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TMI Blog1991 (12) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... to all employees entering Bank service on or after 1st November, 1990; for them the CPF scheme did not exist. The in-service employees i.e. those employees who were actually in service at the date of introduction of the scheme were given an option to opt out of the pension scheme and continue to be governed by the CPF scheme. The third category is of those who retired from Bank's service between 1st January, 1986 and 1st November 1990. Regulation 3(3) which deals with the applicability of the scheme to the said category of retired employees reads as under: 3(3)-Employees who were in service as on 1st January 1986 (excluding those on leave preparatory to retirement) and had retired before 1st November, 1990, provided they exercise option to be governed by these Regulations and refund within such period as may be specified, the Bank's contribution to provident fund including interest received by them from the Bank together with simple interest at six percent per annum from the date of withdrawal till the date of repayment. Pension shall be payable to them in accordance with Regulation 31. 2. Regulation 31 reads as under : 31-Employees who have retired from the Bank& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve a rational nexus to the object sought to be achieved by the relevant Rules or Regulations. The petitioners, therefore, contend that while the pension scheme introduced under the Regulations is a welcome step consistent with the constitutional philosophy discernible from the Preamble and Articles 38, 39, 41 and 43 of Part IV of the Constitution, the artificial division of a homogeneous class of retired employees between those who retired prior to 1st January, 1986 and those who retired on or after that date is wholly arbitrary and unreasonable and is liable to be struck down as violative of Article 14 of the Constitution as explained by this Court in D.S.Nakara and Ors. v. Union of India [1983] 3 SCR 165. The petitioners contend that it is settled law that pension is neither a bounty nor a gratuitous payment dependent wholly on the sweet will or grace of the employer but is a right to which an employee is entitled on superannuation under the relevant Rules and is a welfare measure intended to render socioeconomic justice, a concept enshrined in the Preamble and Part IV of the constitution. To deny benefit of the pension scheme merely because a group of employees superannuated on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary, 1986 principally because that was the date from which the pension scheme as revised by the Fourth Central Pay Commission was made applicable to Government employees. It was further contended that it was felt undesirable to relate back the scheme to a date prior to 1st January, 1986 as that would cause considerable difficulties regarding calculation etc., of the pension payable to old employees for want of availability of relevant records. The respondents, therefore, contend that the submission that the pension scheme introduced by the Regulations is violative of Articles 14, 19 and 21 of the Constitution is wholly misplaced as this is a totally new scheme introduced for the first time and it is open to the Bank Authorities to decide the date from which it should be brought in force and the employees who should be covered thereunder. The respondents, therefore, contend that the writ petition is without merits and deserves to be dismissed with costs. 6. Before we proceed to deal with the main contention based on the decision of this Court in Nakara's case it would be advantageous to notice the fact that employees of the Reserve Bank of India were, prior to the introducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us appear from the above that after the proposal for the introduction of a third retiral benefit as recommended by the Study Group was negatived, the alternative proposal for introductions of pension scheme on the lines of the Government Pension Scheme was mooted. Subsequently, by the Circular of June 15, 1982 the Association informed its members about the rejection by the Central Government of the recommendation made by the Study Group. This is how the demand for the introduction of a third retiral benefit ended. Thereafter in the beginning of 1986 a large section of employees of the Bank belonging to various classes represented that the Bank should at least work out a pension scheme as an alternative to and in lieu of the existing CPF Scheme. Taking into account the general feeling of a large section of the Bank employees a fresh review was undertaken and in 1987 informal discussions took place with the officers of the Central Government The Central Government ultimately towards the end of 1989 agreed to the Bank introducing a pension scheme patterned on Government Pension Scheme as revised by the Fourth Central Pay Commission with effect from 1st January, 1986 in lieu of the CPF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the petitioners it is necessary to understand the thrust of the ratio laid down in Nakara's case. That case arose out of a Memorandum dated May 25, 1979 issued by the Government of India liberalising the formula for computation of pension in respect of the employees governed by the Central Civil Services (Pension) Rules, 1972. This liberalised scheme was made applicable to employees retiring on or after March 31, 1979. By a subsequent Memorandum dated September 23, 1979 the benefit was extended to members of the Armed Forces retiring on or after April 1, 1979. The petitioners who had retired in the year 1972 from the Central Civil Services and Armed Forces challenged the validity of the aforesaid Memoranda insofar as the liberalisation was limited to those retiring on or after the specified date thereby denying the benefit of liberalisation to all those who had retired prior to the specified date. The challenge was based principally on Article 14 of the Constitution on the ground that the specified dates fixed under the Memoranda for the two classes of employees were wholly arbitrary, unreasonable and unfair and the classification was not based on an intelligible different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the pension scheme was extended to those Bank employees who had retired on and after 1st January, 1986 as the proposal for the introduction of such a pension scheme patterned on the scheme governing the Central Government employees was mooted and taken up for consideration in 1986 and also because the pension scheme admissible to Government employees had undergone a change pursuant to the recommendations of the Fourth Central Pay Commission with effect from that date i.e. 1st January, 1986. Counsel further submitted that the cut-off date was selected as 1st January, 1986 having regard to the fact that under the Rules of the Bank, records concerning retired employees are maintained for a certain number of years only and if the benefit of the pension scheme was to be extended to all retired employees regardless of their date of retirement, the Bank would find it difficult to work out the actual benefit under the scheme admissible to each retiree. It was for this reason that the Bank took a conscious decision to extend the benefit of the pension scheme to those who retired on or after 1st January, 1986. He further contended that since the pension scheme was being introduced for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e homogeneous group of provident fund retirees between those who can come over to the pension scheme and those who are denied that benefit. The 12th Notification dated May 8, 1987 fixed the cut-off date as January 1, 1986. Under that notification all CPF beneficiaries who were in service on January 1, 1986 were taken to have come over to the pension scheme unless they specifically opted out with a view to retaining the benefits under the CPF scheme. This cut-off date was fixed as the pay-scales were revised in September, 1986 and March, 1987 effective from January 1, 1986 following the recommendations of the Fourth Central Pay Commission. On account of this upward revision in payscales another pension option was given to Railway employees who were in service on January 1, 1986. Thus, those who had retired prior to that specified date were not entitled to the benefit of the pension scheme. The question which this Court was required to consider was whether this specified date offended Article 14 of the Constitution. This Court in paragraph 34 of the judgment repelled the contention based on Article 14 read with the ratio in Nakara's case as fallacious in view of the fact that whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme governing the Central Government employees which was brought into effect from 1st January, 1986 on the recommendations of the Fourth Central Pay Commission found in Chapter X of the report, vide paragraph 10.19 of that chapter. There is, however, no doubt that by fixing the cut-off date Bank employees who superannuated on or before 31st December, 1985 are denied the benefit of the pension scheme. The contention of the petitioners that both the groups, namely, those who retired on or before 31st December, 1985 and those who retired between 1st January, 198.6 and 31st October, 1990 belong to the same group of CPF retirees and yet the Regulations seek to divide them by placing an artificial cut-off date under Regulations 3(3) and 31 of the Regulations. It is, therefore, contended that this artificial division of a homogeneous group not based on any logic or rational and having no nexus to the object to be achieved clearly offends the equality clause contained in Article 14. There is no doubt that whenever any rule or regulation having statutory flavour is made by an authority which is a State within the meaning of Article 12 of the Constitution, the choice of the cut-off date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , be no doubt that if the CPF retirees were not admitted to this new scheme they could not make any grievance in that behalf. They had no right to claim coverage under the new pension scheme since they had already retired and had collected their retiral benefits from the employer. But the moot question is whether it was open to the employer to grant the benefit of the pension scheme to one group of CPF retirees who had retired from Bank service on or after 1st January, 1986 and deny the same to all those who had retired on or before 31st December, 1985. Is this division of CPF retirees discriminatory and violative of Article 14 of the Constitution? 14. Nakara's judgment has itself drawn a distinction between an existing scheme and a new scheme. Where an existing scheme is revised or liberalised all those who are governed by the said scheme must ordinarily receive the benefit of such revision or liberalisation and if the State desires to deny it to a group thereof, it must justify its action on the touchstone of Article 14 and must show that a certain group is denied the benefit of revision/liberalisation on sound reason and not entirely on the whim and caprice of the State. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit and introduction of a totally new scheme. In the case of pensioners it is necessary to revise the pension periodically as the continuous fall in the rupee value and the rise in prices of essential commodities necessitates an adjustment of the pension amount but that is not the case of employees governed under the CPF scheme, since they had received the lump sum payment which they were at liberty to invest in a manner that would yield optimum return which would take care of the inflationary trends. This distinction between those belonging to the pension scheme and those belonging to the CPF scheme has been rightly emphasised by this Court in Krishena's case (supra). 15. Besides it has been pointed out by the Bank Authorities that under their manual, service details pertaining to an employee who has retired are maintained for five years and thereafter they are destroyed and, therefore, the cut-off date was fixed as 1st January, 1986. This is clearly brought out in paragraph 3 of Deepak Bankal's affidavit. Secondly, this Court had, during the pendency of the writ petition, asked both sides to prepare statements showing the financial implications if the cut-off date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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