T.S. Thiruvengadam
Vs. The Secretary to Govt. of India,
Ministry of Finance [1993] INSC 85 (17 February 1993)
Kuldip
Singh (J) Kuldip Singh (J) Kasliwal, N.M. (J)
CITATION:
1993 SCR (1)1078 1993 SCC (2) 174 JT 1993 (1) 609 1993 SCALE (1)625
ACT:
Civil Services:
Central
Civil Services (Pension) Rules, 1972 Retirement benefits Govt. servants
absorbed in public sector Undertakings-Government of India Memorandum dated
16.6.1967- Revised Terms and Conditions-Made applicable to those who retired
after the issue; of Memorandum-Validity of.
Constitution
of India, 1950.
Articles
14 and 16-Retirement benefits to Govt. servants absorbed in Public Sector
Undertakings-Government of India- Memorandum dated 16.6.1967-Terms and
Conditions revised-Made applicable from date of issue of the Memorandum-
Reasonableness of the classification-Cut-off date-whether arbitrary and
discriminatory.
HEAD NOTE:
The
appellant was serving the Audit Department of the Government of India. He was
sent on foreign service to the Public Sector Undertaking Neyveli Lignite
Corporation Ltd. (N.L.C.) and was absorbed there. Before joining N.L.C. he had
already completed 15 years of pensionable government service. Retirement
benefits in such cases were regulated by Memorandum dated November 10, 1960 issued by the Ministry of Finance
(Department of Expenditure), New Delhi.
According
to the said Memorandum the retirement benefits for service rendered by a
government servant before his absorption in a public undertaking were
admissible equal to what the government would have contributed had the
individual been on contributory provident fund terms, with 2% simple interest
thereon. The Government of India subsequently issued Memorandum dated June 16, 1967 providing revised terms and
conditions of absorption in Central Public Sector Undertakings but restricted
the revised benefits only to those who were absorbed on or after June 16, 1967. The appellant retired 1078 1079
from the public undertaking and was paid a sum of Rs. 3036 as retirement
benefits in terms of the Memorandum dated November 10, 1960. The benefit of the revised terms
and conditions of absorption as contained in the government Memorandum dated June 16, 1967 was denied to the appellant on the
ground that he was absorbed in the public undertaking prior to the date of
coming into force of the said Memorandum. The appellant challenged the same by
riling a Writ Petition before the High Court. Subsequently, the Writ Petition
was transferred to the Central Administrative Tribunal which rejected the claim
of the appellant. Being aggrieved against the Tribunal's judgment, the
appellant preferred the present appeal.
It was
contended on behalf of the appellant that it was not open to the government to
deny the benefit of the 1967 Memorandum to those employees who were absorbed
prior to the date of the Memorandum as it would be arbitrary and that such
classification is violative of Articles 14 and 16 of the Constitution.
On
behalf of the respondents, it was contended that the revised retirement benefits
were introduced to attract more and more government servants for permanent
absorption in government undertakings to build up their cadres, and this being
a new incentive, it has been given effect to from the date of issue of orders
and there was nothing arbitrary or discriminatory in fixing the cut-off date.
Allowing
the appeal, this Court,
HELD :
1.1. The object of bringing into existence the revised terms and conditions in
the Memorandum dated June,
16, 1967 was to
protect the pensionary benefits which the Central Government servants had
earned before their absorption into the public undertakings. Restricting the
applicability of the revised Memorandum only to those who are absorbed after
the coming into force of the said Memorandum, would be defeating the very
object and purpose of the revised Memorandum. The appellant along with other
Central Government employees was sent on foreign service to the public
undertaking in the year 1961. He was absorbed in the year 1964. All those who
joined foreign service alongwith the appellant but were absorbed after June 16, 1967 have been given the benefits under
the revised Memorandum. Denying the same to the appellant would be contrary to fairplay
and justice. Assuming that the revised 1080 Memorandum is an incentive to
attract Central Government employees to public undertakings, the persons who
are so attracted do not become a different class. They join the same class to
which the persons like the appellant belong.
Therefore,
all those Central Government employees who were absorbed in public undertakings
either before June 16,1967 or thereafter and were serving the
public undertakings, are entitled to the benefits provided under the Memorandum
dated June 16, 1967. [1083G-H; 1084A-B-C] 1.2. It is no
doubt correct that the Memorandum dated June 16, 1967 is prospective which only means
that the benefits therein can be claimed only after June, 16,1967. The Memorandum, however, takes into consideration the past
event that is the period of service under the Central Government for the
purpose of giving pro-rata pension. Whoever has rendered pensionable service
prior to coming into force of the Memorandum would be entitled to claim the
benefits under the said Memorandum. Restricting the benefits only to those who
were absorbed in public undertaking after June 16, 1967 would be arbitrary and hit by
Articles 14 and 16 of the Constitution. [1084E]
2.
Rule 37 of Central Civil Services (Pension) Rules, 1972 provides that a
government servant who has been permitted to be absorbed in service in a
Central Government public undertaking in public interest, be deemed to have
retired from service from the date of such absorption and shall be eligible to
receive retirement benefits in accordance with the orders of the Government
applicable to him. Admittedly the appellant was permitted to be absorbed in the
Central Government public undertaking in public interest. The appellant, as
such, shall be deemed to have retired from government service from the date of
his absorption and is eligible to receive the retirement benefits. It is no
doubt correct that the retirement benefits envisaged under Rule 37 are to be
determined in accordance with the Government orders but the plain language of
the Rule does not permit any classification while granting the retirement
benefits.
When
the Rule specifically provides that all the persons who fulfil the
pre-conditions prescribed therein shall be deemed to have retired from
government service from the date of absorption and shall be eligible to receive
retirement benefits then the government while granting benefits cannot deny the
same to some of them on the basis of arbitrary classification. All those person
who fulfil the conditions under Rule 37 are a class by themselves 1081 and no
discrimination can be permitted within the said class. The government action in
restricting the benefits under the revised Memorandum dated June 16, 1967 only to those who are absorbed
after that date goes contrary to the Rule and cannot be sustained. [1085C-G]
CIVIL
APPELLATE JURISDICTION : Civil Appeal No. 666 of 1993.
From
the Judgment and Order dated 14.6.1988 of the Central Administrative Tribunal, Madras in T.A. No. 12 of 1988. M.N. Krishnamani,
T. Raja and Pravir Choudhary for the Appellant.
Altaf
Ahmad, Addl. Solicitor General, V.N. Ganpule, Hemant Sharma and S.N. Terdol for
the Respondents.
The
Judgment of the Court was delivered by KULDIP SINGH, J. Special leave granted.
Applications
for impleadment are allowed.
The
appellant was in the service of the Central Government for a period of about 15
years. He was thereafter permanently absorbed in a public undertaking, from
where he retired on April
1, 1984. The question
for our consideration is whether the appellant on absorption in the public
undertaking was eligible for pro-rata pension and death-cum-retirement gratuity
based on the length of his qualifying service under the Government till the
date of absorption.
The
appellant was serving the Audit Department (Defence Service) of the Government
of India as Substantive Upper Division Clerk. He was sent on foreign service to
Neyveli Lignite Corporation Ltd. (public sector undertaking) on January 9/10,
1961. He was permanently absorbed in the public undertaking with effect from August 1, 1964. It is not disputed that the
appellant, having joined Central Government service on July 25, 1949, had completed 15 years of pensionable
government-service. On the date of appellant's permanent absorption in the
public undertaking the retirement benefits were regulated by Memorandum dated November 10, 1960 issued by the Ministry of Finance
(Department of Expenditure), New Delhi.
1082
According to the said Memorandum the retirement benefits for service rendered
by a government servant before his absorption in a public undertaking, were
admissible equal to what the government would have contributed had the
individual been on contributory provident fund terms, with 2% simple interest
thereon. The Government of India subsequently issued Memorandum dated June 16, 1967 providing revised terms and
conditions of absorption in Central Public Sector Undertakings but restricted
the revised benefits only to those who were absorbed on or after June 1.6,
1967. The operative features of the revised instructions were as under:-
(i) A
permanent government servant with not less than 10 years qualifying service on
absorption in public undertaking was eligible for pro-rata pension and
death-cum-retirement gratuity based on the length of his qualifying service
under government till the date of absorption. The pension was to be calculated
on the basis of average emoluments immediately before absorption.
(ii)The
pro-rata pension, gratuity, etc. admissible in respect of the service rendered
under the government was disbursable only from the date the government servant
would have normally superannuated had be continued in service.
The
appellant retired from the public undertaking on April 1, 1984. It is not disputed that on January 15, 1974 the appellant was paid a sum of Rs. 3036 as retirement
benefits in terms of the Memorandum dated November 10, 1960. The benefit of the revised terms
and conditions of absorption as contained in the Government Memorandum dated June 16, 1967 was denied to the appellant on the
short ground that he was absorbed in the public undertaking prior to the date
of coming into force of the said Memorandum.
The
appellant filed a writ petition tinder Article 226 of the Constitution of India
on October 19, 1984 in the Madras High Court seeking a
mandamus directing the respondents to grant him pro-rata pension and all other
benefits admissible under the revised Memorandum dated June 16, 1967. As an interim measure the High
Court directed that the appellant be paid 50 per cent of the pro-rata pension
and other pensionary benefits 1083 under the Memorandum dated June 16, 1967 from the date of his absorption in
the public undertaking. The writ petition was transferred to the Central
Administrative Tribunal, Madras. The tribunal by its judgment dated
June 14, 1988 dismissed the application and
rejected the claim of the appellant. This appeal by way of special leave is
against the judgment of the Central Administrative Tribunal.
The
appellant has questioned the validity of the condition imposed in the
Memorandum dated June
16, 1967 making the Memorandum
applicable only to such of the employees who are absorbed in the public
undertakings on or after June 16.
1967.
According to the appellant it was not open to the government to deny the
benefit of the Memorandum to those employees who were absorbed prior to the
date of the Memorandum as it would bring into existence arbitrary
classification in respect of government employees absorbed in the public
undertakings prior to June 16, 1967 and thereafter. The appellant has contended
that such classification is not warranted under Articles 14 and 16 of the
Constitution as it has no nexus with the object sought to be achieved by the
government Memorandum.
The
contention of the respondents, on the other hand, is that the revised
retirement benefits were introduced to attract more and more government
servants for permanent absorption in government undertakings to build up their cadres,
It was thus an incentive for encarding suitable persons in the government
undertakings. According to the respondents, being a new incentive, it has been
given effect from the date of issue of orders and there is nothing arbitrary or
discriminatory in fixing the cut-off date.
There
is no dispute that Neyveli Lignite Corporation Ltd. is a body which is
sponsored, financed and controlled by the Central Government. More and more
government functions are being brought under the government undertakings and
autonomous bodies. There is considerable mobility from Central Government
Departments to the public undertakings.
The
object of bringing into existence the revised terms and conditions in the
Memorandum dated June
16, 1967 was to
protect the pensionary benefits which the Central Government servants had
earned before their absorption into the public undertakings. Restricting the
applicability of the revised Memorandum only to those who are absorbed after
the coming into force of, the said Memorandum, would be defeating the very
object and 1084 of the revised Memorandum. It is not disputed that the
appellant along with other Central Government employees was sent on foreign
service to the public undertaking in the year 1961. He was absorbed in the year
1964. All those, who joined on foreign service alongwith the appellant but were
absorbed after June 16,
1967, have been given
the benefits under the revised Memorandum. Denying the same to the appellant
would be contrary to fairplay and justice.
Assuming
that the revised Memorandum is an incentive to attract Central Government
employees to public undertak- ing,,, the persons who are so attracted do not
become a different class. They join the same class to which the persons like
the appellant belong. Therefore, all those Central Government employees who
were absorbed in public undertakings either before June 16, 1967 or thereafter and were serving the public undertakings, are
entitled to the benefits provided under the Memorandum dated June 1.6, 1967.
We do
not, also, find substance in the contention that the revised benefits being new
it could only be prospective in operation and cannot be extended to employees
who were absorbed earlier. It is no doubt correct that the Memorandum dated June 16, 1967 is prospective which only means
that the benefit.-, therein can be claimed only after June 16, 1967. The Memorandum, however, takes
into consideration the past event that is the period of service under the
Central Government for the purposes of giving pro- rata pension. Whoever has
rendered pensionable service prior to coming into force of the Memorandum would
be entitled to claim the .benefits under the said Memorandum.
Restricting
the benefits only to those who were absorbed in public undertakings after June 16, 1967 would be arbitrary and hit by
Articles 14 and 16 of the Constitution.
We may
examine the claim of the appellant under the Central Civil Services (Pension)
Rules, 1972 (the Rules). Rule 37 of the Rules is as under:- " A Government
servant who has been permitted to be absorbed in a service or post in or under
a corporation or company wholly or substantially owned or controlled by the
Government or in or under a body controlled or financed by the Government
shall, if such absorption is declared by the Government to be in the public
interest, be deemed to have retired from service from the date of 1085 such
absorption and shall be eligible to receive retirement benefits which he may
have elected or deemed to have elected, and from such date as may be
determined, in accordance with the orders of the Government applicable to him:
Provided
that no declaration regarding absorption in the public interest in a service or
post in or under such corporation, company or body shall be required in respect
of a Government servant whom the Government may, by order, declare to be a
scientific employee." Rule 37, thus, provides that a government servant
who has been permitted to be absorbed in service in a Central Government public
undertaking in public interest, be deemed to have retired from service from the
date of such absorption and shall be eligible to receive retirement benefits in
accordance with the orders of the Government applicable to him. It is not
disputed that the appellant was permitted to be absorbed in the Central
Government public undertaking in public interest. The appellant, as such, shall
be deemed to have retired from government service from the date of his
absorption and is eligible to receive the retirement benefits. It is no doubt
correct that the retirement benefits envisaged under Rule 37 are to be
determined in accordance with the government order but the plain language of the
rule does dot permit any classification while granting the retirement benefits.
When the Rule specifically provides that all the persons who fulfil the
pre-conditions prescribed therein shall be deemed to have retired from
government service from the date of absorption and shall be eligible to receive
retirement benefits then the government while granting benefits cannot deny the
same to some of them on the basis of arbitrary classification. All those
persons who fulfil the conditions under Rule 37 are a class by themselves and
no discrimination can be permitted within the said class. The government action
in restricting the benefits under the revised Memorandum dated June 16, 1967 only to those who are absorbed
after that date goes contrary to the Rule and cannot be sustained.
We,
therefore, allow the appeal, set aside the judgment of the Central
Administrative Tribunal and direct the respondents to grant pro-rata pension
and other benefits to the appellant under the office Memorandum dated June 16, 1967. The respondents are directed to finarise
the benefits 1086 within three months from today and all the arrears of pension
etc. shall be paid to the appellant within one month thereafter with 12%
interest. Any payment already received by the appellant under the interim order
of the High Court has to be adjusted. The appellant shall be entitled to costs
which we quantify as Rs. 10,000.
We
allow I.A. 4/91 and direct that the applicants therein namely, K.B.L. Mathur, Jaswant
Lal Jetlie and C.L. Soni whose cases are identical to that of the appellant be
also given benefit of the Memorandum dated June 16, 1967 in similar terms as directed by us
in respect of the appellant.
These
applicants shall, however, be not entitled to costs.
G.N.
Appeal allowed.
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