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PETITIONER: "COMMON CAUSE" A REGISTERED SOCIETY AND OTHERS

       Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT09/12/1986

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH BHAGWATI, P.N. (CJ)

CITATION:  1987 AIR  210            1987 SCR  (1) 497  1987 SCC  (1) 142        JT 1986   991  1986 SCALE  (2)974  CITATOR INFO :  RF         1988 SC1407  (3)  R          1988 SC2125  (3)  D          1990 SC1228  (1)

ACT:     Central Civil Services (Commutation. of Pension)  Rules, 1981-Commuted  value   of pension--Deduction  from   monthly pension-Restoration  of--After completion of 15  years  from date  of retirement--Both for Civilian employees  and  Armed Forces personnel--Benefit effective from April 1, 1985.

HEADNOTE:     The  Central  Civil Services  (Commutation  of  Pension) Rules,  1981 are the rules applicable to civilian  employees under the Government of India. In regard to Defence  person- nel a similar set of regulations is in force. In the case of civilians the total amount of pension which can be  commuted is  upto onethird, while in the case of  Defence  personnel, commutation  is admissible upto 43% in the case of  officers and upto 45% in respect of other ranks.     In  petitions  under Article 32,  the  petitioners  have asked for striking down certain provisions of the said Rules as  they permit the Union to recover more than what is  paid to the pensioners upon commutation and for a direction  that an appropriate scheme rationalising the provisions  relating to commutation be brought into force because there has  been a  substantial  improvement in the life  expectancy  of  the people, and since commutation portion out of the pension  is ordinarily  recovered  within about 12 years,  there  is  no justification for fixing the period at 15 years.     The respondent--Union of India challenged the  maintain- ability of the petitions as also the claim of the  petition- ers.  On  the suggestion of the Court, the  Union  of  India examined  the  matter  and agreed to  restore  the  commuted portion  of the pension in regard to civilian  employees  at the  age of 70 years or after 15 years, whichever is  later, effective  from April 1, 1986. So far as  Defence  employees were  concerned, it was contended that retirement  in  their case  was at an early age and merely with 1apse of a  period of 15 years full pension could not be restored because  they receive in consideration of the exigencies of the service  a

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higher rate of pension as compared to civilian employees and the  benefit  contained in the Government  order  cannot  be extended to all classes of Defence personnel. Allowing the petitions, 498     HELD:  1.  When  a pensioner commutes any  part  of  his pension  upto the authorised limit, his pension  is  reduced for the remaining part of his life by deducting the commuted portion from the monthly pension. [501 B]     2.  Commutation  brings about  certain  advantages.  The commuting pensioner gets a lump sum amount which  ordinarily he  would  have received in course of a spread  over  period subject  to his continuing to live. Two advantages are  cer- tainly forthcoming out of commutation--(1) availability of a lump sum amount, and (2) the risk factor. Many State Govern- ments have already formulated schemes accepting the 15 years rule. This Court would not be justified in disturbing the 15 years  formula so far as civilian pensioners are  concerned. [501 C-D]     3.  On the expiry of 15 years from the date  of  retire- ment,  restoration of commuted value of pension  would  take place and it would be just and equitable that the benefit of commuted  portion  of the pension should be  effective  from 1.4.1985 so far as civilian employees are concerned.[500  E, 501 G]     4.  The decision of the respondent--Government does  not cover all classes of Defence personnel, having been confined to  personnel of Armed Forces in whose case  the  retirement age varies in accordance with the colour service  prescribed for  the  rank (attaining the age of 37/38 years  or  more). Previously  the  retiring age for the lower  ranks  such  as sepoys,  used to be after 15 years’ service but now  it  has been  enhanced to 20 years’ service. A sepoy retiring  after 20  years’ service is entitled to 5 years of weightage,  for his pension entitlement. Similarly a Naik retiring after  22 years’ of service and a Havildar after 24 years’ service are also  given credit of five yeats. While a civilian  employee ordinarily  retires after a full term of  service  entitling him  to full pension, it does not happen in the case of  the lower  ranks  in the Defence services and  with  the  extra- advantage by the addition of years of credit, the benefit in terms  of money works out in the range of about 75%  to  6%. [501 H-502 B]     5. More than 50% of the Defence personnel belong to  the lowest rank and about 81% in all retire early. The weightage factor  relied upon by the respondent to treat  the  Defence personnel differently is not a tenable feature. The  Defence personnel are a class by themselves. In their case,  retire- ment  takes  effect in certain classes as justified  by  the exigencies  of the service rather early. Weightage, if  any, is  intended  to cover this so that an  equation  for  other purposes  could  be established. There is no  merit  in  the stand  of  respondent that the early age  of  retirement  is fully compensated by the higher rate of pension. [502C -- D] 6.  No  separate period need be fixed for the  Armed  Forces personnel and 499 they should also be entitled to restoration of the  commuted portion  of  the  pension on the expiry of 15  years  as  is conceded  in the case of civil pensioners, and for them  too the effective date should be from 1.4.1985. [502 F-G]     7.  In  dealing with a matter of this nature it  is  not appropriate  to be guided by the example of Life  Insurance; equally unjust it would be to adopt the interest basis.  The conclusion should be evolved by relating it to the ’years of

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purchase’  basis.  An addition of two years  to  the  period necessary for the recovery on the basis of years of purchase justifies the adoption of the 15 year rule, which appears to be equitable. [502 E]

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 3958-61 of 1983. (Under Article 32 of the Constitution of India) H. Salve, P.H. Parekh and P.K. Manohar, for the Petitioners.     P.P.  Singh,  R.D. Agarwala, Ms. S. Relan,  C.V.S.  Rao, L.R. Singhand S.R. Srivastava for the Respondent. The Judgment of the Court was delivered by     RANGANATH MISRA, J. By these applications under  Article 32  of the Constitution Common Cause, a  registered  Society and three retired Government servants have asked for  strik- ing down certain provisions of the Communication of  Pension Rules applicable to civilian and defence pensioners as  they permit the Union of India to recover more than what is  paid to the pensioners upon commutation and for a direction  that an appropriate scheme rationalising the provisions  relating to  commutation  be brought into force. The  respondent  has filed a counter-affidavit challenging the maintainability of the  petition as also the claim of the petitioners  and  the matter  has been heard at considerable length from  time  to time.  Parties have filed written submissions  supplementing their oral arguments.     The  Central  Civil Services (Commutation  of  Pension), Rules,  1981  are the approximate rules in force so  far  as civilian  employees Under the Government of India  are  con- cerned.  A set of regulations is in force in regard  to  De- fence personnel.     It  is  not disputed that in the case of  civilians  the total  amount of pension which can be commuted is upto  one- third while in the case of Defence personnel, commutation is admissible upto 43 per cent in the case of officers 500 and upto 45 per cent in respect of other ranks. The argument advancement on behalf of the petitioners that there has been a  substantial  improvement in the life  expectancy  of  the people  in India has not been refuted on behalf of  the  re- spondent.  This Court suggested to the respondent in  course of the hearing that in the changed situation now  prevailing in the country, a new look should be given to the matter. In deference to the suggestion made by this Court the  respond- ent took time to consider the various aspects raised in  the writ  petitions  and the oral submissions  advanced  at  the hearing  as  also the written notes submitted in  Court.  II also  took into account the fact that several State  Govern- ments  have changed the rule applicable to  commutation  and have restored full pension to the pensioners who commuted  a part of their pension after lapse of fifteen years. Union of India has now agreed to restore the commuted portion of  the pension  in regard to all civilian employees at the  age  of seventy  years or after fifteen years, whichever  is  later, and  has agreed to make this effective from April  1,  1986. This  decision  of the Respondent was  communicated  to  the learned Attorney General by a letter dated 20.3.1986 reading thus:               "I am glad to inform you that Government  have               taken  a  decision in the matter  of  recovery               from  pension towards commuted value  of  pen-               sion. The decision is as follows:               (i) Recovery from pension payable every  month

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             towards commuted value of pension will stop on               the  completion of 15 years from the  date  of               retirement  on superannuation or on  the  pen-               sioner completing the age of 70 years,  which-               ever is later.               (ii) The formulation will apply to all  civil-               ian  pensioners in whose case the age  of  re-               tirement on superannuation is 58 years and the               personnel  of Armed Forces in whose  case  the               retirement  age varies in accordance with  the               colour  service prescribed for the  rank  (at-               taining the age of 37/38 years or more).               (iii)  Government have taken this decision  as               an  act  of  goodwill  to  pensioners  and  to               ’extend to them some measure of relief in  the               evening  of their lives. It is  sincerely  be-               lieved that there will be no further demand on               this issue and that the pensioners will accept               the decision of the Government without dissent               or reservation.               (iv)  The decision will take  effect  prospec-               tively (from April, 1, 1986)."               501 A distinction has been made in the case of Defence employees on  the ground that retirement in their case is at an  early age and merely with lapse of a period of fifteen years  full pension could not be restored. It has also been pointed  out that  the Defence personnel receive in consideration of  the exigencies  of the service a higher rate of pension as  com- pared to civilian employees.     As  the position now stands, when a  pensioner  commutes any  part of his pension upto the authorised limit his  pen- sion  is reduced for the remaining part of his life  by  de- ducting the commuted portion from the monthly pension.     The petitioners have contended that the commuted portion out  of the pension is ordinarily recovered within about  12 years  and, therefore, there is no justification for  fixing the  period  at 15 years. Commutation brings  about  certain advantages.  The commuting pensioner gets a lump sum  amount which  ordinarily  he  would have received in  course  of  a spread over period subject to his continuing to live.  Thus, two   advantages   are   certainly   forthcoming   out    of commutation--(1) availability of a lump sum amount, and  (2) the  risk factor. Again many of the State  Governments  have already  formulated schemes accepting the 15 year  rule.  In this  background, we do not think we would be  justified  in disturbing the 15 year formula so far as civilian pensioners are concerned.     The  age  of superannuation used to be 55 until  it  was raised to 58. It is not necessary to refer to the age of the commuting  pensioner when the benefit would be restored.  It is  sufficient  to indicate that on the  expiry  of  fifteen years  from the period of retirement such restoration  would take place.     The respondent--Government has agreed that this  benefit should  be  extended  with effect from  1.4.1986.  The  writ applications  were filed in 1983. The matter was  placed  on board  for  hearing in February 1984. The  Union  Government took some time for responding to the suggestion of the Court and that is how the disposal was initially delayed. Thereaf- ter,  the  hearing of the matter has again been  delayed  on account of pressing business in the Court. In these  circum- stances,  we  think it just and equitable that  the  benefit agreed to be extended in respect of the commuted portion  of the pension should be effective from 1.4.1985 so far as  the

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civilian employees are concerned.     The decision of the respondent--Government contained  in the  above communication does not cover all classes  of  De- fence  personnel having been confined to personnel of  Armed Forces in whose case the retirement age varies in accordance the  colour service prescribed for the rank  (attaining  the age  of  37/38 years or more). In regard to  those  who  are excluded it has been contended that the retirement is at too early an age and since a higher rate of 502 pension as compared to civilian employees is admissible, the benefit contained in the Government order cannot be extended to  that  class. Previously the retiring age for  the  lower ranks such as sepoys, used to be after 15 years’ service but now  it  has  been enhanced to 20 years’  service.  A  sepoy retiring  after 20 years’ service is entitled to five  years of weightage, for his pension entitlement. Similarly a  Naik retiring  after 22 years of service and a Havildar after  24 years’ service are also given credit of five years. While  a civilian  employee ordinarily retires after a full  term  of service entitling him to full pension, it does not happen in the case of the lower ranks in the Defence services and with the extra-advantage by the addition of-years of credit,  the benefit  in terms of money works out in the range  of  about 75% to 6%. It has to be remembered that more than 50% of the Defence personnel belong to the lowest rank and about 81% in all  retire early. The weightage factor relied upon  by  the Respondent to treat the Defence personnel differently is not a  tenable feature. Undoubtedly the Defence personnel are  a class by themselves. In their case, retirement takes  effect in  certain  classes as justified by the exigencies  of  the service  rather-early.  Weightage, if any,  is  intended  to cover  this so that an equation for other purposes could  be established.  There is really no merit in the stand  of  the Respondent that the early age of retirement is fully compen- sated by the higher rate of pension.     In  dealing  with  a matter of this nature,  it  is  not appropriate  to be guided by the example of Life  Insurance; equally  unjust it would be to adopt the interest basis.  On the other hand, the conclusion should be evolved by relating it  to  the ’years of purchase’ basis. An  addition  of  two years to the period necessary for the recovery on the  basis of years of purchase justifies the adoption of the 15  years rule.  That  is more or less the basis which appears  to  be equitable.  It may be that this would give rise to an  addi- tional burden on the exchequer but it would not be heavy and after  all  it  would bring some relief to  those  who  have served  the cause of the Nation at great sacrifice. We  are, therefore, of the view that no separate period need be fixed for  the  Armed  Forces personnel and they  should  also  be entitled  to  restoration  of the commuted  portion  of  the pension on the expiry of 15 years as is conceded in the case of  civil  pensioners. And for them too the  effective  date should be from 1.4.1985.     We  direct the respondent--Government to give effect  to this  order  within a period of three months  from  now.  We place on record our appreciation of the consideration  shown by  the  Union of India to ameliorate the  hardship  of  the pensioners. There will be no order as to the costs. A.P.J.                                             Petitions allowed. 503