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CASE NO.: Appeal (civil)  2327-28 of 1999

PETITIONER: N D P Namboodripad (Dead) by LRs

RESPONDENT: Union of India & Ors

DATE OF JUDGMENT: 08/03/2007

BENCH: H K Sema & R V Raveendran

JUDGMENT: J U D G M E N T

RAVEENDRAN, J.

       These appeals by special leave are filed against the judgment dated  10.7.1997 in Writ Appeal No.804 of 1992 and the order dated 10.11.1997 in  Review Petition No.299/1997 passed by a Division Bench of the Kerala  High Court.

2.      The appellant entered the Kerala Higher Judicial Service as a directly  recruited District & Sessions Judge and was later elevated as a Judge of the  Kerala High Court in the year 1972. He retired on 31.7.1980 with 23 years  of pensionable service which included 8 years of service as a Judge of the  High Court.  At the time of his retirement, the appellant was in receipt of a  total emolument of Rs.4,237/- comprising Basic Pay of  Rs.3,500/-,  Dearness Allowance of Rs.437/- and Special Allowance of  Rs.300/-.  

3.      The pension payable to High Court Judges is governed by Chapter III  of the High Court Judges (Conditions of Service) Act, 1954 (for short ’the  Act’). Clause (b) of sub-section (1) of section 15 provides that every Judge  who was not a member of the Indian Civil Service but has held any other  pensionable post under the Union or a State, shall, on his retirement, be paid  a pension in accordance with the scale and provisions in Part III of the First  Schedule. The proviso thereto and sub-section (2) require such Judge to  exercise certain options. The appellant was governed by Part III of the First  Schedule to the Act as he did not opt for pension under Part I of that  Schedule. Part III of the First Schedule is extracted below : "1.     The provisions of this Part apply to a Judge who has held any  pensionable post under the Union or a State (but is not a member of the  Indian Civil Service) and who has not elected to receive the pension  payable under Part I.

2.      The pension payable to such a Judge shall be \026 (a)     the pension to which he is entitled under the ordinary rules  of his service if he had not been appointed a Judge, his service as a  Judge being treated as service therein for the purpose of calculating  that pension; and

(b)     a special additional pension of Rs.1,600 per annum in  respect of each completed year of service for pension but in no  case such additional pension together with the additional or special  pension, if any, to which he is entitled under the ordinary rules of  his service, shall exceed Rs.8,000 per annum.

Provided that the pension under clause (a) and the additional pension  under clause (b) together shall in no case exceed Rs.54,000 per annum in

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the case of a Chief Justice and Rs.48,000 per annum in the case of any  other Judge."

(Note : The special additional pension was Rs.700/- per annum and the ceiling was  Rs.3500/- per annum under clause (b) and these were substituted as Rs.1600/- and  Rs.8000/- respectively with effect from 1.11.1986)

The pension payable to the appellant was fixed at Rs.17,300/- per annum  (comprised of Rs.13,800/- as ordinary pension and Rs.3,500/- as special  additional pension).   

4.      The Government of India vide Official Memorandum dated 16.4.1987  rationalised the pension structure of the employees who retired prior to  1.1.1986. Clause 4.1 thereof provided for additional relief for existing  pensioners. Clause 5 provided for calculation of pension at 50% of average  emoluments in the case of pensioners whose pension was calculated under  the slab formula. Clause 6.1 related to consolidation of pension and provided  that the pension of existing pensioners will be consolidated with effect from  1.1.1986 by adding together (a) the existing pension, (b) the existing  dearness  relief and (c) the additional benefits accruing from Paras 4 and 5 of  the  said O. M. dated  16.4.1987.  The  said   O. M.   was     not               applicable    to    retired     High      Court       Judges       whose        pension  was governed by separate rules/orders and stated that necessary orders will  be issued in their cases by the respective authorities.

5.      By Circular dated 18.12.1987, the Government of India notified the  Accountant Generals of all States that the ordinary pension admissible to  High Court Judges under Para 2(a) of Part III of the First Schedule to the  High Court Judges (Conditions of Service) Act, 1954 may be revised with  effect from 1.1.1986 as in the case of the employees of the Central  Government. It permitted the respective State Governments to either adopt  the said O.M. or issue independent orders on similar lines, subject to the  maximum stipulated in Schedule III to the Act. By order dated 19.10.1989,  the Government of Kerala directed that the pension of the Judges of the High  Court, who have been promoted from the State Higher Judicial Service and  falling under Part III of the First Schedule to the Act, shall be revised with  effect from 1.1.1986 in accordance with the rates referred to in the O.M.  dated 16.4.1987 issued by the Government of India.  

6.      By communication dated 26.10.1989, the office of the Accountant  General, Kerala, informed the Central Government (with copy endorsed to  appellant) that the pension of the appellant who had opted for Part III of the  First Schedule to the Act, was revised and consolidated from 1.1.1986 and  1.11.1986 as follows :

       (a) Pension (including additional pension) from 1.1.1986  :  Rs.32,720 p.a.

       (b) Pension (including additional pension) from 1.11.1986 : Rs.37,220 p.a.

The annexure to the said letter showed the calculation of pension as follows,  by treating the ’emolument’ reckoned for pension as Rs.3,500/- per month  and qualifying service as 23 years :

Existing ordinary pension                       : Rs. 1150/- p.m.

Revised ordinary pension (as per 50% formula) : 3500 x  23  = Rs.1342 p.m.                                                           2        30    

Increase due to Revision                        : Rs. 192/- p.m. or Rs. 2304/- p.a.

"Consolidation of Pension as per O.M. dt. 16.4.1987            

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                                                               Amount Per Annum

1.      Existing ordinary pension( 1150 x 12)                   Rs. 13,800/-          2.      Part consolidated ordinary pension as         per Para 6.1 of O.M. dt. 16.4.87                                Rs. 26,916/-         Additional relief as per para 6.1(A) in         case of pre 31.3.85 retirees (vide          Col.2 of ready reckoner) : (2243 x 12)

3.      Increase due to recalculation at 50% of Pay                     Rs.  2,304/-

4.      Total consolidated ordinary pension                             Rs. 29,220/-         from 1.1.1986 ( 2 + 3 )

5.      Additional pension admissible from 1.1.1986             Rs.  3,500/-         (under para 2(b) of Schedule III to the Act)

6.      Total pension admissible from 1.1.1986 (4 + 5)          Rs. 32,720/-

7.      Additional pension admissible from 1.11.1986.           Rs.  8,000/-         (under para 2(b) of Schedule III to the Act)

8.      Total pension admissible from 1.11.86 (4 + 7)           Rs. 37,220/-"

7.      The appellant challenged the said fixation of pension in O.P.  No.203/1990. According to him the ordinary pension ought to have been   calculated, by taking the emoluments drawn at the time of retirement  (Rs.4237/- per month) instead of Rs.3500/-. He also contended that the  additional pension under para 2(b) of Part III of First Schedule to the Act  should be without reference to any ceiling. A learned Single Judge allowed  the said petition by order dated 12.3.1992. He held that the appellant was  entitled to a pension of Rs.35,100/- per annum (that is Rs.2,925x12) from  1.1.1986 and Rs.47,900/- per annum (that is Rs.35,100 + Rs.12,800) from  1.11.1986.  

8.      Union of India challenged the said order of the learned Single Judge  in W.A. No.804 of 1992. The said appeal was allowed by judgment dated  10.7.1997. The Division Bench set aside the order of the learned Single  Judge and affirmed the pension as fixed under communication dated  26.10.1989 (extracted in para 6 above). The Division Bench purported to  follow the decisions of this Court in M.L. Jain (I) [AIR 1985 SC 619] and  M.L. Jain (II) [AIR 1989 SC 669]. It, however, observed that if any excess  payment had been made to the appellant on account of any wrong  calculation, such excess need not be refunded by the appellant. A review  petition filed by the appellant was rejected by the Division Bench by Order  dated 10.11.1997.  

9.      The said judgment of the Division Bench and the rejection of the  review petition, are challenged in these appeals by special leave. The  appellant placed reliance on Rule 62 of Part III of the Kerala Service Rules,  in support of his contention that average emolument of the appellant had to  be taken as Rs.4237/- instead of Rs.3500/- per month for calculating the  ordinary pension. In support of the contention that the special additional  pension should be calculated without any ceiling, reliance was placed on  M.L. Jain (III) [AIR 1991 SC 928].  

10.     This Court, by judgment dated 16.4.2004 (reported in 2004 (5) SCC  259) held that having regard to Rule 62, ’emolument’ for calculating pension,  would include dearness allowance and other special allowances. This Court  further held that the ordinary pension of appellant should be calculated by  taking Rs.4237/- as the monthly emolument instead of Rs.3,500/-. This  Court also held that the special additional pension should be calculated  under Clause 2(b) of Part III of the First Schedule to the Act without any

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ceiling, in view of the decision in M.L. Jain (III). The respondents were  directed to recalculate the pension within three months and pay the arrears to  the appellant.  

11.     Aggrieved by the first part of the judgment relating to calculation of  ordinary pension based on the interpretation of Rule 62, the State of Kerala  filed a review petition in R.P.(C) Nos.1482-83/2004. The review petitions  were allowed by order dated 1.4.2005, the judgment dated 16.4.2004 was  recalled and the civil appeals were restored for fresh hearing. We have heard  the learned counsel on both issues.  

Re : Ordinary Pension :

12.     The State Government contended that the term ’emolument’ (for  ascertaining the ’average emolument’  which is the basis for determination of  ordinary pension) used in Rule 62 of Part III of Kerala Services Rules,  included only basic pay and dearness pay, if any, and did not include  dearness allowance or any other allowances. It is further contended that as  the appellant was not receiving any dearness pay, his last drawn basic pay of  Rs.3500/- per month alone constituted the ’emolument’ for calculating the  pension of the appellant.  

13.     On the other hand, it is contended on behalf of the Appellant that the  word "includes" in Rule 62 is not equivalent to "means" or "only includes".  According to the Appellant, the word "includes" when used in the definition  of a word or phrase in a Statute, enlarges the meaning of the word or phrase   and such words or phrase must be construed as comprehending not only  such things as they signify according to their natural meaning, but also those  things which the interpretation or definition clause declares that they shall  include (vide The Regional Director, ESI Corporation vs. High Land Coffee  Works - AIR 1992 SC 129). The Appellant contends that ’emolument’ in its  natural and ordinary sense, refers to the pay and all allowances; and the  inclusive definition in Rule 62 is intended to further expand it by specifically  including ’dearness pay’. It is submitted that what is already included in the  general meaning of the word ’emolument’, that is dearness allowance and  special allowances in addition to basic pay, could not be excluded because of  the addition of some other item like ’dearness pay’. The Appellant, therefore,  contends that ’emolument’ for purpose of pension, consists of basic pay,  dearness allowance, other allowances and dearness pay.    

14.     As the entire argument of the appellant is based on Rule 62, it is  useful to extract it. It reads thus : "62.    The term emolument when used in this part means the emolument  which the employee was receiving immediately before his retirement and  includes :

(a)     pay as defined in Rule 12(23) in Part I of these Rules  and/or pay of the appointment under Rule 9 or Rule 31 of the  Kerala State and Subordinate Service Rules.

(b)     the dearness pay the employee was actually in receipt of."   

Rule 12(23) in Part I of the Kerala Service Rules defines ’pay’ thus :  "Pay :- Means the amount drawn monthly by an officer as -  

(i)     the pay, other than 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 is  entitled by reason of his position in a cadre, and  

(ii)    personal pay and special pay, and  

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

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The appellant was not receiving any Dearness Pay. It is also not in dispute  that dearness allowance and special allowance were not specially classed as  ’pay’ by the State Government under Rule 12(23). Therefore dearness  allowance and special allowances, do not form part of pay. The word  ’emolument’ no doubt is a wider term than basic pay. It generally refers to  the salary or profits from employment or office. But the word ’emolument’ is  not used in the general sense in the service Rules relating to pension. The  word is defined for purposes of pension. In fact, all rules governing pension,  define the word ’emolument’ by giving a special or specific meaning, for  purposes of pension calculation.  Where a word is defined, there can be no  reference or reliance on any general meaning. To bring in ’generality’ instead  of ’specificity’ in defining the term ’emolument’ will defeat the very purpose  of defining ’emolument’ for purposes of pension. Therefore, contextually the  definition of ’emolument’ should be specific and not ’expansive’ or general.  

15.     The word ’includes’ has different meanings in different contexts.  Standard Dictionaries assign more than one meaning to the word ’include’.  Webster’s Dictionary defines the word ’include’ as synonymous with  ’comprise’ or ’contain’. The Illustrated Oxford Dictionary defines the word  ’include’ as : (i) comprise or reckon in as a part of a whole; (ii) treat or regard  as so included. The Collins Dictionary of English Language defines the  word ’includes’ as :  (i) to have as contents or part of the contents; be made  up of or contain; (ii) to add as part of something else; put in as part of a set,  group or a  category; (iii) to contain as a secondary or minor ingredient or  element. It is no doubt true that generally when the word ’include’ is used in  a definition clause, it is used as a word of enlargement, that is to make the  definition extensive and not restrictive. But the word ’includes’ is also used  to connote a specific meaning, that is, as ’means and includes’ or ’comprises’  or ’consists of’.

16.     Justice G. P. Singh in his treatise ’Principles of Statutory  Interpretation’, (Tenth Edition, 2006), has noticed that where a word defined  is declared to ’include’ such and such, the definition is prima facie extensive,  but the word ’include’ when used while defining a word or expression, may  also be construed as equivalent to ’mean and include’ in which event, it will  afford an exhaustive explanation of the meaning which for the purposes of  the Act must invariably be attached to the word or expression. [vide pages  173 and 175 referring to and relying on the decisions of this Court in The  Municipal Council, Raipur v. State of Madhya Pradesh [AIR 1970 SC  1923], South Gujarat Roofing Tile Manufacturers Association vs. State of  Gujarat [AIR 1977 SC 90], Hindustan Aluminum Corporation vs. State of  Uttar Pradesh [AIR 1981 SC 1649], and Reserve Bank of India v. Peerless  General Finance and Investment Co. Ltd. [1987 (1) SCC 424]. It is,  therefore, evident that the word ’includes’ can be used in interpretation  clauses either generally in order to enlarge the meaning of any word or  phrase occurring in the body of a Statute, or in the normal standard sense, to  mean ’comprises’  or ’consists of’ or ’means and includes’, depending on the  context.  

17.     If the words ’and includes’ were intended to rope in certain items  which would not be part of the meaning, but for the definition, then Rule 62  would have specified only ’dearness pay’ as the item to be included but not  ’pay’. If pay, dearness allowance and other allowances were already included  in ’emolument’ with reference to its general or normal meaning, as contended  by appellant, there was no reason to specifically again include ’pay’ in Rule  62. Inclusion of ’pay’ and ’dearness pay’ and non-inclusion of ’dearness  allowance or other allowances’ in the definition of ’emolument’ is significant.  The definition in Rule 62 is intended to clarify that only pay and dearness  pay would be considered as ’emolument’ for purposes of calculating pension.  The words ’and includes’ have been used in Rule 62, as meaning ’comprises’  or ’consists of’.

18.     In the view we have taken, it is unnecessary to consider the following  two amendments to Rule 62 of Part III of the Kerala Service Rules, made

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during the pendency of this appeal, in exercise of power conferred by section  2(1) of the Kerala Public Services Act, 1968 :  

(i)     Substitution of the words ’comprises only’ in place of ’includes’  in Rule 62, by Kerala Service (Amendment) Rules 2004, with  effect from 1.3.1997.  

(ii)    Further substitution of the words ’comprises only the following’  in place of the words ’comprises only’ in Rule 62 of Part III of  Kerala Service Rules by Kerala Service (Amendment) Rules,  2005, with effect from 14.11.1966.  

The explanatory notes to the two amendments clarify that the State  Government decided to amend the Service Rules to give more clarity and to  avoid ambiguity in calculating pension and the term ’emolument’ for the  purpose of calculation of pension will comprise of only pay and dearness  pay. We have already held accordingly while interpreting unamended Rule  62. The amendments merely reinforce our view.  

19.     We, therefore, accept the contention of the State Government that  Rule 62 does not enable the addition of dearness allowance and special  allowance to the pay for purposes of pension. The ’emolument’ of the  appellant was rightly taken as Rs.3500/- per month. We find no error in  calculation of the consolidated ordinary pension at Rs.29,220/-.

Re : Special Additional Pension :

20.     Special additional pension is provided for under Para 2(b) of Part III  of first Schedule to the Act. In M.L. Jain (III) - AIR 1991 SC 928, the  ceiling prescribed under para 2(b) was held to be unconstitutional being  violative of Article 14 of Constitution of India. Therefore, neither the ceiling  of Rs.8,000/- introduced with effect from 1.11.1986, nor the earlier ceiling  of Rs.3500/- is valid. As a consequence, the special additional pension  should be taken as Rs.5,600/- per annum (that is Rs.700x8) instead of  Rs.3500/- from 1.1.1986 and Rs.12,800/- per annum (that is Rs.1600x8)  instead of Rs.8,000/- from 1.11.1986. In fact, neither Union of India, nor  State Government dispute this position.

21.     We, therefore, allow these appeals in part and hold as follows :  

(i)     that for the purpose of calculation of pension, the ’emolument’  received by the appellant was Rs.3,500/- per month and not  Rs.4,237/-. Consequently, determination of consolidated  ordinary pension as Rs.29,220/- per annum from 1.1.1986 is  upheld.  

(ii)    As the ceiling on the amount to be added under clause 2(b) of  Part III of First Schedule to the Act is invalid, the special  additional pension per annum would be Rs.5600/- per annum  from 1.1.1986 and Rs.12,800/- per annum from 1.11.1986 in  the case of appellant.  

(iii)   Therefore, the total pension was Rs.34,820/- p.a. from 1.1.1986   and Rs. 42,020/- per annum from 1.11.1986.  

22.     We direct that the pension due be recalculated and settled accordingly.  If any excess payment has been made to the appellant, it shall not, however,  be recovered from the Legal Representatives of the deceased appellant.  Parties to bear their respective costs.