2006 JTR(SC) 1207
2007 AIR(SC) 622 ; 2007 AIR(SCW) 214 ; 2006 3 JKJ(SC) 55 ; 2007 1 KLT 170 ; 2006 13 Scale 20 ; 2006 12 SCC 557 ; 2007 2 SCC(L&S) 330 ; 2006 Supp9 SCR 776 ; 2007 1 SCT 469 ; 2007 2 SLR 33 ; 2007 KHC 3383 ; 2006 9 Supreme 685
2006(9) Supreme 685
SUPREME COURT OF INDIA
(From Andhra Pradesh High Court)
Arijit Pasayat and S.H. Kapadia, JJ.
Accountant General of Orissa & Anr. - Appellants
versus
R. Ramamurthy & Anr. - Respondents
Civil Appeal No. 5269 of 2006
(Arising out of SLP (C) Nos. 21647-648 of 2005)
Decided on 29-11-2006
Counsel for the Parties :
For the Appearing Parties : A. Sharan, A.S.G., Dr. Shyamlha Pappu, J.V. Suryanarayana, Sr. Advocates, Asheesh Jain, Ms. Rekha Pandey and Mrs. Anil Katiyar, P.V. Sundarajan, Ms. Shipra Ghose, Ms. Arundhati Mukherjee, R. Krishnaa Morthi, Goodwill Indeevar, S. Udaya Kumar Sagar and Ms. Bina Madhavan (for M/s. Lawyer’s Knit & Co.) Advocates.
Act
Referred
:CENTRAL CIVIL SERVICES PENSION RULES : R.37, R.37(a)
SERVICE LAW : .
(A) The Central Civil Services Pension Rules, Rule 37 and Rule 37A, as interpreted by this Court in P.V. Sundara Rajan (2000 (4) SCC 469), govern the mode of calculating restoration of pension for government servants absorbed into corporations or bodies wholly or substantially owned by the Central or State Government. Rule 37 provides for deemed retirement upon absorption and eligibility for retirement benefits, while Rule 37A allows a government servant to elect a lump sum amount not exceeding one-third of the pension admissible under the Civil Services (Commutation) Rules, 1981, along with terminal benefits equal to the commuted value, on condition that the servant surrenders the right to draw two-thirds of the pension. The Court clarified that dearness relief is calculated only on the restored one-third of the pension and not on the commuted portion, and that pension under the rules does not include dearness relief. These provisions and interpretations form the basis for determining the restorable pension and related benefits in cases involving commutation and restoration.
(B) Key legal principles include: (i) Rule 37A permits commutation of only one-third of pension as a lump sum, with surrender of two-thirds pension rights; (ii) dearness relief is admissible only on the restored one-third pension and not on the commuted portion; (iii) pension under the rules excludes dearness relief; (iv) where a pensioner is re-employed, dearness relief is not payable during re-employment; (v) the computation of commuted amount must align with statutory commutation tables and government instructions.
Facts of the case:
The appellants challenged an order of the Central Administrative Tribunal (Hyderabad Bench) in Writ Petition No.8532 of 2003, questioning the method of calculating restoration of pension for employees under Rule 37A of the Central Civil Services (Pension) Rules, 1972. The appellants contended that the High Court erred by not considering Office Memoranda on pension computation issued by the Department of Pension. The High Court had held that where an employee commuted the minimum pension (one-third) or any lesser portion, the commuted amount must be deducted from the basic pension to determine the restorable pension, while dearness relief and interim relief continue to be payable on the full basic pension. The appellants sought revision of this interpretation, emphasizing the need to apply the pension rules and relevant office memoranda.
Findings of Court:
The Supreme Court, per Justice Arijit Pasayat, noted that the High Court correctly applied the principles laid down in P.V. Sundara Rajan. The Court observed that the dearness relief is meant to compensate for the erosion in the value of money due to rising cost of living and is granted only on the restored one-third portion of pension, not on the commuted part. The Court held that there was no substance in the appeals and that the memoranda referred to by the appellants did not alter the statutory scheme or the calculation method already established.
Issues:
The primary issue was whether the restoration of pension under Rule 37A requires computation after deducting the commuted portion from the basic pension, and whether dearness relief is payable on the full basic pension or only on the restored portion. Additionally, it was examined whether office memoranda issued by the Department of Pension mandate a different calculation method not already covered by the rules and prior Supreme Court decisions.
Ratio Decidendi:
The restoration of pension under Rule 37A involves computing the commuted amount as one-third (or less) of the basic pension, deducting it from the basic pension to arrive at the restorable pension, while dearness relief is admissible only on the restored one-third portion and not on the commuted amount, in accordance with the statutory framework and prior Supreme Court precedents.
Result:
The appeals are dismissed with no costs.
(A) The Central Civil Services Pension Rules, Rule 37 and Rule 37A, as interpreted by this Court in P.V. Sundara Rajan (2000 (4) SCC 469), govern the mode of calculating restoration of pension for government servants absorbed into corporations or bodies wholly or substantially owned by the Central or State Government. Rule 37 provides for deemed retirement upon absorption and eligibility for retirement benefits, while Rule 37A allows a government servant to elect a lump sum amount not exceeding one-third of the pension admissible under the Civil Services (Commutation) Rules, 1981, along with terminal benefits equal to the commuted value, on condition that the servant surrenders the right to draw two-thirds of the pension. The Court clarified that dearness relief is calculated only on the restored one-third of the pension and not on the commuted portion, and that pension under the rules does not include dearness relief. These provisions and interpretations form the basis for determining the restorable pension and related benefits in cases involving commutation and restoration.
(B) Key legal principles include: (i) Rule 37A permits commutation of only one-third of pension as a lump sum, with surrender of two-thirds pension rights; (ii) dearness relief is admissible only on the restored one-third pension and not on the commuted portion; (iii) pension under the rules excludes dearness relief; (iv) where a pensioner is re-employed, dearness relief is not payable during re-employment; (v) the computation of commuted amount must align with statutory commutation tables and government instructions.
Facts of the case:
The appellants challenged an order of the Central Administrative Tribunal (Hyderabad Bench) in Writ Petition No.8532 of 2003, questioning the method of calculating restoration of pension for employees under Rule 37A of the Central Civil Services (Pension) Rules, 1972. The appellants contended that the High Court erred by not considering Office Memoranda on pension computation issued by the Department of Pension. The High Court had held that where an employee commuted the minimum pension (one-third) or any lesser portion, the commuted amount must be deducted from the basic pension to determine the restorable pension, while dearness relief and interim relief continue to be payable on the full basic pension. The appellants sought revision of this interpretation, emphasizing the need to apply the pension rules and relevant office memoranda.
Findings of Court:
The Supreme Court, per Justice Arijit Pasayat, noted that the High Court correctly applied the principles laid down in P.V. Sundara Rajan. The Court observed that the dearness relief is meant to compensate for the erosion in the value of money due to rising cost of living and is granted only on the restored one-third portion of pension, not on the commuted part. The Court held that there was no substance in the appeals and that the memoranda referred to by the appellants did not alter the statutory scheme or the calculation method already established.
Issues:
The primary issue was whether the restoration of pension under Rule 37A requires computation after deducting the commuted portion from the basic pension, and whether dearness relief is payable on the full basic pension or only on the restored portion. Additionally, it was examined whether office memoranda issued by the Department of Pension mandate a different calculation method not already covered by the rules and prior Supreme Court decisions.
Ratio Decidendi:
The restoration of pension under Rule 37A involves computing the commuted amount as one-third (or less) of the basic pension, deducting it from the basic pension to arrive at the restorable pension, while dearness relief is admissible only on the restored one-third portion and not on the commuted amount, in accordance with the statutory framework and prior Supreme Court precedents.
Result:
The appeals are dismissed with no costs.
JUDGMENT
Arijit Pasayat, J. - Leave granted.
2. Challenge in these appeals is to a judgment rendered by a Division Bench of the Andhra Pradesh High Court in Writ Petition No.8532 of 2003. The said writ petition had been filed by the appellants questioning correctness of the decision rendered by the Central Administrative Tribunal, Hyderabad Bench (in short the CAT) in O.A.No. 1345 of 2001. The basic issue which arose for consideration in the writ petition was "what is the mode of calculating of restoration of pension in respect of employees covered by Rule 37A of CCS (Pension) Rules, 1972 (in short the Rules). According to the appellants, a conjoint reading of Rules 37 and 37A as operated upto 31.3.1995 has not been kept in view. The High Court modified the order of the CAT and held that in a case where an employee had commuted minimum permissible pension i.e. 1/3 and even where lesser portion is commuted, the pro rata commuted portion has to be deducted from the basic pension to arrive at restorable pension, but however, he will get dearness relief, interim relief etc. on full basic pension.
3. The High Court arrived at the aforesaid conclusion after considering Rules 37 and 37A.
4. Challenge in these appeals is on the ground that the High Court was not correct in calculating the commuted amount of pension to be restorable pension without taking into consideration the relevant pension rules and the Office Memorandum No.4/59/97-P&PW(D) dated 14.7.1998, Office Memorandum No.2/1/87-PIC-1 dated 16.4.1987 and Office Memorandum No.45/86/97-P&PW(A) Part II dated 27.10.1997.
5. According to the appellants, these Memorandas laid down the tables according to which the computation has to be arrived at as issued by the Department of Pension.
6. Learned counsel for the respondents on the other hand supported the judgment in question.
7. Rules 37 and 37A read as follows:
"Rule 37: Pension on absorption in or under a corporation, company or body:-
(1) 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 Central Government or a State Government or in or under a Body controlled or financed by the Central Government or a State Government shall be deemed to have retired from service from the date of such absorption and subject to sub-rule (3) he 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 Central Government applicable to him.
EXPLANATION: Date of absorption shall be:
(i)in case of Government employee joins a Corporation or a company or body on immediate absorption basis the date on which he actually joins that corporation or company or body;
(ii)in case a Government employee initially joins a corporation or company or body on foreign service terms by retaining a lien under the Government the date from which his unqualified resignation is accepted by the Government.
(2) The provisions of sub-rule (1) shall also apply to Central Government servants who are permitted to be absorbed in joint sector undertakings, wholly under the joint control of Cenra1 Government and State Governments / Union Territory Administrations or under the joint control of two or more State Government/Union Territory Administration.
(3) Where there is a pension scheme in a body controlled or financed by the Central Government in which a Government servant is absorbed, he shall be entitled to exercise option either to count the service rendered under the Central Government in that body for pension or to receive pro rata retirement benefits for the service rendered under the Central Government in accordance with the orders issued by the Central Government.
EXPLANATION: Body means autonomous body or statutory body:-
RULE 37-A:- Payment of lump sum, amount to persons on absorption in or under a Corporation, company or body:
(1) Where a Government servant referred to in Rule 37 elects the alternative of receiving the retirement gratuity and a lump sum amount in lieu of pension he shall, in addition to the retirement gratuity be granted:
(a) On an application made in this behalf, a lump sum amount not exceeding the computed value of one-third of his pension as may be admissible to him in accordance with the provisions of the Civil Pensions (Commutation) Rules [now Central Civil Services (Commutation of Pension) Rules, 1981]; and
(b) terminal benefits equal to the commuted value of the balance amount of pension left after commuting one-third of pension to be worked out with reference to the commutation tables obtaining on the date from which the commuted value becomes payable subject to the condition that the Government servant surrenders his right of drawing two-thirds of his pension."
8. The respective stand have to be considered in the light of this Courts decision in P.V. Sundara Rajan v. Union of India (2000 (4) SCC 469). In para 11 it has been noted as follows:
"The dearness relief on pension has been granted to pensioners to compensate them for the erosion in the value of money due to rise in the cost of living. It seems clear that the Government has permitted to the applicants dearness relief calculated only on one-third part of the pension restored while in case of other pensioners, the dearness relief is calculated on full pension including the commuted part of pension. As already noticed, the applicants are to be treated on the same footing as other Central Government employees insofar as the question of restoration of one-third of commuted pension is concerned and are entitled to the benefits as given in Common Cause case (1987 (1) SCC 142). In this respect, it would also be useful to notice that "pension" as defined in Central Civil Services (Pension) Rules, 1972 does not include dearness relief. Rule 3(1)(o) reads as under:
"3(1)(o) pension includes gratuity except when the term pension is used in contradistinction to gratuity, but does not include dearness relief."
9. Further, in Paragraphs 12 and 13 it has been observed as follows:
12. We may also reproduce Rule 55-A:
"55-A Dearness relief on pension/family pension.–(i) Relief against price rise may be granted to the pensioners and family pensioners in the form of dearness relief at such rates and subject to such conditions as the Central Government may specify from time to time.
(ii) If a pensioner is re-employed under the Central or State Government or a corporation/company/body/bank under them in India or abroad including permanent absorption in such corporation/company/body/bank, he shall not be eligible to draw dearness relief on pension/family pension during the period of such re-employment.
(iii) Deleted"
13. The government instructions also show that the dearness relief is granted to compensate the pensioners for erosion in the value of money due to rise in the cost of living. Anything which is not a part of pension has to be paid in full insofar as those who have commuted one-third pension."
10. In view of what has been stated in the said case, more particularly in the quoted paragraphs, there is no substance in the appeals which we accordingly dismiss. No costs.
Appeal dismissed.
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