1994 (3) TMI 387 - SC - Indian Laws

Summary

Issues Involved:
1. Validity and applicability of Office Memorandum No. F-19(4)-E.V./79.
2. Alleged discrimination and arbitrariness under Article 14 of the Constitution.
3. Cut-off date for pension benefits.
4. Encashment of earned leave.
5. Family pension scheme.

Detailed Analysis:

1. Validity and Applicability of Office Memorandum No. F-19(4)-E.V./79:
The respondents, retired government servants, contested the validity of Office Memorandum No. F-19(4)-E.V./79, issued by the Government of India, which treated a portion of the dearness allowance as pay for retirement benefits for those who retired on or after 30-9-1977. They argued that these benefits should be extended to all retired government servants, regardless of their retirement date. The High Court allowed the writ application based on the judgment in D.S. Nakara v. Union of India, declaring the memorandum discriminatory. However, the Supreme Court noted that the memorandum introduced a scheme to treat a portion of the dearness allowance as pay for government servants who retired on or after 30-9-1977, with specific percentages of dearness pay fixed for different pay ranges for retirement benefits.

2. Alleged Discrimination and Arbitrariness under Article 14 of the Constitution:
The Supreme Court examined whether the memorandum was discriminatory and arbitrary, violating Article 14 of the Constitution. The Court emphasized that public service is bilateral, where a public servant is remunerated for services rendered, and pension is an integral part of employment. The Court recognized that the government revises pension rates and provides additional benefits over time, but it is not always feasible to extend these benefits to all retirees regardless of their retirement dates. The Court held that any revised scheme with a reasonable and rational cut-off date does not violate Article 14. The Court concluded that the concept of 'dearness pay' was evolved with different percentages for different pay ranges, and the option given to retirees to choose between two alternatives was not arbitrary.

3. Cut-off Date for Pension Benefits:
The Court addressed the issue of the cut-off date, 30-9-1977, for implementing the scheme. It noted that the cut-off date was linked to the price index level at 272, which fell on 30-9-1977, and was based on the Third Pay Commission's recommendation. The Court held that the cut-off date was not arbitrary and was necessary for implementing the scheme within the government's financial resources. The Court cited previous judgments, including D.R. Nim v. Union of India, Action Committee South Eastern Railway Pensioners v. Union of India, and Krishena Kumar v. Union of India, to support the validity of having a cut-off date for pension benefits.

4. Encashment of Earned Leave:
Regarding the grievance about encashment of earned leave up to a maximum of six months, the Court pointed out that it was a new facility allowed to serving government servants, and a date had to be fixed for its application. The respondents, who were not in service on the relevant date, could not claim this benefit.

5. Family Pension Scheme:
The Court addressed the family pension scheme, which was contributory until 22-9-1977 and then made non-contributory. The respondents, who were not in service on the said date, were not eligible for the non-contributory benefit, and there was no question of refunding the amount they contributed under the old scheme.

Conclusion:
The Supreme Court concluded that the High Court erred in applying the principle of D.S. Nakara to the present case. The Court held that the cut-off date of 30-9-1977 was not arbitrary, and the decision to merge a part of the dearness allowance with pay was based on rational considerations linked to the price index level. The appeal was allowed, and the High Court's judgment was set aside, with no order as to costs.