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PETITIONER: P.V.SUNDARA RAJAN & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       26/04/2000

BENCH: S.S.Ahamad, Y.K.Sabharwal

JUDGMENT:

Y.K.SABHARWAL J.

     The   matter  concerning  the   pension   of   Central Government  employees absorbed in Public Sector Undertakings has  been  the subject matter of examination by  this  Court from time to time.

     In  "Common Cause", A Registered Society And Ors.   v. Union  of  India [(1987) 1 SCC 142], the grievance  stressed was  that  certain provisions of the Commutation of  Pension Rules  permit  Union of India to recover more than  what  is paid to the pensioners upon commutation and thus they sought for  the  issue  of directions for  formulating  appropriate scheme rationalising the provisions relating to commutation. That petition was filed on behalf of the government servants who  had  commuted  their  pension  partially.   During  the pendency of the matter, Union of India agreed to restore the commuted  portion  of the pension in regard to all  civilian employees  at  the  age  of  70 years  or  after  15  years, whichever  is later, and agreed to make this effective  from 1st April, 1986.  The Court, however, directed that it would be just and equitable that the benefit agreed to be extended in  respect  of  commuted portion of the pension  should  be effective from 1st April, 1985.

     In  Welfare Association of Absorbed Central Government Employees  in  Public Enterprises v.  Union of India &  Ors. [(1991)  2  SCC 265], a two Judges’ Bench examined the  writ petition  filed  on  behalf  of those who  at  the  time  of retirement  from Government service and entering into public sector  had  taken  the advantage of  commuting  the  entire pension  and were seeking the benefit of the judgment in the case  of  Common  Cause  (supra).   It  was  held  that  the petitioners  belong  to a class different from  those  whose case was before this Court in the Common Cause case.  It was noticed  that the commutation does bring certain  advantages to  the  commutee  and  the  class  of  Government  officers represented  by the petitioner had derived such benefits and there  was no basis for the allegation that by not extending the  benefit  of  common  cause case,  there  has  been  any infringement of Article 14 of the Constitution.

     In  Welfare Association of Absorbed Central Government

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Employees  in  Public Enterprises v.  Union of India &  Ors. and P.V.Sundara Rajan & Anr.  v.  B.B.  Tandon & Ors.  being Writ  Petitions  (C)  Nos.  11855 of 1985 and  567  of  1995 respectively  [(1996) 2 SCC 187], the relief was confined to the  restoration of one-third portion of the fully  commuted pension  as  per  the decision in Common  Cause  case.   The contention of the petitioners was that they have been denied the benefit of ‘common cause’ judgment, by insertion of para 4  in  the impugned OM dated 5th march, 1987.   They  sought quashing  of  the said para which provided that the  Central Government  employees  who  got  themselves  absorbed  under Central  Public  Sector Undertakings/Autonomous  Bodies  and have  received/or  opted  to   receive  commuted  value  for one-third  of pension as well as terminal benefits equal  to the  commuted  value of the balance amount of  pension  left after commuting one-third of pension are not entitled to any benefit  under  the  said orders as they have ceased  to  be Central Government pensioners.  The scope of Rule 37A of the CCS  (Pension)  Rules,  1972 was also examined.   That  Rule reads as under :-

     "37-A  Payment  of  lump  sum  amount  to  persons  on absorption in or under a corporation, company or body

     (1)  Where a government servant referred to in Rule 37 elects   the  alternative  of   receiving  the   (retirement gratuity)  and  a  lump sum amount in lieu  of  pension,  he shall, in addition to the (retirement gratuity) be granted:

     (a)  on an application made in this behalf, a lump sum amount  not exceeding the commuted value of one-third of his pension  as may be admissible to him in accordance with  the provisions of the Civil Pensions (Commutation) Rules;  and

     (b)  terminal benefits equal to the commuted value  of the balance amount of pension left after commuting one-third of   pension  to  be  worked   out  with  reference  to  the commutation  tables  obtaining  on the date from  which  the commuted value becomes payable subject to the condition that the  government  servant  surrenders his  right  of  drawing two-thirds of his pension."

     This Court (Bench of three Judges) held that one-third portion  of  the  pension  has  been  commuted  without  any condition  and  two-third with the condition  attached.   It would  be useful to reproduce para 9 of the said decision as under:

     "From  the  above  extracts, it will be  seen  that  a clear-cut  distinction  is made in Rule 37-A itself  between one-third  portion  of  pension to be commuted  without  any condition  attached  and two-third portion of pension to  be received  as terminal benefits with condition attached  with it.   It follows that so far as commutation of one-third  of the  pension is concerned, the petitioners herein as well as petitioners  in "Common Cause" case stand on similar footing with  no  difference.   So far as the balance  of  two-third pension  is concerned, the petitioners herein have  received the commuted value (terminal benefits) on condition of their surrendering  of their right of drawing two-thirds of  their pension.   This  was  not the case with the  petitioners  in "Common  Cause" case.  That being the position the denial of benefit  given to "Common Cause" petitioners to the  present petitioners violates Articles 14 and 16 of the Constitution.

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The  reasoning  for restoring one-third commuted pension  in the  case  of "Common Cause" petitioners equally applies  to the restoration of one-third commuted pension in the case of these petitioners as well."

     In  respect of the earlier two Judges’ Bench decision, [(1991)  2  SCC 265], it was observed that Rule 37A was  not brought  to the notice of the Court and that the  contention that  the  petitioners  on commuting their pension  in  full cease  to be Central Government pensioners was too broad  to be  accepted  in  the absence of any Statute  or  the  Rule. Under  these circumstances, it was held that the petitioners are entitled to the benefits as given in "Common Cause" case so  far  as  it related to restoration of one third  of  the commuted  pension  and consequently, para 4 of OM dated  5th March, 1987 was quashed.

     Contempt  Petition  No.  530 of 1997 in Writ  Petition (C) No.  11855 of 1985 was filed with the grievance that the Government  construing  the   aforesaid  judgment  literally restored  one-third  of the commuted pension and denied  all other  attendant  benefits  as made available to  the  other Central Government pensioners.  By order dated 1st May, 1998 in  Welfare  Association  of   Absorbed  Central  Government Employees  in Public Enterprises & Anr.  v.  Arvind Verma  & Ors.   [AIR  1998  SC  2862],   this  Court  held  that  the petitioners  have  to  be treated at par  with  the  Central Government  pensioners  and the earlier decision had  to  be given  effect  to in letter and spirit which means that  the restoration  of  pension must be with attendant benefits  as given to the Central Government pensioners.  The Government, it  was held, was liable to restore not only the pension but also  all attendant benefits.  Noticing, however, that there was  some  genuine doubt on the part of the  respondents  in construing  and giving effect to the judgment of this  Court and,  therefore,  there was no contempt, the Government  was directed to comply with the judgment within three months and the contempt petition was thus disposed of.

     In  purported  implementation of the  aforesaid  order dated  1st  May,  1988,  the  Central  Government  issued  a circular  dated 14th July, 1998.  This led to filing of  yet another  contempt  petition (Contempt Petition  (Civil)  No. 255  of  1999).  By order dated 6th September,  1999,  while observing  that no case for contempt is made out, this Court directed   that  the  contempt   petitions  be  treated   as applications for clarification.

     Under aforesaid circumstances, contempt petitions have been  registered  as  interlocutory applications.   One  Lt. Col.   B.R.   Malhotra (Retired) has also been impleaded  as one of the applicants in IA No.  4/99.  He had commuted 100% pension  and  complains  of   discrimination  by  government against 100% commutees.  Writ Petitions(C) Nos.  345 and 576 of  1999  have  also been filed by the  absorbed  government employees who had commuted 100% pension.

     One  of  main grievance urged in the  applications  is that  all  Central  Government pensioners  are  entitled  to dearness  relief on sanctioned basis pension as revised from time  to time, regardless of whether they have commuted  any part of their pension.  It has been claimed that the benefit is  to  be calculated at applicable rates on the  amount  of pension  including the amount of commuted pension but  these benefits  have been restored to the petitioners only  partly

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at  the notified rates on one-third of the notional pension. It  has  been  submitted  that they are at  par  with  other Central Government pensioners.

     The  dearness  relief on pension has been  granted  to pensioners  to compensate them for the erosion in the  value of  money due to rise in the cost of living.  It seems clear that the Government has permitted to the applicants dearness relief  calculated  only  on one-third part of  the  pension restored  while  in case of other pensioners,  the  dearness relief  is calculated on full pension including the commuted part  of pension.  As already noticed, the applicants are to be  treated on the same footing as other Central  Government employees  in  so  far  as the question  of  restoration  of one-third  of commuted pension is concerned and are entitled to  the  benefits  as given in Common Cause case.   In  this respect,  it  would  also  be  useful  to  notice  that  the ‘pension’  as  defined in Central Civil  Services  (Pension) Rules  1972 does not include dearness relief.  Rule  3(1)(o) reads as under :-

     "‘Pension’  includes  gratuity  except when  the  term pension  is used in contradistinction to gratuity, but  does not include dearness relief;"

     We may also reproduce Rule 55-A :-

     " Dearness Relief on Pension/Family Pension

     (i)  Relief  against price rise may be granted to  the pensioners  and  family 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.

     (ii)  If a pensioner is re-employed under the  Central or State Government or a Corporation/Company/Body/Bank under them  in  India or abroad including permanent absorption  in such Corporation/Company/Body/Bank, he shall not be eligible to draw dearness relief on pension/family pension during the period of such re- employment.

     (iii) Deleted"

     The  Government  instructions  also   show  that   the dearness  relief is granted to compensate the pensioners for erosion  in  the value of money due to rise in the  cost  of living.   Anything  which is not part of pension has  to  be paid  in full in so far as those who have commuted one-third pension.   Nothing of substance could be shown by Mr.  Altaf Ahmed,  learned  Additional  Solicitor  General,  so  as  to deprive  the  grant  of benefit of dearness relief  on  full pension to these public sector absorbees at par with Central Government  pensioners.  Directions in this regard have been issued  by  this Court from time to time but applicants  are still  being  deprived  of  this benefit.  We  give  to  the respondents  a final opportunity to grant to the  applicants the  benefit  of  dearness relief on  pension  as  aforesaid within  a  period  of  three months.   The  applicants  are, however,  not  entitled to any other benefit claimed in  the applications.

     The  parity  claimed  by Lt.Col.  Malhotra  and  other absorbees  who  had commuted 100% pension, in our  view,  is entirely misplaced.  The contention that what is commuted or

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given  up is an amount and not the right to receive  pension or  right to receive post-commutation revision and attendant benefits  including  dearness relief on the  gross  entitled pension  on the dates they were granted to other  Government pensioners,  is only illusory.  The decision in the case  of State  of  T.N.  and Ors.  v.  V.S.  Balakrishnan  and  Ors. [(1994)  Suppl.  3 SCC 204] on which reliance was placed  by Mr.    Gopal   Subramanium,   Senior    Advocate,   has   no applicability  to  the point in issue.  Those  who  commuted 100%  pension  continue to remain non-pensioners till  their pension  is restored.  In Welfare Association Case  (supra), persons  who  commuted the full pension and who will not  be given any monthly pension by deeming monthly pension to have been reduced to nil has been treated as a separate category. Those  who  commute  100% pension are not  entitled  to  the benefit of dearness relief on full pension or other benefits as  claimed herein.  We also do not find any  discrimination in so far as this class is concerned.

     The  interlocutory applications and the writ petitions are  disposed  of in the above terms leaving the parties  to bear their own costs.