2021 (2) TMI 1190 - SC - Indian Laws

Pension Scheme - fixation of cut-off date for implementing the Pension Scheme - It was the plea of the appellants that all the employees of the Corporation who retired prior to 05.06.1995 were already paid all the retiral benefits including the benefit of Contributory Provident Fund - HELD THAT - It is clear that all the members of the respondent-Union while in service were governed by Contributory Provident Fund Scheme. All those employees who retired before 05.06.1995 were paid all retiral benefits applicable to them. As the Pension Scheme was not in existence during the relevant time it was not the case of violation of any service conditions either. The Pension Scheme is introduced by way of notification dated 06.10.1995 by giving effect from 05.06.1995 on which date the Cabinet has approved the Scheme. The employees who were governed by the Contributory Provident Fund Scheme and retired prior to 05.06.1995 and the employees who were in service and continued after 05.06.1995 of the appellant- Corporation cannot be treated as a homogeneous class. The retired employees who were governed by the Contributory Provident Fund Scheme on their retirement had already received the benefits of such Scheme constitute different class than those employees who were in service as on 05.06.1995. There is a valid reason for giving effect to the Pension Scheme from 05.06.1995 though the notification was issued on 06.10.1995. The cut-off date i.e 05.06.1995 is fixed on the ground that the Cabinet has approved the Scheme from such date. On the facts of this case it is to be noticed that when the members of the respondent-Union retired there was no Pension Scheme at all. They were merely governed by the Contributory Provident Fund Scheme and on retirement they were already granted the benefit of such Scheme. In that view of the matter only on the spacious plea that all the employees of the Corporation constitute homogeneous class cannot question the cut-off date fixed for grant of Pension Scheme. The High Court without noticing the difference of factual background in the cases relied on by the respondent-writ petitioner and without independently considering the issue in question has allowed the writ petition. In view of the same the judgment of the High Court deserves to be set aside. Appeal allowed.

Summary

Issues Involved:
1. Validity of the cut-off date for the implementation of the Pension Scheme.
2. Classification of employees for pension benefits.
3. Alleged discrimination and violation of Articles 14, 16, and 21 of the Constitution.

Detailed Analysis:

1. Validity of the Cut-off Date for the Implementation of the Pension Scheme:

The Himachal Road Transport Corporation introduced a Pension Scheme effective from 05.06.1995, as approved by the Cabinet, and notified it on 06.10.1995. The respondent-Union challenged this cut-off date, arguing it was arbitrary and discriminatory. The High Court quashed the cut-off date, stating no reasons were provided by the Corporation for choosing 05.06.1995. However, the Supreme Court held that the cut-off date was valid as it was based on the Cabinet's approval date. The Court emphasized that fixing a cut-off date is an executive function influenced by various factors, including financial constraints, and should not be interfered with unless it results in blatantly capricious outcomes.

2. Classification of Employees for Pension Benefits:

The respondent-Union argued that all employees of the Corporation should be treated as a homogeneous class, and the cut-off date created an unjust classification. The Administrative Tribunal and Supreme Court disagreed, noting that employees who retired before 05.06.1995 had already availed benefits under the Contributory Provident Fund Scheme and thus constituted a different category from those in service as of 05.06.1995. The Supreme Court reiterated that it is permissible for an employer to introduce new benefits prospectively and that the retired employees could not claim the Pension Scheme benefits retroactively.

3. Alleged Discrimination and Violation of Articles 14, 16, and 21 of the Constitution:

The respondent-Union claimed that denying pension benefits to employees who retired before 05.06.1995 violated Articles 14, 16, and 21 of the Constitution. They relied on precedents like D.S. Nakara v. Union of India, which dealt with the arbitrary classification of pensioners. However, the Supreme Court distinguished the present case from D.S. Nakara, noting that the latter involved a continuing obligation of pension, whereas the current case involved a one-time benefit under the Contributory Provident Fund Scheme. The Court held that the classification was reasonable and based on valid grounds, such as the financial impact and the approval date of the Pension Scheme by the Cabinet.

Conclusion:

The Supreme Court set aside the High Court's judgment, upholding the validity of the cut-off date (05.06.1995) for the implementation of the Pension Scheme. The Court concluded that the classification of employees based on their retirement date was justified and did not violate constitutional provisions. The appeal by the Himachal Road Transport Corporation was allowed, and the writ petition by the respondent-Union was dismissed.