1997 JTR(SC) 29
1997 AIR(SC) 782 ; 1997 AIR(SCW) 603 ; 1997 2 CLT(SC) 234 ; 1997 1 JT 421 ; 1997 LIC 420 ; 1997 LIC 618 ; 1997 2 LLN 596 ; 1997 1 RSJ 685 ; 1997 1 Scale 168 ; 1997 2 SCC 342 ; 1997 SCC(L&S) 512 ; 1997 1 SCR 121 ; 1997 1 SCT 699 ; 1997 1 SLR 528 ; 1997 KHC 707 ; 1997 1 KLT(Online) 1096 ; 1997 1 Supreme 270
1997(1) Supreme 270
SUPREME COURT OF INDIA
J.S. Verma and B.N. Kirpal, JJ.
State of Rajasthan & Anr. etc. -Appellants
versus
Amrit Lal Gandhi & Ors. -Respondents
Civil Appeal Nos. 9710-17 of 1995
With
C.A. No. 9718/95, C.A. No. 77 of 1997)
@ SLP (C) No. 19231/1996
Decided on 10-1-1997
Counsel for the Parties :
For the Appearing Parties : Tapas Ray, Anil B. Divan, Sr. Advs., Aruneshwar Gupta, Sushil Kumar Jain, K.S. Bhati, B.N. Singhvi, Surya Kant, (Indra Makwana) Adv. (NP), B.D. Sharma, Rajesh, Raj Kr. Gupta, H.P. Sharma, Advocates.
IMPORTANT POINT
Financial impact of giving retrospective operation to the Pension Regulations can be the sole consideration while fixing a cut-off date.
Act
Referred
:CONSTITUTION OF INDIA : Art.16, Art.14, Art.136
SERVICE LAW : .
(A) The Constitution of India, Article 14 mandates equality and non-arbitrary classification, while Article 16 ensures equality of opportunity in public employment; these provisions were read in conjunction with service law principles and the jurisdiction of Article 136 to assess the validity of retrospective pension amendments. The case examines whether the fixation of a cut-off date for pension benefits under university pension regulations violated constitutional guarantees, with the State invoking fiscal necessity and rational classification under Article 14 to justify the 1.1.1990 date as a reasonable and non-discriminatory policy decision.
(B) Key legal principles include the power of the State to fix reasonable cut-off dates for post-retirement benefits, the doctrine of rational classification under Article 14, financial considerations as a valid basis for pension scheme implementation, and the non-justiciability of policy decisions when based on reasonable economic grounds; retrospective application of pension benefits is permissible if the classification is rational and not arbitrary.
Facts of the case:
University teachers retiring between 1.1.1986 and 1.1.1990 challenged the fixation of 1.1.1990 as the effective date for pension scheme benefits, arguing for earlier applicability; the State defended the date as a reasonable policy decision based on financial implications and legislative approval.
Findings of Court:
The High Court erred in substituting 1.1.1986 for 1.1.1990; the fixation of 1.1.1990 was a valid policy decision under Article 14, supported by fiscal considerations and legislative frameworks, and did not constitute arbitrary discrimination.
Issues:
Whether the fixation of 1.1.1990 as the effective date for pension benefits was reasonable and non-discriminatory under Article 14; whether the High Court had jurisdiction to substitute an alternative cut-off date.
Ratio Decidendi:
A cut-off date for pension benefits is permissible if it is rational and based on valid financial and policy considerations; courts cannot interfere if the classification under Article 14 is reasonable and the decision reflects genuine fiscal assessment.
Result:
The appeals are allowed, the High Court judgments are set aside, and the writ petitions are dismissed without costs.
(A) The Constitution of India, Article 14 mandates equality and non-arbitrary classification, while Article 16 ensures equality of opportunity in public employment; these provisions were read in conjunction with service law principles and the jurisdiction of Article 136 to assess the validity of retrospective pension amendments. The case examines whether the fixation of a cut-off date for pension benefits under university pension regulations violated constitutional guarantees, with the State invoking fiscal necessity and rational classification under Article 14 to justify the 1.1.1990 date as a reasonable and non-discriminatory policy decision.
(B) Key legal principles include the power of the State to fix reasonable cut-off dates for post-retirement benefits, the doctrine of rational classification under Article 14, financial considerations as a valid basis for pension scheme implementation, and the non-justiciability of policy decisions when based on reasonable economic grounds; retrospective application of pension benefits is permissible if the classification is rational and not arbitrary.
Facts of the case:
University teachers retiring between 1.1.1986 and 1.1.1990 challenged the fixation of 1.1.1990 as the effective date for pension scheme benefits, arguing for earlier applicability; the State defended the date as a reasonable policy decision based on financial implications and legislative approval.
Findings of Court:
The High Court erred in substituting 1.1.1986 for 1.1.1990; the fixation of 1.1.1990 was a valid policy decision under Article 14, supported by fiscal considerations and legislative frameworks, and did not constitute arbitrary discrimination.
Issues:
Whether the fixation of 1.1.1990 as the effective date for pension benefits was reasonable and non-discriminatory under Article 14; whether the High Court had jurisdiction to substitute an alternative cut-off date.
Ratio Decidendi:
A cut-off date for pension benefits is permissible if it is rational and based on valid financial and policy considerations; courts cannot interfere if the classification under Article 14 is reasonable and the decision reflects genuine fiscal assessment.
Result:
The appeals are allowed, the High Court judgments are set aside, and the writ petitions are dismissed without costs.
JUDGMENT
Kirpal, J.-Leave granted.
2. The common question of law which arises in these appeals by special leave relates to the date with effect from which the revised pension is to be paid to the teachers of the Jai Narayan Vyas University and Mohan Lal Sukhadia University who had retired between 1.1.1986 and 1.1.1990.
3. Though the facts in these appeals are similar, for the purpose of this judgment, we need only refer to the facts in Civil Appeal Nos. 9710-9717 of 1995 and S.L.P. (C) No. 19231 of 1996 which arise from the judgment dated 30.8.1994 of the Division Bench of the High Court in D.B. civil Writ Petition No. 115/1993 which considered the rival contentions of the parties on merit. The said judgment has been followed by the High Court while allowing the writ petition from which Civil Appeal No. 9718 of 1995 arises.
In 1962, Jodhpur University Act, 1962 was promulgated. For the teaching staff of the University contributory provident fund rules were framed and there was no pension scheme which was applicable to them.
It appears that the University Grant Commission in 1983 constituted a committee known as Mehrotra Committee to examine the structure of emoluments and also the conditions of service of the University and College teachers.
The Mehrotra Committee submitted its report in 1986, containing various recommendations. One of the recommendations related to extending pension-cum-gratuity scheme to the teachers of Universities and colleges.
4. Pursuant to the said recommendations, resolutions were passed in 1986 by the Syndicate of University of Jodhpur (now known as Jai Narayan Vyas University) and approved by the University Senate for the introduction of pensionary scheme in the University. According to this scheme, option was to be given to the university employees to opt either for contributory provident fund or for pension in lieu of the provident fund. Draft rules providing for payment of pension were also approved.
5. As the proposed scheme had financial implications, the University had to seek the approval of the Government. The Education Department of the Rajasthan Government, vide its letter dated 16.4.1991, informed the Vice-chancellors of the Rajasthan University. Jaipur, Jodhpur University, Jodhpur, M.L. Sukhdia University, Udaipur, Ajmer University, Ajmer and Kota Open University, Kota that the State Government had decided to introduce the pension scheme in the Universities of the State w.e.f. 1.1.1990. It is pursuant thereto that the cabinet of the Jodhpur University on 24.4.1991 approved the resolutions of the Syndicate and the Senate providing for the introduction of the pension scheme. Thereafter Pension Regulations 1990 and General Provident Fund Regulations 1990 were framed and on 3.8.1991 options were invited from all persons who were in the service of the University of Jodhpur on or after 1.1.1990 to give their options whether they wanted to be covered by the Provident Fund Regulations or desired to be covered by the Pension Regulations of 1990.
Thereafter, several writ petitions were filed in the High Court of Rajasthan. Two writ petitions were filed by the erstwhile teachers of the Rajasthan University who had retired prior to 1.1.1986 while eight writ petitions were filed by those who had retired between 1.1.1986 and 1.1.1990.
6. The Single Judge of the High Court allowed all the aforesaid writ petitions and directed that the revised pension scheme should be made applicable to all the petitioners including those who had retired prior to 1.1.1986. Appeals were then filed before the Division Bench which, vide judgment dated 30.8.1994, held that the revised pension scheme should be made applicable to only those employees who had retired between 1.1.1986 and 1.1.1990.
7. As already noticed above, the aforesaid judgment of the Division Bench was followed in D.B. Civil Writ Petition No. 3489 of 1993 filed by the retired university teachers of the Mohan Lal Sukhadia University, Udaipur from which Civil Appeal No. 9718 of 1995 arises.
8. On behalf of the appellants, main arguments were addressed by Shri Tapas Ray, Sr. learned counsel in C.A. 9718 of 1995. He referred to the observations of the High Court to the effect that the Mehrotra Committee had made its recommendations in 1986 and the Syndicate and Senate of the University had approved of the grant of pension to those employees who had retired after 1.1.1986, and there was no reason as to why the Pension Regulations should have been made applicable with effect from 1.1.1990. It was contended by Shri Ray that the High Court overlooked the fact that the Pension Regulations which were framed and were made applicable w.e.f. 1.1.1990 in view of the decision of the State of Rajasthan contained in its letter dated 16.4.1991. He further submitted that the date, as to when pension scheme was to be made applicable, was a policy matter. The Government having decided, as a matter of policy, that all the Universities in Rajasthan were to introduce the pension w.e.f. 1.1.1990 the said decision could not, it was submitted, be challenged.
9. Mr. Ray drew our attention to the decisions of this Court in State of West Bengal and Others v. Ratan Behari Dey and Others1 and Union of India v. P.N. Menon and others2 and contended that the High Court fell in error in not following the ratio of the aforesaid decisions in which it was clearly held that a particular cut-off date could be fixed while granting pensionary benefits.
In Ratan Behari case (supra), the Calcutta Corporation had in force a provident fund scheme. A demand was raised in 1977 for the introduced of a pension scheme. A three member committee was constituted and pursuant to its recommendations, which were accepted by the Government with some modifications, Pension Regulations were framed in 1982. Effect was given to these Regulations on and from 1.4.1977. The fixing of the date of 1.4.1977 was challenged by some of the members of the Calcutta Municipal Corporation who had retired prior to 1.4.1977. The Calcutta High Court allowed the writ petitions by holding that the date of 1.4.1977, with effect from when the Pension Regulations were to come into effect, was non est and void. While allowing the appeals, and dismissing the writ petitions, this Court examined the reasons why the date 1.4.1977 has been fixed and then observed as follows :
"Now, it is open to the State or to the Corporation, as the case may be, to change the conditions of service unilaterally. Terminal benefits as well as pensionary benefits constitute conditions of service. The employer has the undoubted power to revise the salaries and/or the pay scales as also terminal benefits/ pensionary benefits. The power to specify a date from which the revision of pay scales or terminal benefits/pensionary benefits, as the case may be, shall effect is a concomitant of the said power. So long as such date is specified in a reasonable manner, i.e., without bringing about a discrimination between similarly situated persons, no interference is called for by the court in that behalf."
In P.N. Menon case (supra) the question again arose with regard to fixing of cut-off date for payment of gratuity and pension. In that case the cut-off date, which was fixed, was 30.9.1977. While allowing the appeals and repelling the challenge to the fixation of the said date, it was observed at pages 73-74 as under :
"Whenever the Government or an authority, which can be held to be a State within the meaning of Article 12 of the Constitution, frames a scheme for persons who have superannuated from service, due to many constraints, it is not always possible to extend the same benefits to one and all, irrespective of the dates of superannuation. As such any revised scheme in respect of post-retirement benefits, if implemented with a cut-off date, which can be held to be reasonable and rational in the light of Article 14 of the Constitution, need not be held to be invalid. It shall not amount to "picking out a date from the hat, as was said by this Court in the case of D.R. Nim v. Union of India in connection with fixation of seniority. Whenever a revision takes place, a cut-off date becomes imperative because the benefit has to be allowed within the financial resources available with the Government."
It again reiterated at page 75 that "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".
10. Applying the ratio of the aforesaid decisions to the present case, we find no justification for the High Court having substituted the date of 1.1.1986 in lieu of 1.1.1990. It is evident that for introducing a pension scheme, which envisaged financial implications, approval of the Rajasthan Government was required. In the letter of 16.4.1991. Written to the Vice-Chancellors of different universities of Rajasthan, it was stated as follows :
"As per the direction in regard to the aforesaid subject, the State Government has decided to introduce Pension Scheme in the Universities of the State w.e.f. 1.1.1990. In this regard the State Legislature has passed University Pension Rules and General Provident Fund Rules. Therefore, by enclosing a copy of University Pension Regulations and General Provident Fund Regulations with this letter, it is requested that by obtaining approval of the competent body or syndicate of the University, these Regulations be implemented in the University together and necessary information regarding implementation be intimated."
The Syndicate and Senate of the Universities, when they had forwarded their recommendations in 1986, did not contain a specific date with effect from which the pension scheme was to be made applicable. Their recommendations were subject to approval. The approval was granted by the Government, after the State Legislature had passed University Pension Rules and General Provident Fund Rules. The Government had stated in its affidavit before the High Court that the justification of the cut-off date of 1.1.1990 was "wholly economic". It cannot be said that the paying capacity is not a relevant or valid consideration while fixing the cut-off date. The University could, in 1991, validly frame Pension Regulations to be made applicable prospectively. It, however, chose to give them limited retrospectivity so as to cover a larger number of employees by taking into account the financial impact of giving retrospective operation to the Pension Regulations. It was decided that employees retiring on or after 1.1.1990 would be able to exercise the option of getting either pension or provident fund. Financial impact of making the Regulations retrospective can be the sole consideration while fixing a cut-off date. In our opinion, it cannot be said that this cut-off date was fixed arbitrarily or without any reason. The High Court was clearly in error in allowing the writ petitions and substituting the date of 1.1.1986 for 1.1.1990.
11. Mr. Anil B. Diwan, Sr. Advocate appearing in Civil Appeal Nos. 9710-9717 of 1995 for respondent No.1, contended that the University had asked for extention of time to implement the judgment and must be regarded as having accepted the decision specially when the University had not come in appeal and, therefore, whatever be the decision of this Court on the question of law, the benefit of the judgment should be given to his clients who had retired between 1.1.1986 to 1.1.1990.
12. It is true that the University has not filed any appeal but the State of Rajasthan has challenged the correctness of the decision of the High Court and it was represented at the bar, on behalf of the appellant, that only the options had been invited and the judgment had not been given effect to and no pension has been given to those employees who had retired between 1.1.1986 to 1.1.1990. Counsel for the University stated that as the State of Rajasthan had a filed an appeal, therefore the University chose not to file one of it s own. We, therefore, do not see any reason as to why this decision should not be applicable to all the employees who had retired prior to 1.1.1990 as it cannot be held that the University had accepted the correctness of the High Court s decision.
13. From the aforesaid discussion, it follows that the policy decision of the Universities, making the Pension Regulations applicable w.e.f. 1.1.1990 has not been shown to be arbitrary or invalid. These appeals are, accordingly, allowed and the judgments of the High Court are set aside and the writ petitions filed by the respondents are dismissed. There shall be no order as to costs.
Appeal allowed.
Writ Petitions dismissed.
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