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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: ALL INDIA SERVICES PENSIONERS ASSOCIATION & ANR.

DATE OF JUDGMENT14/01/1988

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) RAY, B.C. (J)

CITATION:  1988 AIR  501            1988 SCR  (2) 697  1988 SCC  (2) 580        JT 1988 (1)    96  1988 SCALE  (1)93  CITATOR INFO :  E          1990 SC 334  (22)

ACT:      Cicil   Service:   Pension   and   gratuity-Distinction between-Pension payable  periodically as  long as  pensioner alive-gratuity ordinarily paid once only on retirement.      Members of  All India Services-Retired prior to January 1,  1973-Not   entitled  to   claim  gratuity  on  basis  of Notification dated January 24, 1975.      Constitution of India 1950: Articles 136 and 141-S.L.P. dismissed giving  reasons-Decision attracts  Article 141 and becomes binding.      All India  Service (Death_cum-Retirement Benefitl Rules 1958. Rule  28(6) and  Government of  India Notification No. 33/I2/73-AIS (ii)  dated  January  24,  1975-Gratuity-Upward revision of-Those  members of  the service who retired prior to January 1, 1973 not entitled to benefit of the additional amount.

HEADNOTE: %      In  a   petition  filed   by  the  All  India  Services Pensioners’ Association, and an I.A.S. Omcer who had retired from service  prior to  l.1.1973 (respondents in the Appeal) the Central  Administrative Tribunal  by its  decision dated August 5,  1985, declared  that Rule  28(6) of the All India Services (Death-cum-Retirement Benefits) Rules; 1958 insofar as it  tended to  restrict pensioners to retirement benefits to which they were entitled on the date of their retirement, and sought  to deny  them the  benefit  of  the  Iiberalised pension  and   gratuity  in  the  amended  Notification  No. 33/12/73-AIS (ii)  dated January  24, 1975  was violative of Article 16  of the  Constitution, and  directed that all the members of  the All  India  Service  would  be  entitled  to liberalised pensionary  benefits including  gratuity as  per the said  Notification  irrespective  of  whether  they  had retired prior to January 1, 1973 or thereafter.      The Appellant-Union  of India  in its appeal by Special Leave to  this Court had not questioned the Tribunal’s order insofar as its liabil- H 698

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ity to  pay pension  was concerned, but sought leave against the  direction  to  pay  gratuity  in  accordance  with  the Notification even to those members of the All India Services who had retired prior to January 1, 1973.      On the  question: whether  the members of the All India Services who  had retired  prior  to  January  1,  1973  are entitled to  payment of  gratuity as  a part  of  retirement benefits at  the rates  specified in  the  Notification  No. 33;12 73-AIS (ii) dated 24. 1. 1975.      Allowing the appeal, ^      HELD:1.  In   the  Andhra   Pradesh  State   Government Pensioners’ Association v. State of Andhra Pradesh, [1986] 3 SCC 501  this Court  had given  reasons for not applying the rule in  D.S. Nakara  v. Union  of India,  [1983]2  SCR  165 insofar as  the liability  of the Government to pay gratuity on retirement is concerned. [704A-B]      2. The views expressed by this Court apply to all cases of gratuity where similar features exist and it should apply to the instant case too. [704D]      3. The  way the Tribunal in the instant case, has tried to ignore  the decision  of this Court in the Andhra Pradesh State  Government   Pensioners’  Association   case  is  not correct. The  first ground  relied on by the Tribunal not to follow the  said decision  is that  it had  been rendered by this Court  while dismissing some special leave petitions is a wholly  untenable ground.  The second  ground given by the Tribunal that  the decision  was  one  rendered  in  a  case involving  a  Notification  issued  by  the  Andhra  Pradesh Government and  not  one  touching  the  Notification  dated January 24, 1975 is also not tenable. [704C-D]       4. When reasons are given for dismissing Special Leave Petitions the  decision becomes  one which  attracts Article 141 of the Constitution which provides that the law declared by the  Supreme Court  shall be  binding on  all the  courts within the territory of India. [704B-C]       5.  This Court  has made  a  distinction  between  the pension payable  on retirement  and the  gratuity payable on retirement. While pension is payable periodically as long as the pensioner  is alive,  gratuity is  ordinarily paid  only once on retirement. [706C-D]      6. The observation made by this Court in Andhra Pradesh State Government  Pensioners’ Association  case and  in M.L. Abhyankar v.  U.O.I, [1981]  3 SCC 125LS are binding insofar as the applicability of the 699 rule  in   D.S.  Nakara’s  case  to  the  liability  of  the Government to pay gratuity on retirement. [706D-E]      7.(i) The Government Notification No. 33/12/73-AIS (ii) dated January  24, 1975  neither expressly  nor by necessary implication directs  that those  who had  retired  prior  to January 1,  1973 would  be entitled to any additional amount by way of gratuity. [706E-F]      7.(ii) The  Tribunal was  in error  in  upholding  that gratuity was  payable  in  accordance  with  the  Government Notification No. 33/12/73-AIS (ii) dated January 24, 1975 to all those  members of the All India Services who had retired prior to January t, 1973. It is declared that the members of the All  India Services  who had retired prior to January 1, 1973 are  not entitled to claim gratuity on the basis of the said Notification. [706F-G]

JUDGMENT:

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    CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 897 of 1987      From the  Judgment and  order  dated  5.8.1986  of  the Central Administrative  Tribunal, New  Delhi in Regn. No. T- 853 of 1985 (CWP No. 2709 of 1985).      G.  Ramaswamy,   Additional   Solicitor   General,   P. Parmeshwaran and B. Parthasarthy for the Appellant.      Harish N. Salve, Pramod Dayal and Badri Dass Sharma for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  The short  question involved in this case is  whether the  members of  the All India Services who had retired  prior to  1.1.1973 are  entitled to  payment of gratuity as  a part  of retirement  benefits  at  the  rates specified in  the Notification  No. 33/12/73-AIS  (ii) dated 24.1. 1975.      This appeal  by special  leave  is  filed  against  the decision of the Central Administrative Tribunal dated August 5, 1986  declaring that rule 28(6) of the All India Services (Death-cum-Retirement Benefits)  Rules, 1958  insofar as  it tended to  restrict pensioners  to  retirement  benefits  to which they were entitled on the date of their retirement and sought to  deny them the benefits of the liberalised pension and 700 gratuity in  the amended  notification No. 33/12/73-AIS (ii) dated  24.1.1975   was  violative   of  Article  16  of  the Constitution of  India and  further directing  that all  the members of  the All  India Services  would  be  entitled  to liberalised pensionary  benefits including  gratuity as  per the said  notification  irrespective  of  whether  they  had retired prior  to 1.1.1973 or thereafter. The above decision was given  by the Central Administrative Tribunal, New Delhi in REGN No. T-853/85 (C.W. No. 2709185) which was a petition filed by  the  All  India  Services  Pensioners  Association (Rajasthan) and  one R.D.  Mathur, an  IAS officer  who  had retired from  service prior to 1.1.1973. The Union of India, the appellant  herein, has  not questioned  the order of the Central Administrative  Tribunal insofar as its liability to pay the  pension in  accordance with  the  judgment  of  the Tribunal is  concerned. This  appeal  by  special  leave  is confined only  to that  part of the order of the Tribunal by which the  Union of  India is  directed to  pay gratuity  in accordance with  the aforesaid  notification even  to  those members of  the All  India Services who had retired prior to 1.1.1973.      The crucial  point for  consideration in this appeal is whether the  members of  a service  who had retired prior to the date  on which  there  is  an  upward  revision  of  the gratuity on  retirement to the members of such service would also  be  entitled  to  claim  the  difference  between  the gratuity payable  to members  of such service on such upward revision and  the gratuity  which had  been actually paid to them on  their retirement,  even though the Government order revising the  gratuity  does  not  either  expressly  or  by necessary implication  state that the members of the service who had  retired earlier should also be paid gratuity at the revised rates  because of the decision of this Court in D.S. Nakara v.  Union of  lndia, [1983]  2 S.C.R.  165. A similar question came  up for consideration before this Court in the State Government Pensioners Association & others v. State of Andhra Pradesh., [1986] 3 S.C.C. 501. The facts of that case are these  The Government  of Andhra  Pradesh by  its  order G.O.Ms. No.  88 dated  26.3.1980  directed  that  retirement gratuity was  payable to  the  officers  to  whom  the  said

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Government order was applicable as follows:           "Retirement gratuity  may be 1/3rd of pay drawn at           the time  of  retirement  for  every  six  monthly           service subject  to  maximum  of  20  months’  pay           limited to Rs.30,000. "      The said  order was  made effective from April 1, 1978. The question  which arose  for consideration  in  some  writ petitions filed  in the  High Court  of Andhra  Pradesh  was whether the pensioners who had 701 retired prior  to 1.4.1978  would also  be entitled  to  the payment of gratuity in accordance with the provision made in the aforesaid notification. The High Court of Andhra Pradesh held that  the decision  of this Court in D.S. Nakara’s case (supra) was  not applicable  to the  payment of gratuity and that pensioners who had retired prior to April 1, 1978 would not be entitled to claim the difference between the gratuity payable under  the Government  order and  the gratuity which they had  actually received at the time of their retirement. In the  Special Leave  Petitions  filed  before  this  Court against the  said decision two of the learned Judges of this Court Thakkar  and Ray,  JJ. affirmed  the view taken by the High Court of Andhra Pradesh and dismissed the petitions. In the course  of their  order the  learned Judges  observed as follows:                "We fully  concur with  the view  of the High           Court.  The  upward  revision  of  gratuity  takes           effect from  the specified  date (April  1,  1978)           with  prospective   effect.  The  High  Court  has           rightly  understood   and  correctly  applied  the           principle propounded  by this  Court  in  Nakara’s           case  ....................  An  illustration  will           make it  clear. Improvements  in pay scales by the           very nature of things can be made prospectively so           as  to   apply  to  only  those  who  are  in  the           employment on  the date  of the  upward  revision.           Those who  were in employment say in 1950, 1960 or           1970, lived, spent, and saved, on the basis of the           then prevailing  cost of living structure and pay-           scale structure, cannot invoke Art. 14 in order to           claim the higher pay scale brought into force say,           in 1980.  If upward  pay revision  cannot be  made           prospectively on account of Article 14, perhaps no           such revision  would ever  be made. Similar is the           case with  regard to  gratuity which  has  already           been  paid   to  the   petitioners  on   the  then           prevailing basis  as it  obtained at  the time  of           their respective  dates of  retirement. The amount           got crystalized  on the  date of retirement on the           basis of  the salary  drawn by them on the date of           retirement. And  it was  already paid  to them  on           that footing.  The transaction  is  completed  and           closed. There  is no  scope for upward or downward           revision in  the context  of  upward  or  downward           revision of the formula evolved later on in future           unless the  provision in  this behalf expressly so           provides retrospectively  (downward  revision  may           not be  legally permissible  even).  It  would  be           futile to  contend  that  no  upward  revision  of           gratuity amount can be made in har- 702           mony with  Article 14  unless it also provides for           payment on the revised basis to all those who have           already retired  between the  date of commencement           of the  Constitution in  1950,  and  the  date  of

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         upward revision.  There is therefor no escape from           the conclusion  that the  High Court was perfectly           right in  repelling the  petitioners’ plea in this           behalf."      When the  above decision  was brought  to the notice of the Tribunal  in the  case out  of which  the present appeal arises the  Tribunal declined  to follow  it  and  gave  the following reasons for doing so:                "We must,  however, observe  that the Supreme           Court in  that case  was dismissing  Special Leave           Petition (Civil)  Nos. 14179 and 14180 of 1985 and           was not  disposing  of  an  appeal.  Further,  the           Supreme Court,  in that  case was  considering the           Andhra Pradesh Pension Rules and not rule 28(6) of           the  All   India  Services   (Death-cum-Retirement           Benefit)  Rules,   1958  and   the  liberalisation           pension  scheme  of  Andhra  Pradesh  notified  on           24.1.1985 and not the notification dated 24.1.1975           amending  the   All  India   Services  (Death-cum-           Retirement Benefit)  Rules, 1958 with which we are           now concerned  in this  application. Moreover, the           Special Leave  Petition against the Andhra Pradesh           High Court’s  judgment was  rejected by a Bench of           two Judges  while the  judgment in  V.P.  Gautam’s           case which expressly dealt with Rule 28(6) and the           liberalised pension  scheme notified  on 24.1.1975           in respect  of Members  of All  India Services was           the subject  matter of an appeal before a bench of           three judges  of the  Supreme Court.  The relevant           portion of  the judgment  of  the  High  Court  of           Punjab and  Haryana which  must be  deemed to have           been affirmed  by the  three member  Bench of  the           Supreme Court  when it  dismissed Civil Appeal Nos           2738 and  2739  of  1985  on  12.2.1985  reads  as           follows:                     In other  words, the  provisions of rule                28(6) of  the retirement benefits rules, 1958                in so  far as  they were entitled on the date                of their  retirement and  seeks to  deny them                liberalised pension  under the  amended rules                referred to  above  which  came  into  effect                subsequent to  that date are unconstitutional                and are  also  accordingly  struck  down.  It                follows  that   the  liberalised   pensionary                benefits including death- 703                cum-retirement gratuity granted to pensioners                by the  amendment made in 1975 and 1979 shall                be  payable   to  all   persons  entitled  to                pensionary  benefits   under  the  Retirement                benefits rules, 1958 irrespective of the date                of the retirement from service.                It has  been  repeatedly  laid  down  by  the           Supreme Court  that the  decision  of  the  larger           Bench prevails  over the  decision of  the smaller           benches vide  Ganapati Sitaram  Balvalkar v. Waman           Shripad Mage,  A.I.R. 1981  S.C.  1956;  Mattulala           v.Radhe Lal, A.I R. 1974 S.C. 1596; Union of India           v. K.S.  Subramanian, A.I.R.  1976 S.C.  433. Even           assuming that  some aspects  have not  been  taken           into account  by the  Supreme Court,  no Court  or           Tribunal of  India can  take a view different from           that taken  by the  Supreme Court.  As held by the           Supreme Court  in T. Govindaraja Mudaliar v. State           of Tamilnadu, A.I.R. 1973 S.C. 974 "merely because

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         the aspect presented in the present appeal was not           expressly considered  or a  decision  given,  that           will not  take away  the binding  effect of  those           decisions of the Supreme Court." Vide Somavanti v.           State of Punjab, A.I.R. 1963 S.C. 151.                It may  be pertinent to note that even in the           Andhra   Pradesh    State   Government    Pensions           Association case the judgment in V.P. Gautam’s was           specifically referred to but the Supreme Court did           not state  that  it  was  not  correctly  decided.           Further, in  all the  above  cases  special  leave           applications were rejected following the principle           laid down  in Nakara’s  case. In Gautam’s case the           appeal filed  by the  Union of India was dismissed           applying Nakara’s  case. In dealing with the claim           of the other members of the All India Services who           like V.P. Gautam had retired prior to 1.1.1973, we           cannot hold  otherwise in construing rule 28(6’ in           the context  of the  liberalised pension scheme of           1975,                The conflict  if any  must be resolved by the           Supreme Court. We must follow the decision in V.P.           Gautam’s case which is directly in point."      With great  respect to the Tribunal it should be stated that the way in which it has tried to ignore the decision of this Court in the Andhra Pradesh State Government Pensioners Association case 704 (supra) is  not correct.  In  the  above  decision  the  two learned Judges, who decided that case have given reasons for not applying  the rule in D.S. Nakara’s case (supra) insofar as the  liability of  the  Government  to  pay  gratuity  on retirement is  concerned. The  first ground relied on by the Tribunal not to follow the said decision is that it had been rendered by  this Court  while dismissing some special leave petitions. This  is a  wholly untenable  ground. The special leave petitions  were not  dismissed without  reasons.  This Court had  given reasons  for dismissing  the special  leave petitions. When  such reasons are given the decision becomes one which  attracts Article  141 of  the Constitution  which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India. The second ground given by the Tribunal is that the decision was one rendered  in a  case involving  a notification issued by the Andhra  Pradesh Government  but  not  one  touching  the notification dated  24.1.1975 involved in this case. This is also not  tenable. The  Supreme Court  was  considering  the question of  applicability of  the principle  enunciated  in D.S. Nakara’s,  case to  the case  of  gratuity.  The  views expressed by  this Court  should, therefore,  apply  to  all cases of gratuity where similar features exist and it should apply to the present case too. If what the Tribunal has held is correct then D. S. Nakaras case will not be applicable to any order  of pension  passed by  any State Government. That would indeed be a startling proposition with which we do not agree. As  regards the third ground it is no doubt true that the High  Court of Punjab & Haryana in its decision in V. P. Gautama v.  Union of  India  and  Ors.,  [1984]  Labour  and Industrial Cases  154 had observed that "it follows that the liberalised   pensionary   benefits   including   death-cum- retirement gratuity  granted to  pensioners by the amendment made in  1975 and  1979 shall  be  payable  to  all  persons entitled  to   pensionary  benefits   under  the  Retirement Benefits  Rules,  1958  irrespective  of  the  date  of  the retirement from service". But at the end of its decision the

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High Court passed the following order:                "In the  result, a writ of mandamus is issued           to the  Union of  India and  the other respondents           directing  them  to  compute  and  pay  pensionary           benefits to  the petitioner along with interest on           the amounts  becoming payable  to him  in terms of           this order.  The petitioner shall also be entitled           to the costs of this petition."      When the  Special Leave  Petition was filed against the said decision this Court passed the following order: 705                "Special leave to appeal was confined only to           two questions  (1) whether  the  enhanced  pension           under the  liberalised pension  scheme was payable           with effect from 1st October, 1974 and (2) whether           the High  Court  had  any  jurisdiction  to  award           interest at  12% per  annum. So  far as  the first           question is concerned, it is fully covered by D.S.           Nakara &  Ors. v.  Union  of  India.  We  are  not           inclined to  go into  the second  question in  the           present  appeals.   The  appeals   are  therefore,           dismissed. No costs." The above  decision was  rendered by a bench of three Judges of which  one of  us was a member. It is seen from the above order that  there is  no reference  to the  liability of the Union of  India and the State of Haryana to pay the gratuity to the  pensioner who  was involved  in that case. The first question considered  related  to  the  payment  of  enhanced pension. It  is not  known whether  the question relating to gratuity was  pressed before  this Court or not. There is no reference to  the liability  to pay  gratuity  in  the  said order. The  only point considered by this Court by the above order was  the point involved in question No. 1, referred to therein, namely,  whether the  enhanced  pension  under  the liberalised pension  scheme was payable with effect from 1st October, 1974  and insofar  as that  question was concerned, the view  taken by  the High  Court of  Punjab & Haryana was affirmed. It  may be  that the decision of the High Court of Punjab and  Haryana may  be binding  on the  parties to that petition as  res judicata. But the above order of this Court cannot be considered as a precedent under Article 141 of the Constitution to  hold that the liability to pay gratuity was also governed  by the decision in D.S. Nakara’s case. It may be pointed  out that  in M.L.  Abhyankar and  others etc. v. Union of  India, (Writ Petition (Civil) Nos. 3531-34 of 1983 and connected  cases decided  on April  24, 1984) a bench of three Judges  of this  Court, which  consisted of two of the Judges who  dismissed the  appeal filed against the judgment of the High Court of Punjab & Haryana referred to above, has observed thus:                "In view  of our  decision in  D.S. Nakara v.           Union of  India, [1983]  1 SCC  305  and  for  the           reasons mentioned  by the  Allahabad High Court in           Writ Petition  No. 3201  of 1979 dated 21311983 in           the case of Bidhubhushan Malik and others v. Union           of India  which we  have accepted  as  correct  in           Special Leave  Petition No.  9616 of 1983 just now           dismissed by  us we  allow the writ petitions. The           judges of  the High Court and of the Supreme Court           will be  entitled to the pensionary benefits under           the amended Act of 1973 706           irrespective of  the dates  of  their  retirement.           They  will   be  so   entitled  with  effect  from           1.10.1974. Arrears of pension calculated under the

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         provision of  the new Act will be paid to those to           whom it  is due  within four months from today. In           the case  of Judges  who have died after 1.10.1974           the amounts due will be paid to the legal heirs of           the Judges  within four  months  from  today.  The           family  pension   due  to   the  widows   will  be           calculated  under   the  provisions  of  the  1976           Amending Act  and paid  to them.  Ad-hoc  payments           made, if  any, will  be adjusted while making such           payments.  The  writ  petitions  are  disposed  of           accordingly. What  we have  said about  pensionary           benefits does  not apply to payment of gratuity. "                                          (underlining by us)      From the foregoing it is clear that this Court has made a distinction  between the pension payable on retirement and the gratuity payable on retirement. While pension is payable periodically as  long as the pensioner is alive, gratuity is ordinarily paid  only once  on retirement. No other decision of this  Court which  has  taken  a  view  contrary  to  the decision of Thakkar and Ray, JJ. in the Andhra Pradesh State Government Pensioners  Association’s case (supra) and to the decision in  M. L. Abhyankar’s case (supra) has been brought to our  notice. The observations made in these two cases are binding on  us insofaras  the applicability  of the  rule in D.S.  Nakara’s   case  (supras   to  the  liability  of  the Government to  pay gratuity  on retirement.  We respectfully agree with  the views  expressed in  those decisions.  It is also not  shown that the Government notification in question either expressly  or by  necessary implication  directs that those who had retired prior to 1.1.1973 would be entitled to any additional  amount by way of gratuity. The Tribunal was, therefore, in  error in  upholding that gratuity was payable in accordance with the Government Notification No. 33/12/73- AIS(ii) dated  24.1.1975 to  all those  members of  the  All India Services who had retired prior to 1.1.1973.      The Judgment of the Tribunal is set aside to the extent indicated above.  We make  a declaration that the members of the All India services who had retired prior to 1.1.1973 are not  entitled   to  claim  gratuity  on  the  basis  of  the Notification referred to above.      The appeal  is allowed  to the above extent. There will be no order as to costs. N.V.K.                                       Appeal allowed. 707