1991 (12) TMI 294 - SC - Indian Laws

Summary

Issues Involved:

1. Applicability of the newly introduced pension scheme to retired employees.
2. Classification of retired employees based on cut-off dates.
3. Alleged violation of Article 14 of the Constitution.
4. Financial and administrative implications of extending the pension scheme.

Issue-wise Detailed Analysis:

1. Applicability of the Newly Introduced Pension Scheme to Retired Employees:

The Reserve Bank of India (RBI) introduced a new pension scheme effective from November 1, 1990, replacing the existing Contributory Provident Fund (CPF) Scheme. The new pension scheme was applicable to all employees entering Bank service on or after November 1, 1990. In-service employees were given an option to opt-out of the pension scheme and continue with the CPF scheme. Employees who retired between January 1, 1986, and November 1, 1990, could opt for the pension scheme provided they refunded the Bank's contribution to the provident fund with interest. Employees who retired before January 1, 1986, were not eligible for the pension scheme.

2. Classification of Retired Employees Based on Cut-off Dates:

Petitioners, who retired on or before December 31, 1985, challenged the cut-off date fixed under Regulations 3(3) and 31, arguing it was artificial and had no relation to the objective of the pension scheme. They contended that the classification between those who retired before and after January 1, 1986, violated Article 14 of the Constitution. The respondents justified the cut-off date by stating it was chosen because the pension scheme was patterned on the Central Government Employees' scheme revised by the Fourth Central Pay Commission effective January 1, 1986. Additionally, records of retired employees were maintained for a limited period, making it impractical to extend the scheme to those who retired earlier.

3. Alleged Violation of Article 14 of the Constitution:

The petitioners argued that the classification was arbitrary and violated Article 14, which forbids class legislation. They cited the Supreme Court's decision in D.S. Nakara v. Union of India, which held that pension is a right and not a bounty, and any classification must satisfy the twin test of being based on an intelligible differentia and having a rational nexus to the objective. The respondents countered that the pension scheme was a new scheme, and the cut-off date was based on rational considerations, including financial implications and administrative feasibility.

4. Financial and Administrative Implications of Extending the Pension Scheme:

The respondents highlighted the financial and administrative difficulties in extending the pension scheme to all retirees regardless of their retirement date. They pointed out that the pension scheme was introduced as a new scheme, and extending it to all retirees would impose a significant financial burden and pose challenges due to the unavailability of records for older retirees. The court recognized these practical considerations and the rationale behind the cut-off date.

Conclusion:

The Supreme Court dismissed the petition, holding that the classification based on the cut-off date of January 1, 1986, was not arbitrary or violative of Article 14. The court acknowledged the distinction between revising an existing scheme and introducing a new scheme and found that the cut-off date was justified based on financial and administrative considerations. The petitioners' claim to extend the pension scheme to all retirees was found to be unsustainable. The judgment emphasized that the choice of the cut-off date must be supported on the touchstone of Article 14 and must be based on rational considerations.