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TMI Blog2005 (8) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... l and economic implications are very relevant and germane for any policy decision touching the administration of the Government, at the Centre or at the State level. Even at that time, interestingly, the benefits were not made admissible from 1.3.1988, i.e. the date of the Average Consumer Price Index of 729.91, but from a much further date i.e. 16.9.1993. The Central Government adopted the same policy while issuing the O.M. dated 14.7.1995. Although, dearness allowance linked to the All India Average Consumer Price Index 1201.66 (as on 1.7.1993), was treated as reckonable part of dearness allowance for the purpose of calculating the death-cum-retirement gratuity, the benefit was actually made available to the employees who retired or died on or after 1.4.1995. Similarly, the increase in the ceiling of gratuity was a mere consequential step, which was also made applicable from 1.4.1995. As we have already noticed, 1.4.1995 was the date suggested by the Fifth Central Pay Commission ( Pay Commission ) in its Interim Report. The Central Government took a conscious stand that the consequential financial burden would be unbearable. It, therefore, chose to taper down the financial burden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et retirement gratuity/ death gratuity on the basis of addition of certain portion of the dearness pay to the basic pay. This benefit was refused to them. The respondents challenged the decision of the State Government declining them the aforesaid benefit by a group of writ petitions (numbered CWP No. 4995/97 and others) before the High Court of Punjab Haryana. The High Court partially allowed the writ petition and held that such of the State Government's employees, who had retired on or after 1.7.1993, were entitled to the higher amount of death gratuity and retirement gratuity consequent upon the merger of a portion of dearness allowance into the basic pay. The High Court, however, refused to grant this benefit to employees who had retired before 1.7.1993. The High Court also directed the State Government and its officers to calculate the death/ retirement gratuity of the respondents who had retired on or after 1.7.1993 in accordance with the notification dated 13.12.1996. The said judgment of the Division Bench of the Punjab Haryana High Court is challenged in this appeal. Civil Appeal No. 1061 of 2005: The respondents, retired employees of the Education Department of the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. They retired on different dates, but between 31.10.1993 and 28.2.1994. They were paid gratuity in accordance with the then applicable rules. The respondents demanded gratuity in accordance with the orders of the Government of Punjab. This would have given them the benefit of increased quantum of death gratuity and retirement gratuity pursuant to the merger of certain percentage of the dearness allowance with the basic pay. This benefit having been refused to them, they moved the Punjab Haryana High Court by their writ petition CWP No. 942/99. This writ petition was also allowed by a common judgment dated 3.5.2002 rendered by the Punjab Haryana High Court in CWP No. 4995/97. Being aggrieved thereby, the appellant-Municipal Committee is before this Court. Civil Appeal No. 133 of 2003: The appellants in this case retired from the Education Department of the Government of Punjab upon attaining the age of superannuation on various dates before 1.7.1993. They claimed the benefit of increased amount of retirement-cum-death gratuity consequent upon the merger of a portion of dearness allowance with the basic pay as indicated in the instructions of the State Government dated 13.12.1996, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 14.7.1995, seeking higher benefits of death-cum-retirement gratuity pursuant to the merger of a portion of the dearness allowance with basic pay and the consequential raising of the ceiling on the death cum retirement gratuity amount. Their claims were refused by the Central Government. They filed Original Applications before the CAT (Mumbai Bench). The issue as to the validity of the decision of the Central Government in fixing the cut-off date of 1.4.1995 was referred to the Full Bench of the CAT. The CAT by its order dated 21.9.2001 held that there was no nexus or rational consideration in fixing the aforesaid date of 1.4.1995 for availability of the benefit and allowed the Original Applications. Being aggrieved thereby, the Union of India preferred Writ Petition No. 884/2002, which was pending before a Division Bench of the Bombay High Court. Since the identical issue was being agitated before this Court, by the order dated 27.7.2004, this writ petition was ordered to be transferred to this Court to be heard along with the connected matters. Civil Appeals @ Special Leave Petitions (C) Nos. 6855-6886 of 2003: The respondents are retired employees of the Government of Punj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension) Rules, 1972 and for no other purpose. The said orders came into effect from 16.9.1993. It was directed that the death-cum- retirement gratuity of persons who have already died or retired on or after 16.9.1993 should be recalculated on the basis of the said orders and arrears, if any, be paid. By O.M. dated 14.7.1995, the Central Government directed that, as recommended by the Fifth Central Pay Commission in its Interim Report, dearness allowance as linked to the average All India Consumer Price Index ( AICPI ) 1201.66 would be treated as dearness pay for reckoning emoluments for the purpose of death gratuity and retirement gratuity under the Central Civil Services (Pension) Rules, 1972. Further, it was directed that the ceiling on gratuity would stand enhanced to ₹ 2.50 lacs. The said O.M. indicated different percentages of dearness allowance, depending upon the basic pay drawn, to be added to pay for calculating gratuity. Following the aforesaid O.M. issued by the Central Government, the Government of Punjab in the Department of Finance issued orders dated 13.12.1996, wherein it was notified that the Governor of Punjab was pleased to decide that dearness allowance as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Governments contended that, though it is a fact that certain percentage of dearness allowance was to be merged with the basic pay with effect from 1.7.1993 (linked to the All-India Consumer Price level 1201.66) and that the said dearness allowance admissible to the employees on 1.7.1993 was to be treated as dearness pay for reckoning emoluments for the purpose of death gratuity and retirement gratuity, financial constraints impelled the Governments, both at the Centre and the State, to restrict such payments only to the employees who had died or retired on or after 1.4.1995. The learned counsel for the Union of India made available the Government's file from which it is seen that the Government took a conscious decision that the benefit of the increase in the quantum of gratuity, pursuant to the merged portion of the dearness allowance and the revised ceiling shall be made available from 1.4.1995, which was the date recommended in the Interim Report of the Fifth Central Pay Commission. The Government noticed that the consequential financial burden would be very heavy. Hence, the Central Government decided that these benefits would be made available only from 1.4.1995. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly from 1.4.1995. It is trite that, the final recommendations of the Pay Commission were not ipso facto binding on the Government, as the Government had to accept and implement the recommendations of the Pay Commission consistent with its financial position. This is precisely what the Government did. Such an action on the part of the Government can neither be characterized as irrational, nor as arbitrary so as to infringe Article 14 of the Constitution. D.S. Nakara (supra), which is the mainstay of the case of the employees, arose under special circumstances, quite different from the present case. It was a case of revision of pensionary benefits and classifications of pensioners into two groups by drawing a cut-off line and granting the revised pensionary benefits to employees retiring on or after the cut-off date. The criterion made applicable was being in service and retiring subsequent to the specified date . This Court held that for being eligible for liberalised pension scheme, application of such a criterion is violative of Article 14 of the Constitution, as it was both arbitrary and discriminatory in nature. The reason given by the Court was that the employees who retired pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In Action Committee South Eastern Railway Pensioners v. Union of India, it was held that, on merger of a part of dearness allowance as dearness pay on average price index level at 272 with reference to different pay ranges, fixing a cut-off date in such a manner was not arbitrary and the principle enunciated in D.S. Nakara (supra) was not applicable. In this connection, the ratios in Krishena Kumar v. Union of India, Indian Ex- Services League v. Union of India, State Government Pensioners' Association v. State of A.P., and All India Reserve Bank Retired Officers' Association v. Union of India are apt. In all these cases, the prescription of a cut-off date for implementation of such benefits was held not to be arbitrary, irrational or violative of Article 14 of the Constitution. The importance of considering financial implications, while providing benefits for employees, has been noted by this Court in numerous judgments including in the following two cases. In State of Rajasthan and Anr. v. Amritlal Gandhi Ors., this Court went so as far as to note that: Financial impact of making the Regulations retrospective can be the sole consideration while fixing a cut-off date. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, Railway Board Ors. v. C.R. Rangadhamaiah Ors. and Union of India and Anr. v. Pratibha Bonnerjea and Anr. Having perused these judgments, we find that the issue urged before us, which has been considered in the several judgments that we have referred to in detail, has not been adverted to. In our view, these judgments are of no assistance in resolving the issue before us. In the result, we set aside the common judgment and order of the High Court of Punjab Haryana in CWP No. 4995/97 and in connected matters decided thereby, in so far as they purport to grant the revised death-cum- retirement gratuity to government employees who died or retired before the prescribed cut-off date of 1.4.1995. We also set aside judgment and orders of the High Court of Himachal Pradesh in CWP No. 462/03 (dated 24.6.2003) and in Civil Review No. 32/2003 (dated 11.9.2003). We further allow Civil Appeal Nos. 129/03, 132/03, 1838/03, 1847/03, 902/04, 1061/05 Civil Appeals @ SLP (C) Nos. 12071-12072/04, Civil Appeal @ SLP (C) No. 2947/03, Civil Appeals @ SLP (C) Nos. 6855- 6886/03 and T.C. No. 58/04 (and set aside the order dated 21.9.2001 of the CAT (Mumbai Bench) in O.A. Nos. 542/97, 942/97 and 943/97) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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