of West Bengal & Anr Vs. Weasstsobceinagtailongso
v&T. Orpse.Nsioners  Insc 1 (7 January 2002)
Pattanaik & Ruma Pal Ruma Pal, J.
issue to be decided in this appeal is whether the decision of this Court in D.S.Nakara
V. Union of India obliges the appellant to pay pension calculated on the
revised scales of pay under the West Bengal Services (Revision of Pay and
Allowances) Rules, 1990, to all the erstwhile employees of the State Government
irrespective of their date of retirement.
West Bengal Services (Revision of Pay & Allowances) Rules, 1990 (referred
to hereafter as the 1990 'ROPA Rules'), inter-alia, revised the pay scales of
State Government employees w.e.f. 1st January 1986. It covered those employees who were in service on 1.1.86
even though such employees may have retired before the 1990 ROPA Rules were in
fact published. As far as these retired employees were concerned, their pay
could only be revised notionally and a memorandum was issued on 25th April 1990 giving them pensionary benefits
calculated on the basis of such notionally revised scales of pay.
notification was challenged by the respondent- association, the members of
which are all pre-1986 retirees. They filed a writ petition before the Calcutta
High Court claiming that they too were entitled to the same benefits as the
post 1986 retirees. The petition was disposed of by a learned Single Judge by
directing the Secretary of the Finance Department to consider the claim of the
association in the light of the judgment in D.S. Nakara after giving the
association a chance of being heard and by passing a speaking order.
compliance with the directive of the High Court, the Secretary, Finance
Department heard the members of the association. By an order dated 26th April, 1993, the Finance Secretary held that
D.S. Nakara's decision only directed parity in the principle of calculation of
pension and not parity in the actual quantum of pension payable. It was held
that the State Government had adopted the same formula for computation of
pension of all the pensioners irrespective of the date of retirement, namely,
50% of last pay drawn by the incumbent before the retirement. Since those who
had retired prior to the date of revision of the pay scales could not avail
themselves of the revised pay scales, the Fourth Central Pay Commission evolved
a formula to give the pre-1986 retirees Dearness Allowance on the basis of the
608 point consumer price index (CPI). The order noted that the revised pay
scales were also on the basis of 608 point CPI being merged with un-revised pay
. According to the Finance Secretary, the State Government had issued a
notification 7532-F dated 6th April 1988
by which the State Government, had suitably removed the disparity and
discrimination among all classes of pensioners irrespective of their date of
retirement. The claim of the association for calculation of pension payable to
pre-1.1.86 retirees on the basis of the revised pay scales was accordingly
the decision of the Finance Secretary the respondent-association filed a second
writ application before the High Court in which it was, inter-alia, claimed
that the Finance Secretary's order should be quashed and the State-respondents
should be directed to give equal pension and pensionary benefits to all
pensioners irrespective of their date of retirement.
reason of promulgation of the Administrative Tribunals Act 1985, the second
writ petition was transferred to the West Bengal Administrative Tribunal. The
Tribunal rejected the application of the association. The Tribunal's order was
challenged by the respondent association before the Division Bench of the High
Court by a third application under Article 226 of the Constitution. This writ
application was decided in favour of the association by an order dated 13th May 1998. It was held by the High Court that
in keeping with the decision in D.S.Nakara's case, the members of the
association were entitled to the pensionary benefits as were paid to post-1986
retirees. The decision of the High Court has now been impugned before us by the
to the appellant, the pre-1986 retirees were not entitled to re-calculation of
pension on the basis of the revised pay scales. It was stated that there was no
revision of the pay of employees who had retired prior to 1.1.86 notionally or
submitted that in keeping with the Nakara principle the formula for calculation
for pre-1.1.86 and for post 1.1.86 retirees, namely, 50% of the last pay drawn
was the same. Additionally, all retirees were getting Dearness Allowance
commensurate with the consumer price index. It was also contended that after
the West Bengal Services (Revision of Pay and Allowances) Rules, 1998 came into
force all pensioners whether pre or post-1986 were entitled to revision of
their pension based upon a notional fixation of pay as on 1.1.86 by adopting
the same formula as for the serving employees but with effect from 1.1.96. In
other words, the pre- 1.1.86 pensioners stood at par with post 1.1.86 pensioners
but with effect from 1.1.96. Therefore, the dispute in the appeal before us is
confined to the formula applied to the period 1.1.86 to 31.12.95 when the ROPA
rules, 1990 were in operation.
counsel appearing on behalf of the respondent- association admitted that the
dispute was limited to the period when the ROPA Rules, 1990 were in operation
as the reliefs which had been claimed by the association before the Calcutta
High Court had in fact been granted by the Fourth State Pay Commission but for
a subsequent period. It was however argued that there was no rationale for
distinguishing between the pensioners who had retired prior to 1.1.86 and the
post 1.1.86 retirees as far as quantum of pension was concerned for the period
1986 to 1995. It is said that the quantum of pension forms part of the formula
for computation of pension and that Nakara's case clearly forbade any
distinction between pensioners inter-se.
sides have contended that the decision in Nakara supported their respective contentions.
Neither disputes that Nakara blazed a trail in service law which brought
substantial relief to pensioners who were otherwise isolated from the retiral
benefits which were being conferred on persons who had retired after them. The
dispute is as to the extent of the relief. It is, therefore, necessary to
briefly recapitulate the facts of Nakara's case.
subject matter of decision in that case was an Office Memorandum dated
25.5.1979 by which the Ministry of Finance, Government of India propounded a liberalised
formula for computation of pension and made it applicable to Government
servants who were in service on 31.3.1979 and retired from service on or after
that date. Pre-1979 retirees were being paid pension on the basis of average
emoluments of 36 months' salary which preceded the date of retirement. The liberalised
formula provided for i) average emoluments with reference to the last 10 months
of service; ii) a higher minimum ceiling on the pension payable and iii)
introduced a slab system for computation of pension. After an exhaustive review
of decisions relating to Article 14 of the Constitution, the Court held that
pension was not only compensation for loyal service rendered in the past but
was a measure of socio economic justice, and that there was no reason given for
choosing 1.4.1979 as a cut-off date for applying the formula. In coming to the
conclusion that the cut off date was invalid and must be struck down and that
the liberalised formula must be made available to all pensioners, the Court
noted that it was not a case of contributable scheme or a pension fund from
which alone the pension was to be disbursed neither was it a new retiral
benefit but it was an "upward revision of an existing benefit". The
argument of the Government regarding the non- availability of funds was found
unacceptable since, it was said, that application of the same pension formula
to all pensioners would only make a marginal difference in the case of past
pensioners because the emoluments were not revised and all that the old
pensioners would get by reason of computation on the liberalised formula would
be a slightly higher pension.
several pronouncements of this Court the principles laid down in Nakara have
been defined and their limits restated.
Kumar V. Union of India and Others was a decision of the
Constitution Bench in which it was held that the notification setting a cut off
date for exercising an option to either be covered by the Provident Fund scheme
or the pension scheme could not be struck down by applying the ratio of Nakara.
The reasons for distinguishing Nakara were broadly two fold, namely, that the
fixation of the cut off date was based on a rational principle and that the
persons covered by the Provident Fund Scheme and those covered by the Pension
Scheme did not form a homogeneous class so that the basis for applying Article
14 between the two groups was not there. This decision highlighted the fact
that a cut off date for granting service benefits may not necessarily
tantamount to a violation of Article 14 and will be upheld by the Courts if
there is some reasonable explanation in support of that date.
in Union of India V. P.N. Menon and Others, an Office Memorandum introduced a
scheme to treat a portion of the dearness allowance as pay in respect of
government servants, who retired on or after 30.9.1977. This was challenged as
being discriminatory via-a-vis those who had retired prior to 30.9.77.
challenge was negatived because:
30.9.1997 as the cut-off-date, which date was fixed when the price index level
was 272, cannot be held to be arbitrary. The decision to merge a part of the
dearness allowance with pay, when the price index level was at 272, appears to
have been taken on the basis of the recommendation of the Third Pay Commission.
As such it cannot be held that the cut-off date has been selected in an
arbitrary manner. Not only in matters of revising the pensionary benefits, but
even in respect of revision of scales of pay, a cut-off date on some rational
or reasonable basis, has to be fixed for extending the benefits."
Illustrative of another aspect of the Nakara principle, is the decision in
Commander Head Quarter, Calcutta and Others V. Capt Biplabendra Chanda. which
said that the requirement of equality prescribed by Nakara did not extend to a
new retiral benefit but was limited only to an upward revision of an existing
benefit. It was held therefore that a person who was not entitled to receive
pension on the date of his retirement could not claim a grant of pension
because of a subsequent change in the criteria of eligibility for such grant.
[See also Union of India and Others V. Dr. Vijaypurapu Subbayama 2000 (7) SCC
662 and V.N.Kasturi V. Managing Director, State Bank of India, Bombay and another 1988 (8) SCC 30.] Conversely when there is no
new scheme of payment for pension but only revision of the existing pension
scheme, for example calculation of pension on the basis of 40 per cent of the
average last 10 months salary instead of 40 per cent of the average annual
basis salary for the last 5 years of service, it would be a benefit grantable
to all pensioners irrespective of the date of their retirement in accordance
with Nakara principle.
respondents' case is based upon a failure to distinguish between the pension scheme
on the one hand and the revised pay scales on the other. Pension Schemes are
based on the West Bengal Services (Death-cum-Retirement) Rules 1971
(hereinafter referred to as the '1971 Rules') which were framed under Article
309. These Rules apply to all State Government employees barring a few
exceptions which are not relevant for our purposes.
Rules provide that a Government servant's claim to pension is regulated by the
rules in force at the time the Government servant resigns or is discharged from
service on retirement or otherwise. Rule 67 deals with the amount of pension
which is fixed on the emoluments which in terms of the definition of the word
under Section 7 (1)(d) means the 'pay' as defined in Rule 5 (28) of the West Bengal
Service Rules, Part I which the officer was receiving immediately before his
retirement. Sub-clause (1) of Rule 5 (28) of the West Bengal Service Rules,
Part I has defined pay as:
means the amount monthly drawn by a Government servant as pay other than
special pay or pay granted in view of personal qualification which has been
sanctioned for a post held by him substantially or in an officiating capacity
or to which he is entitled by reason of his position in a cadre."
Therefore unless there is a change in the emoluments as defined in the 1971
Rules, the pension will continue to be pegged to the pay drawn by the employee
immediately before his retirement. This has not been done as far as the
pre-1986 retirees are concerned by the 1990 ROPA Rules.
ROPA Rules, 1990 were based upon the recommendation of the Third State Pay
Commission. The Third State Pay Commission, was constituted by the State
Government by Finance Department resolution No. 805-F dated 30th January 1987,
inter-alia, to examine the structure of pay and conditions of service of the
specified categories of State Government employees keeping in view the
recommendations of the Fourth Central Pay Commission and the decision of the
Government of India. The Third State Pay Commission revised the pay scales and
other benefits of those employees in terms of the reference and also
recommended that the Pay Commission's report on pay, allowances and conditions
of service should be made effective from 1.1.86 because that was the date from
which the Central Government employees and the employees of a large majority of
other States had got the benefit of revised emoluments. Keeping in view the
financial resources of the State, the Third Pay Commission also recommended
that there should be notional effectiveness from 1.1.86 and the arrears due on
the basis thereof should be paid to the employees only for the period from
1.1.88 onwards. It was further recommended that pensioners retiring after
1.1.86 should be allowed the benefit of pay fixation in the revised scales and
allowance of computation of their pension which may be revised where necessary.
State Government accepted the recommendations of the Third Pay Commission and
in exercise of the powers conferred under Article 309 published the ROPA Rules
on 12th January 1990.
upon the revision of the pay scales with effect from 1.1.86 the pensionary
benefits in respect of those State Government employees whose pay had been
fixed under the ROPA Rules, 1990 were also re-calculated. In respect of those
employees who had retired after 1.1.86, their pensionary benefits were revised
notionally on the basis of the revised pay, also fixed notionally, in terms of
the ROPA Rules, 1990 by Memorandum No. 4056-F dated 25th April, 1990.
is noticeable is that the definition of the word 'emoluments' in the 1971 Rules
was not amended. As such pension continued to be calculated on the basis of
emoluments as defined in the 1971 Rules namely the last pay drawn immediately
prior to retirement. The pay of the pre 1986 pensioners was not revised. The
Third Pay Commission had given a reason for choosing 1.1.86, as the cut off
date. As held in Krishena Kumar v. Union of India (supra) and Union of India v.
P.N. Menon (supra) merely because a cut off date is fixed would not make the
exercise invalid all though persons in the service immediately before the cut
off date would be deprived of the benefit of the revised scales of pay. It
would depend upon the relevancy of the consideration underlying the choice of
such date. The reason stated by the Third Pay Commission cannot be said to be
arbitrary or irrelevant.
the scales of pay had been revised from 1.1.86, the re-computation of pension
for such employees as had been granted the revised scales of necessity was
limited to the same cut off date.
that the impugned Memorandum No. 4056-F dated 25th April 1990 did was to
re-compute the benefits in favour of post 1.1.86 retirees according to the
existing formula as provided by the Memorandum No. 7530-F and No. 7531-F both
dated 6th July 1988. The same formula continues to be applied to the pre 1986
retirees. The difference between pre-1986 pensioners and the post-1986
pensioners is only on account of the revision of pay scales and not account of
failure of State Government to equitably apply the liberalised pension scheme
formula. The quantum of the emoluments formed no part of the formula for grant
of pension during 1986 to 1995.
decision did not direct the payment of an equal amount of pension to all pensioners.
This is clear from the following passage where the Court discusses the
financial impact of the formula on the resources of the Government:
our opinion, it would make a marginal difference in the case of past pensioners
because the emoluments are not revised.
last revision of emoluments was as per the recommendation of the Third Pay
Commission (Raghubar Dayal Commission). If the emoluments remain the same, the
computation of average emoluments under amended Rule 34 may raise the average
emoluments, the period for averaging being reduced from last 36 months to last
10 months. The slab will provide slightly higher pension and if some reaches
the maximum the old lower ceiling will not deny him what is otherwise justly
due on computation." This was affirmed in the Indian Ex-Services League
and Others V. Union of India. In that case, the petitioner claimed that the
pre-April 1979 retirees of the Armed Forces were entitled to the same amount of
pension for each rank. The prayers were substantially the same as those made by
the respondent-association before us. The claim for the same amount of pension
to be paid to all pre-April 1979 retirees of the Armed Forces as to the
post-April 1979 retirees was rejected holding, inter-alia:
decision is one of limited application and there is no scope for enlarging the
ambit of that decision to cover all claims made by the pension retirees or a
demand for an identical amount of pension to every retiree from the same rank
irrespective of the date of retirement, even though the reckonable emoluments
for the purpose of computation of their pension be different." Again in
K.L. Rathee V. Union of India & Others the case of the petitioner was that
following Nakara case he had to be given the same amount of pension as other
employees of his rank irrespective of the date of retirement. The Court noted
that Nakara did not strike down the definition of 'emoluments' and held that:
case does not lay down that the same amount of pension must be paid to all
persons retiring from government service irrespective of the date of retirement.Even
if pension is calculated on the basis of the same formula the basis of
calculation has to be the average of the last ten months' emoluments.
principle of adopting last ten months' emoluments as the basis for calculating
of pension must be uniformly applied to all persons drawing pension from the
Central Government. This was all that was laid down in Nakara case. It,
however, did not lay down that the quantum of emoluments drawn during the last
ten months of service of each government employee must be taken to be the same
for this purpose.The emoluments have to be calculated according to the
government rules in force at the time of retirement of the employees."
(Emphasis supplied) Consequently in the present case for the period in
question, namely, pre -1.1.86 to 31.12.95 when the definition of 'emoluments'
was not amended and pension continued to be calculated on the basis of the
unrevised emoluments of the pre 1986 pensioners, no parity in the amount of
pension can be granted.
accordingly, allow this appeal and set aside the decision of the High Court but
without any order as to costs.
Pattanaik ) J.