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CASE NO.: Appeal (civil)  2388 of 2008

PETITIONER: Videsh Sanchar Nigam Ltd. & Anr

RESPONDENT: Ajit Kumar Kar & Ors

DATE OF JUDGMENT: 01/04/2008

BENCH: P. P. Naolekar & Lokeshwar Singh Panta

JUDGMENT: J U D G M E N T REPORTABLE

CIVIL APPEAL NO.   2388 OF 2008 [Arising out of S. L. P. (C) No.1622 of 2005]

Lokeshwar Singh Panta, J.

1.      Leave granted. 2.      This appeal by special leave is directed against the  judgment and order dated 25th November, 2004 passed by the  High Court of Calcutta in MAT No. 171 of 2002 whereby and  whereunder the order of the learned Single Judge of the High  Court dated 15th October, 2001 recorded on Writ Petition No.  6935(W) of 1999 was affirmed and the appellants herein were  directed to give retrial benefits to all the writ  petitioners/respondents 1 to 8-retirees in accordance with the  Central Government Pension Scheme as opted by them in the  year 1989 within a period of four weeks from the date of  communication of the order.   3.    Briefly stated, the facts of the case are as follows:-         The respondents 1 to 8-retirees herein were employees of  the Overseas Communication Service (OCS), the Department  of Telecommunications of the Government of India.  The OCS  was converted into a Government Company, namely, ’Videsh  Sanchar Nigam Limited’ (VSNL) on 1st April, 1986.   4.      By an Office Memorandum No. 4(8)/85-P & PW dated  13th January, 1986, the Government of India settled the  pensionary terms of Government employees who were  transferred to an Autonomous Body/Public Sector  Undertaking (PSU) on conversion of a Central Government  Department/Office into an Autonomous Body or PSU.  The  relevant terms of the said Circular reads as under:- (a)     The permanent Government Servants shall have an  option to retain pensionary benefits available to  them under Government Rules or be governed by  the Rules of the Public Sector  Undertaking/Autonomous Body.

(b)     The Government Servants who opt to be governed  by the pensionary benefits available under the  Government shall at the time of their retirement, be  entitled to pension etc. in accordance with the  Central Government Rules in force at that time.

5.      The Government of India, Ministry of Communication,  Sanchar Bhawan, vide another O.M. bearing No. G 25015/

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1/86-00 dated 19.3.1986 decided to set up a wholly  Government owned Public Sector Corporation known as VSNL  which was made operational from 1st April, 1986.  This  Circular reiterated that the pension and other benefits to the  employees on their absorption in the Corporation will be  determined in accordance with the Department of Pension &  Pension Welfare, O.M. No. 4(8)-85, P & PW dated 13.1.1986  and as amended  from time to time.  Later on, O.M. dated  13.1.1986 was amended by O.M. No. 4/18/87-P & PW (D),  dated 5.7.1989, which provided inter alia that the employees  will have an option to retain Government pay scale till their  promotion or retirement (whichever is earlier) or to come over  to the service conditions of PSUs.  A Circular No. HQ/01- 01/89-PEM/dated 11.12.1989 was issued by VSNL with a  proposal to absorb individual employees in regular service  with effect from 1.1.1990 and the employee concerned had to  exercise his/her option of getting himself/herself absorbed in  regular service of VSNL and if the concerned employee did not  opt for absorption, his or her name will be transferred to the  Surplus Staff Cell for deployment against possible vacancies in  other Government offices.  The terms and conditions of  permanent absorption of the OCS staff contained in separate  formats were supplied to the employees for their information  and necessary action. 6.      The Government of India, Ministry of Personnel, Public  Grievances and Pension (Department of Pension and Pension  Welfare)  later on vide O.M. bearing No. 4/18/87-P & PW (D)  dated 7.2.1990 issued clarification in the following terms:- (i)     that where the employees had opted to retain  pensionary benefits under the Central Government  Rules, the emoluments drawn under the PSU shall  be treated as emoluments for the purpose of Rule  33 of the Central Civil Services (Pension) Rules,  1972 and accordingly any emoluments drawn by  the transferred employee will be taken into account  for the purpose of calculation of average  emoluments as per clarification given in Note 10  below Rule 33 of the Central Civil Services (Pension)  Rules, 1972. (ii)    That such employees, who have specifically opted  for Central Government Pensionary benefits, will be  entitled to the benefit of payment of pension on the  emoluments drawn at the time of retirement from  the PSU.  It is not obligatory on the part of the  transferred employees who opted for pensionary  benefits as admissible under Central Government  Rules to retain Government pay scales, since both  issues are not related. 7.      A fresh Staff Notice, bearing Ref. No. HQ-A/01-01/90  PE1 dated 21.2.1990, was issued by VSNL by which the  employees were called upon to exercise their option as to  whether they wanted to retain the pensionary benefits  available to them under the Government Rules or be governed  by the Rules of the PSU/Autonomous Body.  The clarificatory  information was annexed to the said Notice which inter alia  provided that the option to retain pensionary benefits under  the Central Government Rules will mean that the employees  will receive pensionary benefits (Pension & Gratuity) on the  basis of emoluments/average emoluments drawn by the  employee at the time of retirement from VSNL and in  accordance with the Rules of the Central Government. 8.      The Government of India vide Office Memorandum dated  24.12.1992 conveyed to the VSNL the revision of the pay  structure of Executives (below Board level) and Non- Executives/employees of VSNL recruited on or after 1989 to

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the Industrial Dearness Pattern (IDP).  This O.M. also provided  that D.A. admissible to Executives and Non-Executives would  be at the rates specified in the DPEs O.M. dated 22.1.1991 as  amended from time to time.  The letter in the ’Fitment Method’  would show that the basic pay plus Central D.A. was merged  in the Basic Pay to be fixed in the appropriate stage of the IDA  pattern scale of pay and it was also clarified that the total  emoluments would be drawn by VSNL employees in the  Government scale of pay and D.A. pattern as on 2.1.1990 and,  accordingly, the pay scales of Non-Executive employees of  VSNL were changed over to IDA pay scale in May, 1993 with  retrospective effect from 2.1.1990.  The VSNL vide Office Order  No. HQ-A/01-04/91-PE1 dated 3.9.1993 in reply to the  clarifications sought for by its Centres/Units as to whether the  pay drawn on IDA scales could be treated as emoluments for  the purpose of calculation of pension in respect of employees  who opted to retain pensionary benefits available to them in  terms of Government of India Rules but have changed over to  the IDA pattern of pay scales.  It was clarified in a letter dated  3.9.1993 with reference to O.M. dated 5.7.1989 that in respect  of those employees who have changed over to IDA pattern of  pay scales with effect from 2.1.1990, emoluments for the  purpose of calculation of pension and other terminal benefits  shall be the treated  emoluments drawn by them in IDA Scale  at the time of retirement/resignation/death from the  Company.  This Order stated that pension and other terminal  benefits in the above case shall be calculated in accordance  with the Rules of the Central Government in that behalf.  The  order further clarified: "Admissible Dearness Relief shall also  be allowed on the pension so arrived at as per the existing  Central Government Rules." 9.      On 18.10.1995 VSNL vide its Reference No. HQ-A/01- 04/91-PE1, issued Office Order in terms of O.M. No. 4/18/87- P & PW(D)  dated 07.02.1990 of the Ministry of Personnel,  Public Grievances and Pension (DP & PW) notifying mode of  settlement of pensioners’  benefits in case of the employees  who opted for the Government pension on superannuation at  the time of absorption in the Company and thereafter VSNL by  Office Order dated 19th December, 1995 carried out  modifications in Para 2(A) of the earlier office order dated 18th  October, 1995.  The modified para reads as under:- "A. Employees who retired prior to 1.1.1992 shall have  the following alternative for regulation of their pension;

(i)     To draw pension on eligible CDA pay with  admissible Dearness Relief as per the existing  Central Government rules. (ii)    To draw pension last IDA pay (emoluments for  purposes of calculation of pension shall comprise of  Basic Pay, Personal Pay, if any) with admissible DA  notified by the Government for employees of Public  Sector Undertakings."

10.     The modification so recorded was a one-time exercise for  choosing the alternatives for settlement of pension and the  pensioners shall be required to submit their consent to the  Regional Heads by 15.1.1996 on a prescribed format giving  choice of either of the alternatives.   The Assistant General  Manager (P) sent a letter dated 19.12.1995 to Shri  Nikhileshwar Das, Secretary, VSNL Retired Employees  Association, in regard to the alternatives being provided to  employees who retired prior to 1.1.1992 so as to bring to their  notice to choose either CDA pay with Central Dearness Relief  or IDA pay with admissible DA notified by the Government of  India for the employees of PSUs.  The Ministry of Personnel,

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Public Grievances and Pension (Department of Pension and  Pensioners’ Welfare) vide its Office Memorandum No.  4/16/90-P & PW (D), clearly stated that all those transferred  employees on the establishment of VSNL who received IDA pay  scales prior to their retirement, their emoluments for the  purpose of pension shall be calculated based on the  emoluments drawn in the IDA pay scales, but, they will not be  entitled to the payment of DR on pension at Central  Government rates as the Department of Public Enterprises  have prescribed a separate DR table in respect of such  transferred employees and, therefore, DR on pension in  respect of VSNL retirees shall be regulated as per the orders  issued by the Department of Public Enterprises from time to  time.   11.       It appears that the Director, Ministry of Personnel,  Public Grievances and Pension (Department of Pension and  Pensioners’ Welfare) vide its O.M. No. 4/3/07-P & PW (D)  requested the Department of Communications to examine the  grievances of the absorbees, in accordance with the Rules and  Instructions so that the absorbees who had opted for retention  of Central Government pensionary benefits on their absorption  on the establishment of VSNL could get their retrial benefits,  gratuity and commutation of pension and secondly to examine  the anomalies highlighted by the Association of Retired  Employees of VSNL in consultation with the Department of  Public Enterprises. 12.       The Department of Telecommunications in reply to the  representation dated 23.08.1998 of the Secretary of VSNL’s  Retired Employees Association, in their notification states:- (i)     Pension in IDA pay scale with IDA relief: Having changed over to IDA pattern of pay scales as  per the Government instructions, it is obvious that  employees who opted for the Government pension  should be paid in the applicable IDA pattern of pay  scales with IDA relief. (ii)    Revision of Pension \026 Rule 70 It is clarified that it is not a revision of pension but  change of pension from CDA to IDA pattern of pay  scales as per the government decision.  The revision  in IDA pattern of pay scales is due from 1.1.1997  and pension shall also be revised. 13.     The respondents 1 to 8, who are the retired VSNL  employees, filed W.P. No. 6935 (W) of 1999 before the High  Court of Calcutta on 19th April, 1999 seeking inter alia the  following reliefs: (a)     a writ in the nature of mandamus directing the  VSNL and Union of India to rescind or revoke the  impugned decisions and orders contained in the  Office Orders/Memoranda dated October 18., 1995  (Annexure P-11); December 19, 1995 (Annexure P- 12); November 22, 1996 (Annexure P-14); May 5,  1998 (Annexure P-16); May 28, 1998 and November  12, 1998 (Annexure P-17); (b)     to pay to the petitioners their pensionary benefits on  the basis of the appellants decisions contained in  Memoranda and/or Office Orders  dated January  13, 1986 (Annexure P-1); March 19, 1986  (Annexure P-2); October 30, 1986;  July 5, 1989  (Annexure  P-4); December 11, 1989 (Annexure P \026  6); February 07, 1990 (Annexure \026 P8); February 21,  1990 (Annexure P-8); February 21, 1990 (Annexure  P-9) and September 3, 1993 (Annexure P-10). (c)     to make payments of arrears of pensionary benefits  after calculating average emoluments on the last  pay drawn in the revised pay scale of 1992 and

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other subsequent revised pay scales with the  dearness relief calculated at the rate or rates  prescribed by Central Government for the Central  Government emoluments (d)     to make payments of the withheld amount of  gratuity and commuted value of pension; and to  make all such payments with compound interest at  the minimum rate of 18% per annum from the date  or dates such amounts because due and payable till  (which should be forth with) the date or dates such  emoluments became due and payable till the date of  the same are actually paid.   14.       In the writ petition, VSNL and the Union of India were  made parties-respondents.  Affidavit in-opposition to the writ  petition has been filed by a senior officer of VSNL. The  respondents 1 to 8-retirees filed rejoinder and VSNL filed  supplementary affidavit-in-opposition to the rejoinder of the  respondents 1 to 8-retirees.  The learned Single Judge of the  High Court allowed the Writ Petition and granted the above  said reliefs. 15.      The appellants then preferred an appeal before the  Division Bench of the High Court which dismissed the same  by judgment and order dated 24.11.2004 impugned by the  appellants in this appeal by way of special leave before us.  16.       We have heard learned counsel for the parties and  perused the material on record.  The appellants have  challenged the correctness and validity of the impugned  judgment and order of the High Court inter alia on the  following grounds:-   (i)     The Hon’ble High Court failed to appreciate that in  service jurisprudence, Dearness Relief (DR) in a  particular pay scale complements the basic pay of the  pay scale and is designed to compensate the cost of living  while the basic pay/pension remains steady so that an  employee/retired employee is protected against  fluctuation in the cost of Living Index; (ii)    The Hon’ble High Court failed to appreciate that the basic  purpose of the DR is neutralization of the increase in cost  of living and it cannot exceed 100% neutralization.  The  impugned order would result in a wrongful gain to the  respondents 1 to 8- retirees far in excess of 100%  neutralization; (iii)   The Hon’ble Court failed to appreciate that the original  petitioners viz. respondent nos. 2, 3, 5, 6 and 7 herein  were retired on CDA emoluments and they were drawing  pension on CDA pay scale with DR as applicable to CDA  pay scale and therefore, they have no vested right to  receive pension as per IDA pay scale which would be  much higher; (iv)    The Hon’ble Court failed to appreciate that IDA pay  scales were introduced by VSNL pursuant to the  Government letter No. G-12013/1/91-OC dated 24th  December, 1992 with retrospective effect in respect of  employees who were on the role of company as on 2nd  January, 1990 and the same was implemented for Non- Executive Employees in May,  1993 with retrospective  effect from 2nd January, 1990 and for Executive  Employees in December, 1993 with retrospective effect  from 2nd January, 1990.  Respondent Nos. 1, 4, 8 and  other employees who retired after May, 1993 and  December, 1993 (when the change over to the IDA scale  was implemented for Non-Executive Employees and  Executive Employees respectively) had in fact started  drawing pay on the IDA scales of pay and Dearness  Allowance (DA) as notified by the Government for

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employees of Public Sector Undertakings.  Therefore,  there was no question to respondents Nos. 1 to 8-  retirees having claimed vested right to draw DR as per  existing Central Government Rules when they accepted  their pension not as per Central Government Rules and  CDA pay scales, but as per IDA pay scales which were  much higher in view of the fact that IDA pay scales were  arrived at by merger of CDA pay scales and DR; (v)     The Hon’ble Court failed to appreciate that if it could be  stated that the respondent Nos. 1 to 8\026retirees have  vested right to receive DR as per Central Government  Rules, then they did not have any vested right to receive  pension as per IDA pay scale; (vi)    The Hon’ble Court failed to appreciate that the  respondents No. 1 to 8 \026 retirees were approbating and  reprobating at the same time in as much as  when it  came to the payment of pension as per IDA pay scale,  although the same was introduced retrospectively much  after their retirement, the same was acceptable to them  whereas DR as notified by the Government for employees  of PSUs was not acceptable to them on the ground that it  was taking away their vested right to receive DA/DR; (vii)   The Hon’ble Court failed to appreciate that the impugned  order would result in adverse discrimination to other  employees of VSNL who retired subsequently inasmuch  as the subsequent retirees would get pension at the IDA  pay scale and DR as notified by the Government for PSU  employees whereas the respondents Nos. 1 to 8 - retirees  would get that pension as per CDA scale  and at the  same time they would get DR as per Central Government  Rules, which was also much larger then the DR as  notified by the Government for employees of PSUs on IDA  scale. 17.     We may note at this stage that the respondents-retirees  despite service of notice have chosen not to file any counter to  the special leave petition or the appeal before this Court.   Having heard Mr. K.J. Presswala learned counsel for the  appellants and Mr. K.V. Vishwanathan learned counsel for the  respondents-retirees this Court on 17.01.2008 recorded the  following order:- "The Parties are permitted to file affidavit  explaining Clause 3 of the Circular dated  24.12.1992 of the Government of India,  Department of Telecommunications,  Sanchar Bhavan, 20 Ashok Road, New  Delhi within the period of one week and  the counter affidavit a week thereafter."

Mr. Vivek D. Dhule, Senior Manager (HR) of appellant-VSNL,  pursuant to the above said order filed an affidavit inter alia  states as under:- "1. That in order to ascertain the meaning  of Clause 3 of the Circular dated 24th  December, 1992 I saw my own fixation of  pay in the IDA Scale as on 2nd January,  1990.

2.       In fixation of the said pay, my Basic  Pay (CDA) on 2nd January, 1990 of  Rs.1260/- was taken and clubbed with  my CDA Dearness Allowance Relief of  Rs.479/- making the total existing CDA  emoluments of Rs.1739/- (Rupees one  thousand seven hundred thirty nine  only).  From this amount, an amount of

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Industrial Dearness Allowance and fixed  Dearness Allowance (FDA) of Rs.325.75  (Rupees three hundred twenty five and  paise seventy five only) and Rs.101.60  (Rupees one hundred one and paise sixty  only) respectively (i.e. Rs.427.35 (Rupees  four hundred twenty seven and paise  thirty five only) was deducted and the  amount for fixation was arrived at  Rs.1,311.65 (Rupees one thousand three  hundred eleven and paise sixty five only)  and I was fitted in the pay scale at  Rs.1,321/- (Rupees one thousand three  hundred twenty one only) (Basic pay).   On this salary Industrial Dearness  Allowance of Rs.325.75 (Rupees three  hundred twenty five and paise seventy  five only) plus Fixed Dearness Allowance  of Rs.101.60 (Rupees one hundred one  and paise sixty only) was added and my  total pay became Rs.1,748.35 (Rupees  one thousand seven hundred forty eight  and paise thirty five only)

3.       This shows how the said circular was  implemented.

4.       In the subsequent revision, i.e. in  1992 the basic pay and dearness  allowance was merged, resulting in larger  basic pay and lower IDA Dearness  Allowance while the CDA Dearness  Allowance remained much larger as the  CDA basic pay was much smaller."  

18.       Mr. Ajit Kumar Kar, respondent No.1 herein, in reply to  the affidavit of the Senior Manager (HR) dated 22.02.2008 filed  an affidavit inter alia states in para 5 "\005 I state that the  calculations given as per the pay scale of the deponent clearly  shows that there was no sharp rise and/or increase in the  basic pay as a result of merger with Central D.A.  The same  calculation shows that not the entire D.A. but only a fraction  of it (arrived at after deducting the IDA plus FDA from it) was  merged with the basic pay.  Before the merger, the basis pay  was Rs.1260/-.  The Central D.A. being 38% of the basic pay  as on 01.01.1990, the amount comes to Rs.478.80 rounded to  Rs.479/- in the said affidavit.  From this, an amount of  Industrial D.A. (Rs.325.75) plus Fixed D.A. (Rs.101.60) total  being Rs.427.35 was deducted bringing down the Central D.A.  to Rs.51.65.  The mode of calculation was same for all the  transferred erstwhile OCS employees and the resulting meagre  increase in the basis pay after the above deductions as per  Clause 3 does not speak of any double benefit.   Thus it clearly  shows that not the entire D.A. but only 10.78% of it was  merged with the basic pay making it Rs.1311.65 and as per  the Fitment Method, the said amount was fitted in the next  higher scale resulting in Rs.1321/- being the PSU basic pay  and CDA was abolished.  No option was offered to the  transferred erstwhile OCS employees to retain CDA pay and it  was only after retirement of all the private respondents, the  Appellate Authority came up with the theory that Central D.A.  will be given only on CDA pay although there was no existence  of CDA pay."  It is further stated that in para 6 of the affidavit,  the calculations given by the appellant-authority shows that  by implementing the circular dated 24.12.1992 no "double

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benefit" was given to any of the transferred employees because  the Central D.A. was drastically reduced by about 89% to 90%  before it was merged with the Central basic pay. He denied  and disputed the statement made in the affidavit of Shri Vivek  D. Dhule that "in the subsequent revision i.e. in 1992 the  basic pay and dearness allowance was merged resulting in  larger basic pay and lower Industrial Dearness Allowance  while the CDA Dearness Allowance remained much larger as  the CDA basic pay was much smaller" as the same is not  supported by any Circular or Office Memo.  Finally, he  supported the judgment and order of the High Court and  prayed for the grant of withheld pay, gratuity and arrears of  pensionary benefits to respondents-retirees.      19.     The learned counsel for the respondents-retirees on the  basis of the available record contended before us that the  reasons given by the learned Single Judge as well as by the  Division Bench of the High Court for granting relief to the  respondents - retirees are based upon proper appreciation of  the various Office Memoranda issued by VSNL and the Union  of India from time to time relating to the subject-matter in  issue.  It has however, been contended that pension being a  right (and not a bounty) available to retired employees and DR  being a part of pension, right to receive the same could not  have been denied merely because the incumbent opted for IDA  pay scale.  In support of the submission, reliance has been  placed upon a decision of this Court in the case of Chairman,  Railway Board and Others v. C.R. Rangadhamaiah and Others  [(1997) 6 SCC 623].  The learned counsel also submitted that  in the facts and circumstances of the case, this Court shall not  be obliged to interfere in the well-merited judgment of the High  Court which does not suffer from any infirmity or perversity.  20.     We have given our anxious considerations to the  pleadings, the reasonings recorded and the view taken by the  High Court in the impugned order and the contentions put  forth before us by the learned counsel for the parties.  We are  afraid that we cannot subscribe to the view expressed by the  High Court while construing the expression of DR as of right  accrued to the respondents-retirees.  It is not in dispute that  the respondents- retirees along with other employees of OCS of  the Department of Telecommunications of the Government of  India were transferred to the service of VSNL on its formation  with effect from 1st April, 1986.  By an Office Memorandum  No. 4(8)/85-P & PW dated 13th January, 1986, Government of  India, Ministry of Personnel, Public Grievances and Pension  (Department of Pension & Pensioner’s Welfare), settled the  pensionary benefits of the Government employees who were  transferred to Autonomous Organizations/PSUs consequent  on the conversion of Government Department/Office into an  Autonomous Body or PSUs.  The terms of the said Circular  clearly stated that the permanent government servants shall  have an option to retain the pensionary benefits available to  them under the Government Rules or be governed by the  Rules of the PSUs/Autonomous Body and the Government  servants who opted to be governed by the Rules of the  Autonomous Body or PSUs shall become entitled to the  pensionary benefits in accordance with the Rules of the  Autonomous Body or PSUs from the day of their transfer from  the service of the Government.  Based on this Circular,  another O.M. No.G-12015/1/86-00 dated 19th March, 1986  was issued by the Government of India, Ministry of  Communications, in which it was reiterated in Clause 8 that  the pensionary and other retiral benefits to the employees on  their absorption in the Corporation i.e. VSNL will be  determined in accordance with the Department of Pension and  Pensioners’ Welfare O.M. No. 4(8)/85-P&PW dated 13.01.1986

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and as amended from time to time.  In partial modification of  O.M. No. 4(8)/85-P&PW dated 13th January, 1986 and O.M. of  even number dated 30th October, 1986 on the subject of  settlement of pensionary terms etc. in respect of Government  employees transferred en masse to Central Public Sector  Undertakings/Central Autonomous Bodies. Government of  India, Ministry of Personnel, Public Grievances and Pension  (Department of Pension and Pensioners’ Welfare)  vide its O.M.  No. 4/18/87-P&PW(D) dated 5th July, 1989 lays down certain  terms and conditions which will be applicable to the  transferees.  The material and relevant terms are that the  permanent government servants shall have an option to retain  the pensionary benefits available to them under the  Government Rules or be governed by the Rules of the  PSUs/Autonomous Body.  The Government servants, who  opted to be governed by the pensionary benefits available  under the Government, shall at the time of their retirement be  entitled to pension etc. in accordance with the Central  Government Rules in force at that time.  On December 11,  1989, VSNL issued an Office Memorandum to its employees  asking their choice of absorption in the regular service of  VSNL.  Along with the said Memorandum, a format was  supplied which contained terms and conditions of permanent  absorption of the erstwhile OCS staff in the service of VSNL.   One of the terms relating to pensionary benefits was that the  permanent government servants shall have an option to retain  pensionary benefits available to them under the Government  Rules or be governed by the Rules of VSNL.  The option was  also made available to quasi-permanent and temporary  employees after they have been confirmed in VSNL. The  Government of India, Ministry of Personnel, Public Grievances  and Pension, (Department of Pension and Pensioners’ Welfare)  vide Office Memorandum dated 7.2.1990 in reply to the  Department of Telecommunications O.M. No. A-13016/1/188- O.C. dated 22nd January, 1990 issued a clarification relating  to the settlement of pensionary terms, etc. in respect of  erstwhile OCS employees who were absorbed in VSNL.  In  terms of this O.M., it was clarified very specifically that where  the employees had opted to retain the pensionary benefits  under the Central Government Rules, the emoluments drawn  under the PSUs shall be  treated as emoluments for the  purpose of Rule 33 of the Central Civil Services (Pension)  Rules, 1972 and, accordingly, any emolument drawn by the  transferred employee will be taken into account for the  purposes of calculation of average emoluments as per the  clarification given in Note 10 below Rule 33 of the CCS  (Pension) Rules and it was stated that such employees who  had specifically opted for Central Government Pensionary  benefits will be entitled to the benefit of  payment of pension  based on the emoluments drawn at the time of retirement from  the PSUs.   21.     Before proceeding further to deal with the matter, we  think it appropriate to refer to the relevant provision of the  CCS (Pension) Rules, 1972.  Rule 3 (c) of the CCS (Pension)  Rules defines "emoluments" to mean emoluments as defined  under Rule 33.  Rule 33 of CCS (Pension) Rules deals with  emoluments and reads as under:- "The expression ’emoluments’ means basic pay as  defined in Rule 9(21)(a)(i) of the Fundamental  Rules which a Government servant was receiving  immediately before his retirement or on the date  of his death; and will also include non-practising  allowance granted to medical officer in lieu of  private practice.  

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Note 10 below Rule 33 provides: "When a Government servant has been  transferred to an Autonomous Body consequent  on the conversion of a Department of the  Government into such a body and the  government servant so transferred opts to retains  the pensionary benefits under the rules of the  Government, the emoluments drawn under the  Autonomous Body shall be treated as  emoluments for the purpose of this rule."

Dearness Relief is defined under Rule 3(1)(cc) of the CCS  (Pension) Rules to mean relief as defined in Rule 55-A.  Rule  55-A deals with Dearness Relief on Pension/Family Pension.   It provides: \026 "Relief against price rise may be granted to the  pensioners in the form of dearness relief at such  rates and subject to such conditions as the  Central Government may specify from time to  time."

Rule 9 (21) (a) of Fundamental Rules defines "pay" to mean the  amount drawn monthly by a Government servants as - (i)     the pay, then special pay or pay granted in view of  his personal qualifications, which has been sanctioned  for a post held by him substantively or in an officiating  capacity, or to which he is entitled by reason of his  position in a cadre; and (ii)    overseas pay, special pay and personal pay; and

(iii)   any other emoluments which may be specially  classed as pay by the President.

22.     Fresh Staff Notice bearing No. HQ-A/01-01/90-PE1  dated 21.2.1990 came to be issued by VSNL to all the  permanent employees in Government Service whose services  had been transferred to VSNL from the OCS and who had  opted for absorption in VSNL calling upon them to exercise  their option in terms of sub-para (a) of Department of Pension  and Pensioners’ Welfare O.M. No. 4/18/87-P & PW dated  05.07.1989 which was placed on record of the High Court as  Annexure P4 along with a clarificatory information which inter  alia provided that the option to retain pensionary benefits  under the Central Government Rules will mean that the  employees will receive pensionary benefits (pension and  gratuity) on the basis of emoluments/average emoluments  drawn by the employees at the time of retirement from VSNL  and in accordance with the Rules of the Central Government.   In short, it was clarified that when the employees of VSNL will  retire from the Nigam, he shall retire with pensionary benefits  as if he had retired from Central Government service.  Along  with the clarificatory information three formats in the form of    model (1), model [2] and model [3] were annexed requesting  VSNL employees either to retain pensionary benefits under the  Government Rules or retiral benefits of the Company by  exercising their options as enumerated in either of the model  form.  It appears from the record that vide order dated  24.11.1996, the Government of India conveyed its approval to  the revision of pay structure of Executives Employees and  Non-Executives Employees of VSNL to the IDA pattern who  were recruited on or after January 1, 1989.  This order also  provided that DA admissible to Executives and Non-Executives  will be at the rates specified by the Department of Public  Enterprises in their O.M. dated 22.1.1991 as amended from  time to time.  The letter in the ’Fitment Method’ would show

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that the basic pay plus Central D.A. has been merged in the  basic pay fixed in the appropriate stage of the IDA pattern  scale of pay.  It was specifically clarified in the said letter that  the total emoluments drawn by VSNL employees in the Central  Government scale of pay and DA pattern as on 2.1.1990 would  stand protected and their pay would be fixed as clarified in the  said order.  Further, it was also specifically provided that after  2.1.1990 the employees of VSNL would draw increments and  DA as per IDA pattern.  Based on this direction from the  Government of India, Department of Telecommunications, the  pay scale of Non-Executives of VSNL was changed over to IDA  pay scale in May, 1993 with retrospective effect from 2.1.1990  and for Executives in December, 1993 with retrospective effect  from 2.1.1990.  The respondents- retirees who were petitioners  before the High Court have also relied upon the said letter  dated 24.12.1992 in paragraph 28 of the writ petition.  Again,  VSNL issued office order bearing No. HA-A/01-04/91-PE1  dated 03.09.1993 in reply to clarification sought for by its  Centres/Units as to whether pay drawn under IDA pattern  could be treated as emoluments for the purpose of calculation  of pension and other terminal benefits on or after 2.1.1990 in  respect of employees who opted to retain pensionary benefits  available to them in terms of Government of India Rules and  also for change over to the IDA pattern of pay scale.   In  accordance with O.M. dated 5.7.1989 issued by Ministry of  Personnel, Public Grievances and Pension, (Department of  Pension and Pensioners’ Welfare)  being Annexure\026P4, it was  clarified that in respect of those employees who had changed  over to IDA pattern of pay scale with effect from 2.1.1990  emoluments for purposes of calculation of pension and other  terminal benefits shall be the emoluments drawn by them in  the IDA scales at the time of their  retirement/resignation/death,  etc. from the Company.  The  said order also prescribed that the pension and other terminal  benefits in the above case shall be calculated in accordance  with the Rules of Central Government in that behalf.  It  further stated that "Admissible Dearness Relief" (ADR) shall  also be allowed thereupon so arrived at as per the existing  Central Government Rules.  The respondents-retirees pleaded  in the High Court the clarificatory order as existing facility and  accrued right and the mode of computation of pensionary  benefits to the OCS employees who were absorbed in VSNL.   The letter dated 3.9.1993 (Annexure- P10) was a simple  internal clarificatory circular exchanged between VSNL and its  Centres/Units and in no circumstances the terms and  conditions contained in the said letter could have been treated  as a mode of computation of pensionary benefits of VSNL  employees.  When the clarificatory order stated: "Admissible  Dearness Relief" shall also be allowed on the pension so  arrived at as per existing Central Government Rules", the  words ’so arrived at’ have to be read and construed to be on  the basis of the emoluments drawn in the IDA pay scales and  nothing more or nothing less.  It appears that due to some  uncertainty on the part of VSNL for some period pension was  paid on emoluments arrived at as per the IDA pay scales and  DR accrued on IDA pay scale was wrongly given as per the  CDA scales.  This method and calculation was totally contrary  to and inconsistent with the Government Circular dated  24.12.1992 which was referred to and relied upon by the  respondents-retirees themselves in paragraph 28 of the writ  petition and, therefore, the payment of pension made under  bona fide mistake would, under no circumstances, be viewed  and treated as vested right of VSNL employees who were  drawing pay in IDA scales.  23.     On realising the mistake at the time when the revision of

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IDA pay scales was to be implemented in October, 1995 with  effect from 1st January, 1992 by merger of IDA pay scales and  IDA DR, VSNL issued its order bearing Reference No. HQ-A- 01-04/91-PE-1 dated 19.12.1995.  The Government of India,  Ministry of Personnel, Public Grievances and Pension  (Department of Pension and Pensioners’ Welfare), New Delhi  vide O.M. No. 4/16/90-P&PW dated 22.11.1996 clearly  clarified that the Central Government employees who opted for  retention of Central Government pensionary benefits of  absorption in PSUs/Autonomous Body as a result of efforts of  Government departments as such, were entitled to the  payment of pension based on the emoluments drawn by them  in PSUs.  In this connection reference to Note 10 below Rule  33, CCS (Pension) Rules, as extracted in the earlier part of this  judgment was also made.  As per this Office Memorandum,  earlier clarification has been repeated and re-asserted that in  the case of transferred employees of VSNL who were drawing  IDA pay scales prior to their retirement, the emoluments for  the purpose of pension shall be calculated on the basis of  emoluments drawn in the IDA pay scales.  It was also  categorically stated that such employees shall not be entitled  to the payment of DR on pension at Central Government rates.   The Department of Public Enterprises have prescribed a  separate DR table in respect of such transferred employees  and therefore, DR on pension in respect of VSNL retirees shall  be regulated by the orders issued by the Department of Public  Enterprises from time to time.  In these circumstances, it  cannot be countenanced that the respondents - retirees have  any vested right to receive DR at CDA scales on the pension  which was calculated as per the IDA pay scales.  The payment,  as we have pointed out earlier, was made for sometime under  a mistake and in contravention of the Government letter dated  24.12.1992 and, therefore, the office order of VSNL dated  3.9.1993 could never be considered as supporting the existing  facilities or accrued right of the OCS employees absorbed in  VSNL regarding the mode of computation of their pensionary  benefits as held by the High court.  The said clarificatory order  nowhere has suggested that the DR of CDA scales would be  given on pension which was based on emoluments in the IDA  pay scales.  Thus, the respondents-retirees would get  pensionary benefits on the basis of the Government Circular  dated 24.12.1992 and not on the basis of clarificatory office  order of VSNL.  The respondents Nos. 1, 4 and 8 (except  respondents 2, 3, 5, 6 and 7) prior to their retirement were  drawing pay in the IDA scale of pay with the ADR of the IDA  pay scales and therefore, pension could only be calculated on  IDA pay scales with IDA pattern of DR and not on DR of CDA  scales of pay.  Moreover, the pensionary benefits, i.e. pension  as well as gratuity of the respondents-retirees, were not finally  settled till as late as 25.3.1997 as was evident from O.M.  bearing Reference No. 4/3/07 \026 P & PW (D) dated 25.3.1997  (Annexure P-15) issued by the Government  of India, Ministry  of Personnel, Public Grievances and Pension to the  Department of Telecommunications with a copy to Shri A.K.  Kar, Secretary, VSNL Retired Employees Association  (respondent No. 1 herein) which would clearly show that there  was delay in releasing the terminal benefits of the employees  of VSNL because of some doubts and confusions raised by  some Centres/Units of VSNL and such doubts were finally  settled by the Government of India,  Ministry of Personnel,  Public Grievances and Pension vide their O.M. dated  22.11.1996 (Annexure P-14).   24.       In the facts and circumstances of the case, we are of the  opinion that the clarification given by the Government of India  in its O.M. dated 22.11.1996 (Annexure P14) in clear and

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unambiguous terms stated that the employees of VSNL were  drawing the IDA pay scales with the ADR under the IDA pay  scales were entitled to pensionary benefits only on the basis of  IDA pay scales as IDA pay scales with IDA pattern of DR was  already taken into account for pension and other benefits at  the time of retirement of such employees of VSNL.  It appears  from the various communications exchanged between the  Government of India and VSNL referred to earlier that due to  some error or bona fide mistake, VSNL made wrong payments  of DA to the respondents-retirees calculated on the IDA pay  scales and such employees were getting double benefits of DR.   Employees who were getting IDA pay scales with IDA pattern  of DR could not draw pension calculated on IDA emoluments  with CDA pattern of DR.  It is well-settled that a bona fide  mistake does not confer any right to any party and it can be  corrected.  VSNL vide subsequent Office Order bearing Ref. No.  HQ-A/01-04/91-PE1 dated 18.10.1995 had rectified its  mistake appearing in earlier order dated 3.9.1993 and the said  office order was again modified by another Office Order  bearing No. HQ-8A/01-04/91-PE1 dated 19.12.1995 by which  para 2(A) of the Office Order dated 18.10.1995 was modified to  the extent as stated in the earlier part of this judgment. The  modified order was one-time exercise for choosing the  alternatives of settlement of pension and the pensioners were  required to submit their consent to the Regional Heads in a  prescribed format by 15th January, 1996.  The Government of  India, Ministry of Personnel, Public Grievances and Pension  (DP & PW), New Delhi, issued O.M. dated 22.11.1996  (Annexure\026P14) which is the nodal department of the  Government of India for taking policy decisions on pensionary  matters sent clarificatory order, a copy thereof was sent to the  Ministry of Tele-Communications, Department of  Communications, dealing with the subject of payment of  pension to the employees of erstwhile OCS who were absorbed  in VSNL.   25.       In view of the above, we are of the opinion that the  benefit of DR of CDA scales, which has been given to the  respondents-retirees by mistake at the time of their  retirement, is not to be given again as clarified by the  Government of India from time to time in their various Office  Memoranda referred to above and the respondents -retirees  are entitled to pension to be calculated on emoluments in the  IDA pay scales.  The ratio of the decision cited at Bar in the  case of Chairman, Railway Board and Others v. C.R.  Rangadhamaiah and Others [(1997) 6 SCC 623] is of no  assistance to the respondents-retirees in the facts and  circumstances of the present case.  In that case, the  respondents were railway employees belonging to the category  of running staff (retired from service after 1.9.1973 and before  5.12.1998) and their pensionary benefits were to be calculated  on the basis of "average emoluments" as defined in Rule 2544  of the Indian Railway Establishment Code.  The ’Running  Allowance’ up to maximum of 75% taken as part average  emoluments for determination of their pension and gratuity.   When the pay scales of railway employees were revised  w.e.f.1.1.1973 under the Railway Services (Revised Pay) Rules,  1973, the Railway Board by its letter dated 21.1.1974  intimated that existing percentage of running allowance would  continue for the time being, though it was under revision.  In a  subsequent letter dated 22.3.1976, the percentage was  reduced to 45% retrospectively w.e.f. 1.4.1976 which order  was quashed by the Central Administrative Tribunal in some  other case.  The Railway Board did not challenge the validity of  the said order of the Tribunal, but it issued two statutory  notifications dated 5.12.1988, in which the percentage was

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reduced to 45% retrospectively w.e.f. 1.1.1973 and to 55%  retrospectively w.e.f. 1.4.1979.  The argument on behalf of the  Railway Board before this Court was that the total amount of  pension already being paid to the respondents did not get  reduced on account of the impugned notifications.  The  argument was based on the premise that the respondents had  not yet been paid pension by taking into account maximum  limit of 75% of ’Running Allowance’ on revised pay scale  applicable from 1.1.1973.  Rejecting this argument, this Court  held that pension was payable to the respondents after their  retirement.  They were no longer in service on the date when  the impugned notifications were issued.  The amendments in  the Rules were not restricted in their application in futuro but  apply to employees who had already retired and were no  longer in service on the date the impugned notifications were  issued.  It was observed that pension was determined on the  basis of emoluments payable at the time of retirement (Rule  2301).  It was held that the impugned amendments took away  the right of the employees to have their pension computed on  the basis of their average emoluments in accordance with the  provisions applicable at the time of their retirement.  The  amount of pension payable to the respondents in accordance  with the rules which were in force at the time of their  retirement had been reduced.  In such circumstances, this  Court held that retrospective amendment of statutory rule,  adversely affecting pension of employees who already stood  retired on the date of the notification was invalid.  A  retrospective reduction of the pension was held not  permissible under law. 26.       In the present case, on the basis of the above-noted  various Office Memoranda relating to the subject matter of  pension, the Government of India or VSNL have not infringed  or snatched away the right of pension of the respondent \026 retirees which had accrued to them on the basis of IDA pay  scale with IDA pattern of DR either retrospectively or  prospectively.  The respondents-retirees, therefore, cannot be  held entitled to get DA twice, i.e. first on CDA pay scale and  then on IDA pay scale.  In terms of Rule (o) of CCS (Pension)  Rules, ’Pension’ does not include DR and amount of pension  has to be calculated as prescribed under Rule 49 thereof.  It is  well known that DR is always related to industrialization of the  increase in cost of living and it cannot exceed to 100%  neutralisation.  Therefore, the impugned order of the High  Court would result in granting to the respondents-retirees  benefits in excess of 100% neutralisation of the increase in  cost of living. 27.       Respondents Nos. 1, 4, and 8 and other employees who  retired after May 1993 and December 1993 respectively when  the change over to the IDA scale was implemented for Non- Executive Employees and Executive Employees retrospectively,  had in fact started drawing pay in the IDA scales and DA in  accordance with the orders of the Government of India issued  from time to time to all PSUs/Autonomous Bodies.  Therefore,  no question arose for the respondents-retirees claiming a  vested right to draw DR as per existing pay scales which was  much higher in view of the fact that IDA pay scales were  arrived at by merger of CDA pay scales and DR.  It is well- settled that DR is a matter of grace to the Government  Servants and not a vested right and hence a claim against the  Government for the grant of such allowance at particular rate  is not justiciable.  The grant of DR at such rates and subject to  such conditions is the prerogative of the Central Government  in terms of Rule 55-A of the CCA (Pension) Rules, 1972.  Rule  44 of FR to the grant of DA imposed no duty on the State to  grant it and it merely confers a power on the State to grant

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compassionate allowance at its own discretion and no  mandamus or any other writ or direction, therefore, should be  issued to compel the exercise of such a power as there is no  right in the employee which is capable of being protected or  enforced.[see. State of M.P. v. G.C. Mandawar (AIR 1954 SC  493]. 28.       In this view of the matter, our conclusion on the  question of denial of Dearness Relief on pension in case of  those retired employees of VSNL who have drawn pay on IDA  pay scales with IDA Dearness Relief is legal and just.  Therefore, the view taken by the High Court in this regard  cannot be sustained.  In the result, this appeal is allowed and  the order of the Division Bench in MAT No.  171 of 2002 dated  25.11.2004 affirming the order recorded by the learned Single  Judge in CWP No. 6935(W) of 1999 dated 15.10.2001 shall  stand set aside.  We direct dismissal of the writ petition.   We  make it clear that if any pensionary benefits have been given  to respondents-retirees or to any similarly situated persons of  VSNL at the time of mistaken calculation of the pensionary  benefits or in compliance to the order of the High Court, such  benefits shall not be recovered from them. 29.       However, in the fact and circumstances of the case,  there shall be no order as to costs.