have received/or opted to
receive commuted raise for 1/3rd of pension as well as terminal benefit equal
to the commuted value of the 362 balance amount of pension left after commuting
1/3rd, of pension, are not entitled to any benefit under these orders as they
were not Central Government pensioners as on 1.4.79. In cases where only a portion
of pension has been commuted the pension will have to be enhanced in accordance
with these orders with effect from 1.4.1979".
above clause makes it clear that such Central Government employees, who got
themselves absorbed under Central Public Sector Undertakings prior to 1.4.1979
and opted to receive commuted raise for 1/3rd of pension as well as terminal
benefit equal to the commuted value of the balance amount of pension left after
commuting 1/3rd of pension were not entitled to any benefit as they were not
Central Government pensioners as on 1.4.1979. An identical writ petition No.
1068/1987 under Art. 32 of the constitution was filed on behalf of the Welfare
Association of absorbed Central Government Employees in Public Enterprises and
this Court dismissed the said writ petition on April 12, 1990. In the said writ petition benefit of Judgment of this
Court in "Common Cause" a Registered Society & Ors. v. Union of
India, [ 1987] 1 SCC 142 was claimed but the same was negatived by making a
distinction that the Writ Petition "Common Cause" was on behalf of
the Government servants who had commuted their pension partially and this Court
for the reasons indicated in the judgment came to hold that on the expiry of 15
years from the date of commutation the entire pension revived. The petitioners
were persons who had, at the time of retirement from Government service and
entering into public sector had taken the advantage of commuting the entire
certainly belong to a class different from those whose case was before this
Court at the instance of the common cause in Writ Petition Nos. 1955-61 of
1983. It was further held in the above case that the commutation does bring
certain advantages to the committees and the class of Government officers whom
the petitioner seeks to represent have derived such benefits.' We find no
reason to take a different view. The commutation brings about certain
advantages. The commuting pensioner gets a lumpsum amount which ordinarily he
would have received in the course of his spread over period subject to his
continuing to live. Thus, two advantages are certainly forthcoming out of
commutation-(1) availability of a lumpsum amount, and (2) the risk factor. In
the present case the petitioners had not only got 1/3rd of their pension
commuted but exercised the option of getting the entire pension commuted and in
lieu thereof got a lumpsum. Such persons cannot fall in 363 the category of
Central Government pensioners for the purposes of getting benefit of Liberalised
Pension Rules which can be made applicable only to Central Government
Pensioners. It is no doubt correct that the family pension has been allowed in
case of the persons like the petitioners but that does not make them entitled
to get any benefit given to the pensioners on account of the liberalised
Pension Rules taking note of the fallen value of the rupee.
contended by Mr. Rao on behalf of the petitioners that the petitioners are not
claiming any pension but their contention is that the Liberalised Pension Rules
which given benefit to those pensioners who had got their 1/3rd pension
commuted should be granted to the petitioners by awarding lumpsum after
increasing their pension and calculating such amount in proportion to the
increased pension. We find no force in this contention as the petitioners fall
in a different class altogether and are not entitled to claim any benefit
granted to Central Government pensioners. After getting a lumpsum in lieu of
entire pension, they do not fall in the class of Central Government pensioners
and are not entitled to any benefit granted to Central Government pensioners.
The case of such Central Government pensioners who got their 1/3rd pension
commuted also fall in a different class in as much as they get 2/3rd pension, and
after 15 years of such commutation or having attained the age of 70 years
whichever was later they become entitled to full pension. Petitioners on the
other hand were not entitled to any pension after having received the lumpsum
amount in lieu of pension being commuted and having opted to receive such
amount in lumpsum at the time of entering the service in Public, Sector
above mentioned civil appeal the legal question is identical except that the
appellant in this case became a pensioner of the Central Government w.e.f.
1.4.1977 and the pension determined as payable to him was Rs.609 per month and
the same was got commuted by the appellant for a lumpsum amount on and from 7.8.1978.
The appellant had exercised the option for absorption in Steel Authority of
India Limited (SAIL) a Public Sector Enterprise. The Writ Petition filed by him
before the High Court of Delhi was dismissed on 25.8.1982. The appellant then
filed a S.L.P. against the said order. This Court had granted special leave on
25.3.1985 and had given a direction to hear the appeal along with the writ
petition Nos. 11757 & 11758 of 1984.
result we find no force in all these cases and the same are dismissed with no
order as to costs.
Petitions and Appeal dismissed.