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CASE NO.: Transfer Case (civil)  72 of 2004

PETITIONER: Col. (Retd.) B.J. Akkara                                                 

RESPONDENT: The Govt. of India & Ors.                                        

DATE OF JUDGMENT: 10/10/2006

BENCH: G. P. Mathur & R. V. Raveendran

JUDGMENT: J U D G M E N T With

T.C. (Civil) Nos.  74/2004,  75-128/2004,  129-140/2004,  141/2004,   2/2005,  14/2005,  15/2005,  16/2005,  17/2005,  18/2005,  28/2005 and   43/2005

RAVEENDRAN,  J.

       The petitioners in all these petitions, served as Medical, Dental and  Veterinary officers in the Army Medical Corps (AMC), Army Dental Corps  (ADC) and Veterinary Corps (’RVC’) controlled by the Ministry of Defence  (for short, ’Ministry’).  All of them retired prior to 1.1.1996.  These petitions  involve a common question relating to calculation of their pension.    

2.      Defence Ministry Circular dated 31.12.1965 barred private practice  (which was a traditionally enjoyed privilege) by AMC officers with effect  from 1.1.1966 and  conveyed the sanction of the President to the grant of a  Non-Practising Allowance (’NPA’ for short) to all AMC officers  irrespective of the rank, with a stipulation that such NPA shall be treated as  Pay for all purposes.  Ministry circular dated 2.11.1987 clarified that NPA  will be treated as ’pay’ for all service matters, and will be taken into account  for computing Dearness Allowance and other allowances as well as for  calculation of retirement benefits.  It also prescribed the rate of NPA for  AMC and ADC Officers as Rs. 600/- for basic pay below Rs. 3000/-, Rs.  800/- for basic pay between Rs. 3000/- and Rs. 3700/- and Rs. 900/- for  basic pay of Rs. 3700/- and above.  The NPA was revised as 25% of basic  pay and Rank pay, with effect from 1.1.1996  (subject to the condition that  pay plus NPA does not exceed Rs. 29,500/-). G.O. No. 2/S/98, issued by the  Ministry, which implemented the Fifth Central Pay Commission  recommendations in regard to revision of pay scales, gave the benefit of the  revised NPA to all AMC, ADC and RVC officers who were receiving NPA.  

3.      The recommendations of Fourth Central Pay Commission in regard to  pensionary benefits for Armed Force Officers retiring on or after 1.1.1986  were implemented by Ministry Circular dated 30.10.1987. The said Circular  provided that retiring pension of all commissioned officers of the three  services, shall be calculated at 50 per cent of the reckonable emoluments,   for a qualifying service of 33 years (to be reduced proportionately for lesser  qualifying service). It defined ’reckonable emoluments’ for purposes of  retiring/service pension as average of pay, NPA and rank pay, if any, drawn  by the officer during the last 10 months of his service. It defined the term  ’pay’ as basic pay in the revised pay scales.  

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4.      The recommendations of the Fifth Central Pay Commission were  accepted and accorded sanction by the President on 24.11.1997.  Consequently, the Ministry issued various circulars implementing the  recommendations in regard to pensioners.  

Re : Pre 1996 Pensioners

The Ministry  issued a Circular dated 27.5.1998 (read with earlier circular  dated 24.11.1997) rationalizing the pension of pre 1996 pensioners of the  Armed Forces, by providing that the consolidated pension of existing pre  1996 pensioners will be calculated with effect from 1.1.1996, by aggregating  the following :  i) the existing pension; ii) dearness relief up to CPI 1510   (i.e. @148%, 111% and 96% as the case may be, of basic pension as  admissible on 1.1.1996 vide DP & PWs OM dated 20.3.19996); iii) Interim  relief I; iv) Interim relief II; and v) Fitment weightage @ 40 per cent of the  existing pension.  

Re : Pensioners retiring on and after 1.1.1996  

The Ministry issued a circular dated 3.2.1998, providing that the retiring  pension of Armed Force Officer retiring on or after 1.1.1996 shall be  calculated at 50% of average of reckonable emoluments during the last 10  months of service, (reckonable emoluments being basic pay including rank  pay, stagnation increment and NPA) for a qualifying service of 33 years, to  be reduced proportionately for lesser period of qualifying service.  

5.      The Ministry by Circular dated 7.6.1999, conveyed the decision of the  President that ’with effect from 1.1.1996, pension of all Armed Forces  pensioners irrespective of their date of retirement shall not be less than 50%  of the minimum pay in the revised scale of pay introduced with effect from  1.1.1996 of the rank, held by the pensioner.’ The circular provided that the  revision of pension should be undertaken as follows in case of  commissioned officers (both post and pre 1.1.1996 retirees)  :

i)      "Pension shall continue to be calculated at 50% of the average  emoluments in all cases and shall be subject to a minimum of  Rs.1275/- p.m. and a maximum of upto 50% of the highest pay  applicable to Armed Forces personnel but the full pension in no  case shall be less than 50% of the minimum of the revised scale of  pay introduced w.e.f. 1.1.96 for the rank last held by the  Commissioned Officer at the time of his/her retirement. However,  such pension shall be reduced pro rata, where the pensioner has  less than the maximum required service for full pension. [vide  clause 2.1 (a)]

\005\005\005\005\005\005

ii)     Where the revised and consolidated pension of pre-1.1.96  pensioners are not beneficial to him/her under these orders and is  either equal to or less than existing consolidated pension under this  Ministry’s letters dated 24.11.97, 27.5.98 and 14.7.98, as the case  may be, his/her pension will not be revised to the disadvantage of  the pensioner [vide clause 4]".

The pension of the petitioners were stepped up, re-fixed and paid  accordingly.  

6.      The implementing departments had some doubts in regard to  interpretation of the circular dated 7.6.1999. They therefore, sought  clarifications from the Ministry on the following two issues \026 (i) whether  NPA admissible as on 1.1.1986 is to be taken into consideration after

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refixation of pay on notional basis as on 1.1.1986; and (ii) whether NPA is  to be added to the minimum of the revised scale while considering stepping  up the consolidated pension on 1.1.1996. The Ministry issued the following  clarification, vide Circular dated 11.9.2001, in regard to the Circular dated  7.6.1999 :  

"The undersigned is directed to refer to Ministry of Defence letter  No.1(1)/99/D(Pension/Services) dated 7th June, 1999, wherein decision of  the government that pension of all pensioners irrespective of their date of  retirement shall not be less than 50% of the minimum of the revised scale  of pay introduced with effect from 1.1.96 of the post last held by the  pensioner was communicated\005\005\005\005.  

NPA granted to medical officers does not form part of the scales of pay. It  is a separate element, although it is taken into account for the purpose of  computation of pension.  

This has been examined in consultation with the Deptt. of Pension and  Pensioners’ Welfare and the Department of Expenditure and it is clarified  that NPA is not to be taken into consideration after re-fixation of pay on  notional basis on 1.1.1986. It is also not to be added to the minimum of the  revised scale of pay as on 1.1.1996 in cases where consolidated pension is  to be stepped up to 50%, in terms of Ministry of Defence Letter  No.1(1)/99/D (Pension/Services) dated 7th June, 1999." [Emphasis supplied]

The Circular also directed the Controller General of Defence Accounts to  recalculate the pension by excluding NPA from Basic Pay and await further  instructions regarding recovery of excess payments made with effect from  1.1.1996. In view of it, the pension of the petitioners have been revised by  excluding the NPA element, by issuing corrigenda to their PPOs.

7.      The writ petitioners are aggrieved by the said clarification contained  in the Circular dated 11.9.2001 and the consequential corrigenda to their  PPOs reducing their pension. The petitioners therefore filed writ petitions, in  different High Courts for the following reliefs :-  

i)      For quashing the circular dated 11.9.2001 and/or for a  direction to respondents not to give effect to the said  circular.

ii)     For quashing the consequential corrigenda PPOs, issued  to the petitioners by the Controller of Defence Accounts.

iii)    For a direction to the respondents, to take into account,  NPA at the rate of 25% of the basic pay, including Rank  Pay as was being done till the issue of circular dated  11.9.2001, while calculating their pension.  

[Note : The actual prayers in each case vary slightly in form. What is  given above is the general purport of the prayers in these petitions].  

The said writ petitions have been transferred to this Court, in pursuance of  applications for transfer filed by the Union of India.  

8.      To understand the grievance of the petitioners, it is necessary to give  an illustration :  

Lt. General R. K. Upadhyay - (Petitioner No. 2 in W.P.  No. 1845/2002 on the file of Delhi High Court  corresponding to T.P.(C) No. 833/2002) :   

Pension with effect from 1.7.1991

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Original pension sanctioned as per PPO No.M/003476/91 (50 per  cent of average reckonable emoluments, that is pay plus NPA)   

[Note : There was no Rank pay as it was admissible only to the  Ranks from Captain to Brigadier]  

Rs.4185

Pension with effect from 1.1.1996

Stage I : Pension as per Ministry’s Circulars  dated 24.11.1997  and 27.5.1998

i)      Existing pension                                                  Rs. 4185 ii)     Dearness Relief (96% of existing pension)           Rs. 4018 iii)    Int. Relief I                                                            Rs.     50 iv)     Int. Relief II                                                           Rs.   419 Fitment Weightage (40% of existing pension)      Rs. 1674

Rs.10346

Stage II : Pension as per Ministry’s circular dated 7.6.1999 (vide corrigendum  PPO No. M/MODP/030332/1999)

Pay scale of pensioner                           :  Rs.7300-100-7600 Corresponding revised scale of pay       :  Rs.22400-525 -24500  

Minimum pay in the revised pay scale                   Rs. 22400 Add NPA (25% of Rs.22400)                                Rs.   5600                                                                            ---------------                                                       Total                 Rs. 28000                                                                            --------------- 50% of the aggregate (Rs.28000) as pension                                                     

Rs.14,000

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Stage III : Pension as per Ministry’s circular dated 7.6.1999 , as clarified by circular dated 11.9.2001 (vide corrigendum PPO No. M/MODP/16129/ 2001)

Pay scale of Pensioner :                       Rs. 7300-100-7600 Revised scale of pay          :                  Rs.22400-525-24500

50% of minimum in the revised scale of pay (Rs.22400) as pension  

Rs.11,200

Thus, the pension which had been fixed at Rs.10,346/- per month with effect  from 1.1.1996, was increased to Rs.14,000/- per month by reason of  stepping up as per Circular dated 7.6.1999 and later reduced to Rs.11,200/-  in view of the clarification dated 11.9.2001.

CONTENTIONS OF PENSIONERS :

9.      The petitioners have urged the following contentions :-

9.1)    The Defence Service Medical Officers were earlier entitled to private  practice.  The permission to private practice was withdrawn with effect from  1.1.1966 and in lieu of it, the President sanctioned a non-practising  allowance (NPA) with the stipulation that such NPA will be treated as ’Pay’  for all purposes. As a consequence, in respect of Medical Officers, NPA was  always treated as part of ’pay’ for purposes of pension.  By Circular dated  7.6.1999, the benefit of stepping up was extended to all armed forces  pensioners, including medical officers, with effect from 1.1.1996.  The  benefit extended was that irrespective of their date of retirement, their  pension shall not be less than the 50% of the minimum pay in the revised  scale of pay introduced with effect from 1.1.1996 of the rank held by the  respective pensioner. The words "minimum pay"  should be interpreted as  minimum pay in the revised pay-scale plus NPA, in so far as Medical  Officers entitled to NPA, as in their cases, the term ’Pay’ wherever it occurs,  means and includes basic pay plus NPA.  

9.2)    The Ministry had correctly understood the term "50% of the minimum  pay in the revised scale of pay," used in the circular dated 7.6.1999  as "50%  of the minimum in the revised pay-scale plus NPA", and on that basis issued  modified PPOs., revising the pension.  For example, in the case of Lt.  Generals, where the applicable revised pay scale was Rs.22,400-525-24,500,  the Ministry took the minimum in the revised scale of pay (Rs.22,400/-) and  added 25% thereof (Rs.5,600/-) as NPA and arrived at the pension as  Rs.14,000/- being 50% of the aggregate sum of Rs. 28,000/-.  The Circular  dated 11.9.2001, under the guise of a clarification, directed that NPA be  omitted while calculating the 50% of the minimum pay in the revised pay  scales, for purposes of stepping up.  This amounted to unauthorized  modification of the President’s decision contained in the Ministry’s Circular  dated 7.6.1999. It is also opposed to the rule that in the case of Medical  Officers, ’Pay’ includes NPA, for all purposes.  The Ministry had no  authority to modify or dilute the President’s Policy decision which is given  effect by Circular dated 7.6.1999.  

9.3)    In the case of Medical Officers who retired on or after 1.1.1996, even  after the clarificatory circular dated 11.9.2001, NPA is added to the basic  pay in the revised pay-scale and 50% of the aggregate is being paid as

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’retiring pension’. Adding NPA to the basic pay for arriving at the pension  in the case of those who retired on or after 1.1.1996 and omitting to add  NPA in the case of pre 1996 retirees amounts to hostile discrimination of pre  1996 retirees, violating Article 14 and the principles relating to pension laid  down by this Court in D.S. Nakara vs. Union of India [1983 (1) SCC 305].  

9.4)    The Delhi High Court had struck down a similar clarificatory Circular  dated 19.10.1999 relating to Civilian Medical Officers (corresponding to  Defence Ministry Circular dated 11.9.2001 under challenge in these  petitions) by judgment dated 18.5.2002.  That decision has attained finality  and the Union of India has implemented it by reverting back to addition to  NPA to minimum pay, for purposes of stepping up the pension in regard to  pre 1996 civilian Medical Officers.   Union of India has to extend to similar  treatment, even in the case of Defence Service Medical Officers, by ignoring  the clarification dated 11.9.2001.

9.5)    At all events, irrespective of the validity of the clarification dated  11.9.2001, even if any amount has been wrongly paid to petitioners, the  Respondents cannot recover such excess amount paid in pursuance of the  Circular dated 7.6.1999.

QUESTIONS ARISING FOR DECISION :

10.     On the contentions urged, the following questions arise for  consideration :

(i)     Whether the Circular dated 11.9.2001, is only a clarification, or an  amendment, to the Circular dated 7.6.1999.

(ii)    Whether the Circular dated 7.6.1999 as clarified by Circular dated  11.9.2001, leads to unequal treatment of those who retired prior to  1.1.1996 and those who retired after 1.1.1996 solely with reference  to date of retirement.

(iii)   Whether the respondents having accepted and implemented the  decision of the Delhi High Court (in Dr. K.C. Garg vs. Union of  India \026 C.M.P. No. 7322/2001 and connected cases decided on  18.5.2002) on a similar issue, are required to extend a similar  treatment to Defence Service Medical Officers also, by cancelling  the Circular dated 11.9.2001.

(iv)    Even if the Circular dated 11.9.2001 is found to be valid, whether  Respondents are not entitled to recover the excess payments made.  

Re : Question No. (i) :

11.     We may first refer to the intent and purport of the Circular dated  7.6.1999.  The Circular dated 7.6.1999 neither prescribes the  requirements/qualifications for entitlement to pension nor the method of  determination of pension. It only effectuates the President’s decision that the  pension (Which has already been determined in accordance with the  applicable rules/orders) irrespective of the date of retirement, shall not be  less than 50% of the minimum pay in the revised scales of pay introduced  with effect from 1.1.1996.  Pension is determined as per relevant  rules/orders, by calculating the average of reckonable emoluments (basic  pay, Rank Pay and NPA) drawn during the last 10 months of service and  then taking 50% thereof as the retiring pension applicable to retirees with 33  years of qualifying service, with proportionate reduction for retirees with  lesser period of qualifying service. The basis for calculating the pension in  respect of those who retired prior to 1.1.1996, and those retired on or after  1.1.1996 happens to be the same. The retiring pension is 50% of the average  reckonable emoluments for retirees with 33 years of qualifying service, with

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proportionate reduction for those with lesser years of qualifying service.   The President’s decision given effect by Circular dated 7.6.1999 only  extends to all pre 1996 retirees, who did not have the benefit of fixation of  pension with reference to the revised pay scales which came into effect on  1.1.1996, the benefit of the said revised pay scales, albeit in a limited  manner.  In so doing, it also puts those who retired on or after 1.1.1986 and  pre 1986 retirees on par and on a common platform, removing the disparity,  if any, in their pensions.  

12.     When the Fifth Central Pay Commission recommendations were  implemented, the pension of those who retired prior to 1.1.1996, was  rationalized by directing that their pension shall be the aggregate of (a)  existing pension; (b) dearness relief; (c) interim relief I; (d) interim relief II,  and (e) fitment weightage of 40% of the existing pension. The ’existing  pension’ referred to therein was the pension which had been arrived at by  calculating 50% of the average pay, NPA and Rank Pay during the last 10  months of service.  The Circular dated 7.6.1999 made it clear that pension of  retirees shall continue to be calculated at 50% of average of reckonable  emoluments for the last 10 months before retirement, but only stipulated that  the ’full’ pension (that is pension for 33 years service) shall not be less than  the 50% of the minimum pay in the revised pay scale introduced with effect  from 1.1.1996. The Circular dated 7.6.1999 also made it clear that if the  minimum prescribed therein was not beneficial to the pensioner, that is,  where it was either equal to or less than the existing consolidated pension,  his pension will not be reduced to his disadvantage. In short, the Circular  dated 7.6.1999, merely stepped up the pension (for a qualifying service of 33  years) to 50% of the minimum pay in the revised scale of pay introduced  with effect from 1.1.1996 of the rank held by such pensioner, where his  pension was less.  We may here note that whenever the reference is to  stepping up pension to 50% of the minimum pay in the revised scale of pay,  it applies to those with 33 years of qualifying service and gets  proportionately reduced for lesser period of qualifying service.

13.     The emoluments of those who retired on or after 1.1.1996, calculated  with reference to the basic pay in the revised scale of pay plus NPA will  certainly be more than the minimum pay in the revised scale of pay and  therefore, in their cases, the question of stepping up will not arise. On the  other hand, as the pension of pre-1996 retirees was based on the basic pay  under the old pay scale plus NPA, and as the old pay scale was much less  than the 1996 revised pay scale, their pension required to be stepped up. The  extent to which the existing pension should be stepped up is clearly specified  in the Circular as "minimum pay in the revised scale of pay". The words  used do not give room for any confusion or doubt. A ’pay scale’ has  basically three elements. The first is the minimum pay or initial pay in the  pay scale. The second is the periodical increment. The third is the maximum  pay in the pay scale. An employee starts with the initial pay in the pay scale  and gets periodical increases (increments) and reaches the maximum or  ceiling in the pay scale. Each stage in the pay scale starting from the initial  pay and ending with the ceiling in the pay scale, when applied to an  employee is referred to as ’basic pay’ of the employee. Whenever the  government revises the pay scales, a fitment exercise takes place as per the  principle of fitment (formula) provided in the rules governing the revision of  pay so that the ’basic pay’ in the old scale is converted into a ’basic pay’ in  the revised pay scale. When the circular dated 7.6.1999 used the words ’50%  of the minimum pay in the revised scale of pay’, it referred to 50% of the  initial pay in the revised scale of pay. If the old scale of pay was Rs.7300- 100-7600 and if the revised scale of pay was Rs.22400-525-24500, the  minimum pay in the revised scale of pay would be Rs.22400 and 50% of the  minimum pay in the revised scale of pay would be Rs. 11200/-.

14.     It is no doubt true that the term ’pay’, with reference to medical  officers, includes the basic pay and NPA. But the term ’basic pay’ does not  include NPA. In the absence of any special definition, the term ’basic pay of  a government servant’  refers to the applicable stage of pay in the pay scale  to which he is entitled, and does not include NPA even in the case of

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Medical Officers. What the circular dated 7.6.1999 intended to extend by  way of benefit to all pensioners, was a minimum pension, that is, 50% of the  minimum pay in the 1996 revised scale of pay. NPA has no part to play in  the minimum that is sought to be assured. NPA has relevance only for initial  fixation of  pension and not for stepping up pension under Circular dated  7.6.1999.  

15.     As a result, if the pension of a retiree is determined by taking into  account NPA as part of ’pay’ and the pension so determined is more than  50% of minimum pay in the revised scale of pay, he would continue to get  such higher pension. This would happen in the case of all those who retired  on or after 1.1.1996. If the pension determined by taking into account NPA  as part of pay, is less than 50% of the minimum pay in the revised scale of  pay, his pension would be stepped up to 50% of the minimum pay in the  revised scale of pay. This would happen in the case of  pre 1996 retirees.  

16.     The petitioners want to read the words "not less than 50% of the  minimum pay in the revised scale of pay" in the Circular dated 7.6.1999, as  "not less than 50% of the minimum pay in the revised scale of pay plus  NPA".  When the language used is clear and unambiguous and the intention  is also clear, it is not permissible to add words to the Circular dated 7.6.1999  to satisfy what petitioners consider to be just and reasonable. "Minimum pay  in the revised scale of pay" refers only to the initial pay in the revised scale  of pay and not anything more. Due to a misinterpretation, NPA was included  for the purpose of giving the benefit of stepping up the pension in the case of  retired medical officers. The fact that NPA had already been taken into  account while calculating the ’existing pension’ of the medical officers who  retired before 1.1.1996 was lost sight of. The fact that NPA is part of ’pay’  and not part of ’basic pay’ was also overlooked. Therefore, it became  necessary to issue the clarification, which was done by circular dated  11.9.2001, clarifying that it was impermissible to again add NPA to ’the  minimum pay in the revised pay scale’ for the purpose of stepping up the  pension.  

17.     Another grievance of the petitioners is that prior to circular dated  7.6.1999, the pay and pension of medical officers was always more than the  pay and pension of non-medical officers of the same rank, in view of NPA  element, and by virtue of the clarificatory circular dated 11.9.2001, the  pension of both categories, (Medical Officers and non-Medical Officers),  who retired prior to 1996, became equal. The petitioners contend that even  after stepping up under Circular dated 7.6.1999, the disparity which earlier  existed between Medical Officers and Non-Medical Officers of the same  rank, should be maintained. They point out that if the pension of medical  officers and non-medical officers of the same rank should be the same, the  purpose of giving NPA as part of pay to Medical Officers was defeated and  NPA became illusory.  We cannot agree. When the purpose of stepping up  pension is to ensure that all retirees of the same rank get pension which is  not less than the prescribed minimum, it would be unjust for a section to say  that merely because they were earlier enjoying a higher pension than others  of the same rank, such disparity should be continued, even after stepping up.  When the object of stepping up of pension is to bring in parity and avoid  disparity, the claim of petitioners that disparity should be continued cannot  be accepted.  

18.     We, therefore, hold that circular dated 11.9.2001, is only a  clarification to correct the wrong interpretation of the circular dated  7.6.1999. It neither amends nor modifies the circular dated 7.6.1999.   

Re : Question No. (ii)  

19.     The petitioners next contend that in the case of Medical Officers who  retired on or after 1.1.1996, even after the Circulars dated 7.6.1999 and  11.9.2001, NPA is added to basic pay for the purpose of calculating the  pension, whereas in the case of pre 1996 retirees, NPA is not being added  and that amounts to discrimination. This is a misleading contention.  In the

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case of those retiring on or after 1.1.1996, NPA is added to basic pay, to  determine their pension, and not for stepping up the pension.  In the case of  pre 1996 retirees, as NPA was already added while determining their  pension, the question of adding it again, for purposes of stepping up the  pension, does not arise.

20.     The principles relating to pension relevant to the issue are well settled.   They are :

a)      In regard to pensioners forming a class, computation of pension  cannot be by different formula thereby applying an unequal  treatment solely on the ground that some retired earlier and  some retired later. If the retiree is eligible for pension at the  time of his retirement and the relevant pension scheme is  subsequently amended, he would become eligible to get  enhanced pension as per the new formula of computation of  pension from the date when the amendment takes effect.  In  such a situation, the additional benefit under the amendment,  made available to the same class of pensioners cannot be denied  to him on the ground that he had retired prior to the date on  which the aforesaid additional benefit was conferred.  

b)      But all retirees retiring with a particular rank do not form a  single class for all purposes.  Where the reckonable emoluments  as on the date of retirement (for the purpose of computation of  pension) are different in respect of two groups of pensioners,  who retired with the same rank, the group getting lesser pension  cannot contend that their pension should be identical with or  equal to the pension received by the group whose reckonable  emolument was higher. In other words, pensioners who retire  with the same rank need not be given identical pension, where  their average reckonable emoluments at the time of their  retirement were different, in view of the difference in pay, or in  view of different pay scales being in force.  

c)      When two sets of employees of the same rank retire at different  points of time, it is not discrimination if :

(i)     when one set retired, there was no pension scheme and  when the other set retired, a pension scheme was in force.   (ii)    when one set retired, a voluntary retirement scheme was  in force and when the other set retired, such a scheme  was not in force; or

(iii)   when one set retired, a PF scheme was applicable and  when the other set retired, a pension scheme was in  place.  

One set cannot claim the benefit extended to the other set on the  ground that they are similarly situated. Though they retired with  the same rank, they are not of the ’same class’ or ’homogeneous  group’. The employer can validly fix a cut-off date for  introducing any new pension/retirement scheme or for  discontinuance of any existing scheme. What is discriminatory  is introduction of a benefit retrospectively (or prospectively)  fixing a cut off date arbitrarily thereby dividing a single  homogeneous class of pensioners into two groups and  subjecting them to different treatment.  

[Vide D.S. Nakara v. Union of India [1983 (1) SCC 305], Krishna  Kumar v. Union of India [1990 (4) SCC 207], Indian Ex-Services  League v. Union of India [1991 (2) SCC 104], V. Kasturi v. Managing  Director, State Bank of India [1998 (8) SCC 30] and Union of India v.  Dr. Vijayapurapu Subbayamma [2000 (7) SCC 662].

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21.     As noticed earlier, pension is determined with reference to the  applicable rules/orders governing pension. The Ministry’s Circular dated  7.6.1999 comes in, only to step up the pension from 1.1.1996, if the pension  calculated in accordance with the rules/orders is less than 50% of the  minimum pay in the revised scale of pay introduced with effect from  1.1.1996. There is no need to step up the pension of those who retired on or  after 1.1.1996, as their pension will be more than or in no event less than the  minimum provided under the circular dated 7.6.1999. The stepping up is  required only to those who retired prior to 1.1.1996 as their pension was  lower on account of the fact that their reckonable emoluments for purpose of  calculation of pension, was based on the old scales of pay. Let us take the  case of  a Medical Officer of the rank Lt. General, with 33 years of service,  who retired in the year 1998 after getting two increments in the revised pay  scale. As the applicable pay scale is Rs.22400-525-24500, his basic pay  would have been Rs.23,450/- at the time of retirement. 25% thereof namely  Rs.5863/- would be the NPA. If the reckonable emolument was Rs.29313/-,   pension will be 50% thereof, namely Rs.14656/-. As the pension under the  Rules (Rs.14656/-) was more than 50% of the minimum of revised pay scale  (Rs.11200/-) assured under the circular dated 7.6.1999, the benefit of  stepping up is not required in his case.  It is only those whose pension was  determined with reference to old scales of pay, and not the revised higher  scale of pay, who require the benefit of the stepping up. Therefore, the  contention that pre 1996 retirees and post 1.1.1996 retirees are being treated  differently, is untenable.  They are treated similarly. But the fact that post  1.1.1996 retirees do not require the benefit of stepping up, cannot by any  stretch of imagination, give rise to a contention that the benefit given to pre- 1996 retirees by way of stepping up, amounts to discrimination.  

22.     The contention that NPA is taken into account in the case of post  1.1.1996 retirees but not pre 1996 retirees is untenable. NPA is taken as part  of ’pay’ in the case of both pre and post 1.1.1996 retirees. NPA is not taken  into account in the case of any retiree for applying the stepping up benefit  under circular dated 7.6.1999. It is a different matter that post 1.1.1996  retirees do not require the benefit under the circular dated 7.6.1999. As  already noticed, while calculating pension of the pre 1996 retirees, NPA had  already been taken into account as part of ’pay’, and that pension which was  determined after taking into account NPA, is found to be less than the  minimum guaranteed under the circular dated 7.6.1999, their pension is  being increased to the minimum provided in the circular dated 7.6.1999.   NPA cannot again be added to the minimum to step up the pension. If that is  done, it will amount to taking NPA into account twice for purposes of  pension, which is impermissible. The contention of discrimination between  pre 1.1.1996 retirees and post 1.1.1996 retirees is, therefore, imaginary.  

Re : Question No. (iii)

23.     It was alleged that in the case of civilian medical officers, the nodal  Ministry had issued circulars dated 17.12.1998 and 29.10.1999  (corresponding to the Defence Ministry’s Circulars dated  7.6.1999 and  11.9.2001); that some civilian Medical Officer Retirees had challenged the  said circular dated 29.10.1999 directing that NPA shall not be added to  minimum pay in the revised scale, before the Delhi High Court; that the  High Court had allowed the said writ petitions (CWP No.7322/2001 and  connected cases \026 K. G. Garg vs. Union of India) by order dated 18.5.2002;  and that the said order was not challenged by the Union of India, but on the  other hand, was implemented by adding NPA to basic pay while stepping up  the pension in the case of civilian Medical Doctors who had retired prior to  1.1.1996. It is contended that the Respondents having accepted and  implemented the decision of the Delhi High Court in the case of civilian  medical officers,  cannot discriminate against the Defence service medical  officers placed in identical position and therefore the benefit given to the  civilian medical officers in pursuance of the decision of the Delhi High  Court should also be extended to them. The petitioners rely on the broad

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principles underlying estoppel by Judgment, legitimate expectation, and  fairness in action in support of their contention.  

24.     Respondents have filed an affidavit dated 1.8.2006 admitting that in  pursuance of the decision of the Delhi High Court, the circular dated  29.10.999 had been withdrawn but clarified that it was withdrawn only in  regard to the civilian medical officers who were petitioners in the said writ  petititions and not in regard to all civilian medical officers. It is contended  that the fact that a decision of the High Court had been accepted or  implemented in the case of some persons, will not come in the way of the  Union of India resisting similar petitions filed by others, in public interest.  

25.     A similar contention was considered by this Court in State of  Maharashtra vs. Digambar [1995 (4) SCC 683]. This Court held :  

"Sometimes, as it was stated on behalf of the State, the State Government  may not choose to file appeals against certain judgments of the High Court  rendered in Writ petitions when they are considered as stray cases and not  worthwhile invoking the discretionary jurisdiction of this Court under  Article 136 of the Constitution, for seeking redressal therefor. At other  times, it is also possible for the State, not to file appeals before this Court  in some matters on account of improper advice or negligence or improper  conduct of officers concerned. It is further possible, that even where  S.L.Ps are filed by the State against judgments of High Court, such S.L.Ps  may not be entertained by this Court in exercise of its discretionary  jurisdiction under Article 136 of the Constitution either because they are  considered as individual cases or because they are considered as cases not  involving stakes which may adversely affect the interest of the State.  Therefore, the circumstance of the non-filing of the appeals by the State in  some similar matters or the rejection of some S.L.Ps in limine by this  Court in some other similar matters by itself, in our view, cannot be held  as a bar against the State in filing an S.L.P. or S.L.Ps in other similar  matters where it is considered on behalf of the State that non-filing of such  S.L.P. or S.L.Ps and pursuing them is likely to seriously jeopardize the  interest of the State or public interest."

The said observations apply to this case. A particular judgment of the High  Court may not be challenged by the State where the financial repercussions  are negligible or where the appeal is barred by limitation. It may also not be  challenged due to negligence or oversight of the dealing officers or on  account of wrong legal advice, or on account of the non-comprehension of  the seriousness or magnitude of the issue involved. However, when similar  matters subsequently crop up and the magnitude of the financial implications  is realized, the State is not prevented or barred from challenging the  subsequent decisions or resisting subsequent writ petitions, even though  judgment in a case involving similar issue was allowed to reach finality in  the case of others. Of course, the position would be viewed differently, if  petitioners plead and prove that the State had adopted a ’pick and choose’  method only to exclude petitioners on account of malafides or ulterior  motives. Be that as it may. On the facts and circumstances, neither the  principle of res judicata nor the principle of estoppel is attracted. The  Administrative Law principles of legitimate expectation or fairness in action  are also not attracted. Therefore, the fact that in some cases the validity of  the circular dated 29.10.1999 (corresponding to the Defence Ministry  circular dated 11.9.2001) has been upheld and that decision has attained  finality will not come in the way of State defending or enforcing its circular  dated 11.9.2001.   

Re : Question No. (iv)

25.     The last question to be considered is whether relief should be granted  against the recovery of the excess payments made on account of the wrong  interpretation/understanding of the circular dated 7.6.1999. This Court has  consistently granted relief against recovery of excess wrong payment of

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emoluments/allowances from an employee, if the following conditions are  fulfilled [Vide Sahib Ram vs. State of Haryana [1995 Suppl.1 SCC 18],  Shyam Babu Verma vs. Union of India [1994 (2) SCC 521], Union of India  vs. M. Bhaskar [1996 (4) SCC 416], and V. Gangaram vs. Regional Joint  Director [AIR 1997 SC 2776] :

a)      The excess payment was not made on account of any  misrepresentation or fraud on the part of the employee.  

b)      Such excess payment was made by the employer by  applying a wrong principle for calculating the  pay/allowance or on the basis of a particular  interpretation of rule/order, which is subsequently found  to be erroneous.  

Such relief, restraining recovery back of excess payment, is granted by  courts not because of any right in the employees, but in equity, in exercise of  judicial discretion, to relieve the employees, from the hardship that will be  caused if recovery is implemented.  A Government servant, particularly one  in the lower rungs of service would spend whatever emoluments he receives  for the upkeep of his family.  If he receives an excess payment for a long  period, he would spend it genuinely believing that he is entitled to it. As any  subsequent action to recover the excess payment will cause undue hardship  to him, relief is granted in that behalf.  But where the employee had  knowledge that the payment received was in excess of what was due or  wrongly paid, or where the error is detected or corrected within a short time  of wrong payment, Courts will not grant relief against recovery.  The matter  being in the realm of judicial discretion, courts may on the facts and  circumstances of any particular case refuse to grant such relief against  recovery.

26.     On the same principle, pensioners can also seek a direction that wrong  payments should  not be recovered, as pensioners are in a more  disadvantageous position when compared to in-service employees.  Any  attempt to recover excess wrong payment would cause undue hardship to  them. The petitioners are not guilty of any misrepresentation or fraud in  regard to the excess payment. NPA was added to minimum pay, for  purposes of stepping up, due to a wrong understanding by the implementing  departments. We are therefore of the view that Respondents shall not  recover any excess payments made towards pension in pursuance of circular  dated 7.6.1999 till the issue of the clarificatory circular dated 11.9.2001. In  so far as any excess payment made after the circular dated 11.9.2001,  obviously the Union of India will be entitled to recover the excess as the  validity of the said circular has been upheld and as pensioners have been put  on notice in regard to the wrong calculations earlier made.    27.     A faint attempt was made by the learned Addl. Solicitor General  appearing for Respondent to contend that all such wrong payments could be  recovered and at best the pensioners may be entitled to time or instalments to  avoid hardship. No doubt in Union of India vs Sujatha Vedachalam [2000  (9) SCC 187], this Court did not bar the recovery of excess pay, but directed  recovery in easy instalments. The said decision does not lay down a  principle that relief from recovery should not be granted in regard to  emoluments wrongly paid in excess, or that only relief in such cases is grant  of instalments.  A direction to recover the excess payment in instalments or a  direction not to recover excess payment, is made as a consequential  direction, after the main issue relating to the validity of the order refixing or  reducing the pay/allowance/pension is decided. In some cases, the  petitioners may merely seek quashing of the order refixing the pay and may  not seek any consequential relief. In some cases, the petitioners may make a  supplementary prayer seeking instalments in regard to refund of the excess  payment if the validity of the order refixing the pay is upheld. In some other  cases, the petitioners may pray that such excess payments should not be  recovered. The grant of consequential relief would, therefore, depend upon  the consequential prayer made. If the consequential prayer was not for

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waiving the excess payment but only for instalments, the court would  obviously consider only the prayer for instalments. If any decision which  upholds the refixation of pay/pension does not contain any consequential  direction not to recover the excess payment already made or contains a  consequential direction to recover the excess payment in instalments, it is  not thereby laying down any proposition of law but is merely issuing  consequential direction in exercise of judicial discretion, depending upon the  prayer for consequential relief or absence of prayer for consequential relief  as the case may be, and the facts and circumstances of the case. Many a  time, the prayer for instalments or waiver of recovery of excess, is made not  in the pleadings but during arguments or when the order is dictated  upholding the order revising or re-fixating the pay/pension. Therefore, the  decision in Sujatha Vedachalam (supra) will not come in the way of relief  being granted to the pensioners in regard to the recovery of excess payments.  

28.     The learned Additional Solicitor General next submitted that in so far  as refund of the excess pension relating to the period 11.9.2001 to date, the  petitioners who have obtained interim orders of stay, should be made liable  to pay interest, as the petitioners had the benefit of such excess payment.   Reliance is placed on the decisions of this Court in Style (Dress Land) vs.  Union Territory, Chandigarh [ 1999 (7) SCC 89], Ouseph Mathai vs. M.  Abdul Khadir [2002 (1) SCC 319], Rajasthan Housing Board  vs. Krishna  Kumari [2005 (13) SCC 151].  It is no doubt true that the petitioners, who  have obtained orders of interim stay, have been receiving excess pension  even after the clarification contained in the Circular dated 11.9.2001 and that  they are bound to refund the excess received after 11.9.2001.  But there was  some amount of confusion on account of the earlier interpretation of the  Circular dated 7.6.1999 by the Department itself.  Further, the petitioners are  all pensioners, who have prosecuted these petitions bonafide.  In the  circumstances, on the facts and circumstances, we do not propose to award  of interest on the amounts to be refunded.

Conclusion :

29.     The Circulars dated 7.6.1999 and 11.9.2001 relate not only to pension  but also family pension, the only difference being the percentage, that is,  30% is mentioned in respect of family pension instead of 50% in respect of  pension.  What we have discussed and held in respect of pension will apply  to family pension also.

30.     In view of the above, the challenge to the validity of the circular dated  11.9.2001 is rejected. These petitions (Transferred Cases) are dismissed. The  Respondents,  however, shall not recover the excess, if any, paid to the  petitioners between 7.6.1999 and 11.9.2001. Respondents may recover the  excess   if  any  paid  after  11.9.2001  in   appropriate  monthly   instalments  

approximately equal to the monthly excess payment. Parties to bear  respective costs.