2022 (3) TMI 1556 - SC - Indian Laws

Implementation of One Rank One Pension OROP policy for ex-servicemen of defence forces - OROP is the payment of uniform pension to armed services personnel retiring in the same rank with the same length of service, irrespective of the date of retirement. The Petitioners contend that the initial definition of OROP was altered by the first Respondent and, instead of an automatic revision of the rates of pension, the revision now would take place at periodic intervals. The Petitioners submit that the deviation from the principle of automatic revision of rates of pension, where any future enhancement to the rates of pension are automatically passed on to the past pensioners, is arbitrary and unconstitutional Under Articles 14 and 21 of the Constitution. HELD THAT - The principles governing pensions and cut-off dates can be summarised as follows (i) All pensioners who hold the same rank may not for all purposes form a homogenous class. For example, amongst Sepoys differences do exist in view of the MACP and ACP schemes. Certain Sepoys receive the pay of the higher ranked personnel; (ii) The benefit of a new element in a pensionary scheme can be prospectively applied. However, the scheme cannot bifurcate a homogenous group based on a cut-off date; (iii) The judgment of the Constitution Bench in Nakara (supra) cannot be interpreted to read the one rank one pension Rule into it. It was only held that the same principle of computation of pensions must be applied uniformly to a homogenous class; and (iv) It is not a legal mandate that pensioners who held the same rank must be given the same amount of pension. The varying benefits that may be applicable to certain personnel which would also impact the pension payable need not be equalised with the rest of the personnel. Applying the above principles to the facts of the case, there are no constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015 for the following reasons (i) The definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement. It is not the case of the Petitioners that the pension is reviewed 'automatically' to a class of the pensioners and 'periodically' to another class of the pensioners; (ii) The cut-off date is used only for the purpose of determining the base salary for the calculation of pension. While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used. Since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage, the Union Government has taken a policy decision to enhance the base salary for the calculation of pension. Undoubtedly, the Union Government had a range of policy choices including taking the minimum, the maximum or the mean or average. The Union government decided to adopt the average. Persons below the average were brought up to the average mark while those drawing above the average were protected. Such a decision lies within the ambit of policy choices; (iii) While no legal or constitutional mandate of OROP can be read into the decisions in Nakara (supra) and SPS Vains (supra), varying pension payable to officers of the same rank retiring before and after 1 July 2014 either due to MACP or the different base salary used for the calculation of pension cannot be held arbitrary; and (iv) Since the OROP definition is not arbitrary, it is not necessary for us to undertake the exercise of determining if the financial implications of the scheme is negligible or enormous. In terms of the communication dated 7 November 2015, the benefit of OROP was to be effected from 1 July 2014. Para 3 (v) of the communication states that in future, the pension would be re-fixed every five years . Such an exercise has remained to be carried out after the expiry of five years possibly because of the pendency of the present proceedings. It is ordered that in terms of the communication dated 7 November 2015, a re-fixation exercise shall be carried out from 1 July 2019, upon the expiry of five years. Arrears payable to all eligible pensioners of the armed forces shall be computed and paid over accordingly within a period of three months. Petition disposed off.

Summary

Issues Involved:
1. Concept and genesis of OROP.
2. Plea of Discrimination.
3. ACP-MACP.
4. Financial Implications.
5. Average to Maximum.
6. Periodic revision every five years.

Detailed Analysis:

Concept and Genesis of OROP
The judgment outlines the historical background and evolution of the One Rank One Pension (OROP) policy. The Koshyari Committee Report defined OROP as a uniform pension for armed forces personnel retiring in the same rank with the same length of service, irrespective of their date of retirement. The principle included automatic passing of future enhancements in pension rates to past pensioners. However, the implementation of OROP by the Union Government, as communicated on 7 November 2015, introduced the concept of revising pensions at periodic intervals rather than automatically. This communication also specified the date of implementation as 1 July 2014 and mentioned that pensions would be re-fixed every five years.

Plea of Discrimination
The Petitioners argued that the fixation of pension based on the calendar year 2013 would result in pre-2014 retirees receiving less pension than those retiring after 2014. They also contended that fixing the pension based on the mean of minimum and maximum pensions of 2013 would lead to different pensions for the same ranks and lengths of service. The Union Government explained that the disparities were due to the Modified Assured Career Progression (MACP) scheme and other factors like promotions and disciplinary proceedings.

ACP-MACP
The judgment clarifies that the MACP scheme, implemented from 1 January 2006, replaced the earlier ACP scheme and provided upgradations at 8, 16, and 24 years of service. The Union Government stated that for computing OROP, MACP was taken as the base and applied across the board for all retirees with the same length of service. This ensured that the core value of uniform pension for personnel retiring in the same rank with the same length of service was maintained without disparity.

Financial Implications
The Union Government highlighted the significant financial implications of implementing OROP. At the time of implementation, the annual financial implication was Rs. 7,123.38 crores, with arrears amounting to Rs. 10,392.35 crores for the period from 1 July 2014 to 31 December 2015. If non-MACP personnel were to be matched with MACP personnel, the total financial outflow from 2014 would be Rs. 42,776.38 crores.

Average to Maximum
The CGDA working committee considered four options for OROP in 2013, including one based on the maximum pension of current retirees. The financial implication of this option was Rs. 14,898.34 crores per annum, with total arrears amounting to Rs. 1,45,339.34 crores. The Union Government opted for the average pension of 2013 retirees to balance financial viability and fairness.

Periodic Revision Every Five Years
The Petitioners argued for automatic revision of OROP, but the Union Government submitted that automatic revision would be impractical. The Court held that the expression "automatically passed on" meant that future enhancements in pension rates would be passed on without administrative impediments, not that revisions would occur continuously. The decision to revise pensions every five years was within the ambit of policy choices and did not violate Article 14.

Conclusion
The Court found no constitutional infirmity in the OROP policy as defined by the communication dated 7 November 2015. The policy was uniformly applicable to all pensioners, and the decision to use the average salary of 2013 retirees for calculating pensions was within the Union Government's policy choices. The Court directed that a re-fixation exercise be carried out from 1 July 2019, with arrears payable to all eligible pensioners within three months. The petition was disposed of accordingly.