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Issues involved: Interpretation of gratuity provision with prospective effect and its application to pensioners who retired before the specified date.
Summary: The Supreme Court addressed the issue of whether the provision for payment of increased gratuity with prospective effect from a specified date violates Article 14 of the Constitution of India. The petitioners, former government employees who retired before April 1, 1978, argued that they were entitled to the benefits of a government order dated March 26, 1980, which increased retirement gratuity. The High Court of Andhra Pradesh held that the gratuity revision should not apply retrospectively to pensioners who retired before the specified date. The petitioners contended that gratuity is integral to pensionary benefits and should be revised for all retirees, citing relevant case law. However, the Court, following the principle in D.S. Nakara v. Union of India, held that arrears need not be paid for gratuity benefits accrued under the revised scheme, as it is prospective and not retrospective. The Court agreed with the High Court's decision, emphasizing that the upward revision of gratuity is effective from the specified date with prospective operation. It explained that retrospective application would require rewriting the notification, which the Court cannot do. The Court highlighted that gratuity, once paid based on existing rules, cannot be retrospectively revised unless expressly provided. The Court rejected the petitioners' argument that all retirees should receive the revised gratuity, stating that such revisions are prospective and do not violate Article 14. The Court also noted that other High Court decisions did not consider the principle of prospective operation and upheld the High Court's decision to dismiss the Special Leave Petition in July 1986.
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