http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: T.S. THIRUVENGADAM

       Vs.

RESPONDENT: THE  SECRETARY  TO  GOVT.  OF INDIA,  MINISTRY  OF  FINANCE,

DATE OF JUDGMENT17/02/1993

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) KASLIWAL, N.M. (J)

CITATION:  1993 SCR  (1)1078        1993 SCC  (2) 174  JT 1993 (1)   609        1993 SCALE  (1)625

ACT: Civil Services: Central  Civil  Services (Pension)  Rules,  1972  Retirement benefits   Govt.   servants  absorbed   in   public   sector Undertakings-Government of India Memorandum dated 16.6.1967- Revised  Terms and Conditions-Made applicable to  those  who retired after the issue; of Memorandum-Validity of. Constitution of India, 1950. Articles  14  and 16-Retirement benefits to  Govt.  servants absorbed in Public Sector Undertakings-Government of  India- Memorandum dated 16.6.1967-Terms and Conditions revised-Made applicable   from   date  of  issue   of   the   Memorandum- Reasonableness  of the  classification-Cut-off  date-whether arbitrary and discriminatory.

HEADNOTE: The  appellant  was  serving the  Audit  Department  of  the Government of India.  He was sent on foreign service to  the Public  Sector Undertaking Neyveli Lignite Corporation  Ltd. (N.L.C.)  and was absorbed there.  Before joining N.L.C.  he had  already  completed 15 years of  pensionable  government service.   Retirement benefits in such cases were  regulated by Memorandum dated November 10, 1960 issued by the Ministry of   Finance   (Department  of  Expenditure),   New   Delhi. According to the said Memorandum the retirement benefits for service   rendered  by  a  government  servant  before   his absorption in a public undertaking were admissible equal  to what   the  government  would  have  contributed   had   the individual  been on contributory provident fund terms,  with 2%  simple  interest  thereon.   The  Government  of   India subsequently issued Memorandum dated June 16, 1967 providing revised terms and conditions of absorption in Central Public Sector Undertakings but restricted the revised benefits only to  those who were absorbed on or after June 16, 1967.   The appellant retired 1078 1079 from  the public undertaking and was paid a sum of Rs.  3036 as  retirement  benefits in terms of  the  Memorandum  dated November  10,  1960.  The benefit of the revised  terms  and conditions  of  absorption as contained  in  the  government Memorandum  dated June 16, 1967 was denied to the  appellant on the ground that he was absorbed in the public undertaking

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

prior  to  the  date  of  coming  into  force  of  the  said Memorandum.   The appellant challenged the same by riling  a Writ Petition before the High Court.  Subsequently, the Writ Petition  was  transferred  to  the  Central  Administrative Tribunal  which rejected the claim of the appellant.   Being aggrieved  against  the Tribunal’s judgment,  the  appellant preferred the present appeal. It was contended on behalf of the appellant that it was  not open  to  the  government to deny the benefit  of  the  1967 Memorandum to those employees who were absorbed prior to the date  of  the Memorandum as it would be arbitrary  and  that such  classification is violative of Articles 14 and  16  of the Constitution. On  behalf  of the respondents, it was  contended  that  the revised retirement benefits were introduced to attract  more and  more  government servants for permanent  absorption  in government  undertakings to build up their cadres, and  this being a new incentive, it has been given effect to from  the date  of issue of orders and there was nothing arbitrary  or discriminatory in fixing the cut-off date. Allowing the appeal, this Court, HELD  :  1.1.  The object of  bringing  into  existence  the revised  terms and conditions in the Memorandum dated  June, 16,  1967 was to protect the pensionary benefits  which  the Central   Government  servants  had  earned   before   their absorption  into the public undertakings.   Restricting  the applicability  of the revised Memorandum only to  those  who are  absorbed  after  the  coming into  force  of  the  said Memorandum,  would be defeating the very object and  purpose of  the revised Memorandum.  The appellant along with  other Central Government employees was sent on foreign service  to the public undertaking in the year 1961.  He was absorbed in the  year  1964.   All  those  who  joined  foreign  service alongwith  the  appellant but were absorbed after  June  16, 1967  have  been  given  the  benefits  under  the   revised Memorandum.   Denying  the same to the  appellant  would  be contrary to fairplay and justice.  Assuming that the revised 1080 Memorandum  is  an incentive to attract  Central  Government employees  to  public undertakings, the persons who  are  so attracted  do not become a different class.  They  join  the same  class to which the persons like the appellant  belong. Therefore,  all those Central Government employees who  were absorbed  in public undertakings either before June  16,1967 or thereafter and were serving the public undertakings,  are entitled to the benefits provided under the Memorandum dated June 16, 1967. [1083G-H; 1084A-B-C] 1.2. It  is no doubt correct that the Memorandum dated  June 16,  1967 is prospective which only means that the  benefits therein  can  be  claimed only  after  June,  16,1967.   The Memorandum, however, takes into consideration the past event that  is the period of service under the Central  Government for  the  purpose of giving pro-rata pension.   Whoever  has rendered  pensionable service prior to coming into force  of the Memorandum would be entitled to claim the benefits under the said Memorandum.  Restricting the benefits only to those who were absorbed in public undertaking after June 16,  1967 would  be  arbitrary and hit by Articles 14 and  16  of  the Constitution. [1084E] 2.   Rule 37 of Central Civil Services (Pension) Rules, 1972 provides that a government servant who has been permitted to be  absorbed  in  service in  a  Central  Government  public undertaking  in public interest, be deemed to  have  retired from  service from the date of such absorption and shall  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

eligible  to receive retirement benefits in accordance  with the orders of the Government applicable to him.   Admittedly the  appellant was permitted to be absorbed in  the  Central Government  public  undertaking  in  public  interest.   The appellant,  as  such, shall be deemed to have  retired  from government  service from the date of his absorption  and  is eligible to receive the retirement benefits.  It is no doubt correct that the retirement benefits envisaged under Rule 37 are  to  be  determined in accordance  with  the  Government orders  but the plain language of the Rule does  not  permit any  classification while granting the retirement  benefits. When the Rule specifically provides that all the persons who fulfil the pre-conditions prescribed therein shall be deemed to  have  retired from government service from the  date  of absorption  and  shall  be eligible  to  receive  retirement benefits then the government while granting benefits  cannot deny  the  same to some of them on the  basis  of  arbitrary classification.  All those person who fulfil the  conditions under Rule 37 are a class by themselves  1081 and  no  discrimination  can be permitted  within  the  said class.   The government action in restricting  the  benefits under  the  revised Memorandum dated June 16, 1967  only  to those who are absorbed after that date goes contrary to  the Rule and cannot be sustained. [1085C-G]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 666 of 1993. From  the Judgment and Order dated 14.6.1988 of the  Central Administrative Tribunal, Madras in T.A. No. 12 of 1988. M.N.  Krishnamani,  T.  Raja and Pravir  Choudhary  for  the Appellant. Altaf Ahmad, Addl.  Solicitor General, V.N. Ganpule,  Hemant Sharma and S.N. Terdol for the Respondents. The Judgment of the Court was delivered by KULDIP SINGH, J. Special leave granted. Applications for impleadment are allowed. The  appellant was in the service of the Central  Government for  a  period  of  about  15  years.   He  was   thereafter permanently absorbed in a public undertaking, from where  he retired   on   April  1,  1984.   The   question   for   our consideration is whether the appellant on absorption in  the public  undertaking  was eligible for pro-rata  pension  and death-cum-retirement  gratuity  based on the length  of  his qualifying  service  under the Government till the  date  of absorption. The  appellant  was serving the  Audit  Department  (Defence Service)  of  the Government of India as  Substantive  Upper Division  Clerk.  He was sent on foreign service to  Neyveli Lignite  Corporation  Ltd. (public  sector  undertaking)  on January  9/10,  1961.  He was permanently  absorbed  in  the public  undertaking with effect from August 1, 1964.  It  is not  disputed  that  the appellant,  having  joined  Central Government service on July 25, 1949, had completed 15  years of   pensionable   government-service.   On  the   date   of appellant’s  permanent absorption in the public  undertaking the  retirement benefits were regulated by Memorandum  dated November  10,  1960  issued  by  the  Ministry  of   Finance (Department of Expenditure), New Delhi. 1082 According to the said Memorandum the retirement benefits for service   rendered  by  a  government  servant  before   his absorption in a public undertaking, were admissible equal to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

what   the  government  would  have  contributed   had   the individual  been on contributory provident fund terms,  with 2%  simple  interest  thereon.   The  Government  of   India subsequently issued Memorandum dated June 16, 1967 providing revised terms and conditions of absorption in Central Public Sector Undertakings but restricted the revised benefits only to those who were absorbed on or after June 1.6, 1967.   The operative  features  of  the revised  instructions  were  as under:-               (i)   A permanent government servant with  not               less  than  10  years  qualifying  service  on               absorption in public undertaking was  eligible               for pro-rata pension and  death-cum-retirement               gratuity based on the length of his qualifying               service  under  government till  the  date  of               absorption.  The pension was to be  calculated               on the basis of average emoluments immediately               before absorption.               (ii)The   pro-rata  pension,  gratuity,   etc.               admissible in respect of the service  rendered               under the government was disbursable only from               the  date  the government servant  would  have               normally  superannuated  had be  continued  in               service. The  appellant retired from the public undertaking on  April 1,  1984.  It is not disputed that on January 15,  1974  the appellant was paid a sum of Rs. 3036 as retirement  benefits in  terms  of the Memorandum dated November 10,  1960.   The benefit of the revised terms and conditions of absorption as contained  in the Government Memorandum dated June 16,  1967 was denied to the appellant on the short ground that he  was absorbed  in  the public undertaking prior to  the  date  of coming into force of the said Memorandum. The  appellant filed a writ petition tinder Article  226  of the Constitution of India on October 19, 1984 in the  Madras High  Court seeking a mandamus directing the respondents  to grant him pro-rata pension and all other benefits admissible under  the  revised Memorandum dated June 16, 1967.   As  an interim  measure the High Court directed that the  appellant be  paid  50  per cent of the  pro-rata  pension  and  other pensionary benefits  1083 under  the Memorandum dated June 16, 1967 from the  date  of his absorption in the public undertaking.  The writ petition was  transferred  to the  Central  Administrative  Tribunal, Madras.   The tribunal by its judgment dated June  14,  1988 dismissed  the  application and rejected the  claim  of  the appellant.   This appeal by way of special leave is  against the judgment of the Central Administrative Tribunal. The  appellant has questioned the validity of the  condition imposed  in  the Memorandum dated June 16, 1967  making  the Memorandum applicable only to such of the employees who  are absorbed  in  the public undertakings on or after  June  16. 1967.   According  to the appellant it was not open  to  the government  to deny the benefit of the Memorandum  to  those employees  who  were  absorbed  prior to  the  date  of  the Memorandum  as  it  would  bring  into  existence  arbitrary classification  in respect of government employees  absorbed in  the  public  undertakings prior to  June  16,  1967  and thereafter.    The   appellant  has  contended   that   such classification is not warranted under Articles 14 and 16  of the  Constitution as it has no nexus with the object  sought to be achieved by the government Memorandum. The  contention  of the respondents, on the other  hand,  is that  the  revised retirement benefits  were  introduced  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

attract  more  and more government  servants  for  permanent absorption  in  government undertakings to  build  up  their cadres,  It  was thus an incentive  for  encarding  suitable persons  in the government undertakings.  According  to  the respondents, being a new incentive, it has been given effect from  the  date  of issue of orders  and  there  is  nothing arbitrary or discriminatory in fixing the cut-off date. There is no dispute that Neyveli Lignite Corporation Ltd. is a  body which is sponsored, financed and controlled  by  the Central Government.  More and more government functions  are being   brought  under  the  government   undertakings   and autonomous  bodies.   There is  considerable  mobility  from Central  Government Departments to the public  undertakings. The object of bringing into existence the revised terms  and conditions  in  the Memorandum dated June 16,  1967  was  to protect the pensionary benefits which the Central Government servants had earned before their absorption into the  public undertakings.  Restricting the applicability of the  revised Memorandum  only to those who are absorbed after the  coming into  force of, the said Memorandum, would be defeating  the very object and 1084 of  the  revised Memorandum.  It is not  disputed  that  the appellant along with other Central Government employees  was sent  on  foreign service to the public undertaking  in  the year  1961.  He was absorbed in the year 1964.   All  those, who  joined on foreign service alongwith the  appellant  but were  absorbed  after  June 16, 1967, have  been  given  the benefits under the revised Memorandum.  Denying the same  to the  appellant  would be contrary to fairplay  and  justice. Assuming  that  the revised Memorandum is  an  incentive  to attract  Central  Government employees to  public  undertak- ing,,,  the  persons who are so attracted do  not  become  a different  class.   They join the same class  to  which  the persons  like  the appellant belong.  Therefore,  all  those Central  Government  employees who were absorbed  in  public undertakings  either before June 16, 1967 or thereafter  and were  serving the public undertakings, are entitled  to  the benefits provided under the Memorandum dated June 1.6, 1967. We  do not, also, find substance in the contention that  the revised  benefits being new it could only be prospective  in operation  and  cannot  be extended to  employees  who  were absorbed   earlier.   It  is  no  doubt  correct  that   the Memorandum  dated  June 16, 1967 is prospective  which  only means that the benefit.-, therein can be claimed only  after June   16,  1967.   The  Memorandum,  however,  takes   into consideration  the past event that is the period of  service under the Central Government for the purposes of giving pro- rata  pension.   Whoever has  rendered  pensionable  service prior  to  coming  into force of  the  Memorandum  would  be entitled  to claim the .benefits under the said  Memorandum. Restricting the benefits only to those who were absorbed  in public  undertakings after June 16, 1967 would be  arbitrary and hit by Articles 14 and 16 of the Constitution. We may examine the claim of the appellant under the  Central Civil  Services (Pension) Rules, 1972 (the Rules).  Rule  37 of the Rules is as under:-               " A Government servant who has been  permitted               to  be  absorbed in a service or  post  in  or               under  a  corporation  or  company  wholly  or               substantially  owned  or  controlled  by   the               Government or in or under a body controlled or               financed  by  the Government  shall,  if  such               absorption is declared by the Government to be               in  the  public interest, be  deemed  to  have

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

             retired from service from the date of                1085               such  absorption  and  shall  be  eligible  to               receive retirement benefits which he may  have               elected  or deemed to have elected,  and  from               such date as may be determined, in  accordance               with  the orders of the Government  applicable               to him:               Provided   that   no   declaration   regarding               absorption in the public interest in a service               or post in or under such corporation,  company               or  body  shall be required in  respect  of  a               Government servant whom the Government may, by               order, declare to be a scientific employee." Rule  37, thus, provides that a government servant  who  has been  permitted  to  be absorbed in  service  in  a  Central Government public undertaking in public interest, be  deemed to  have  retired  from  service  from  the  date  of   such absorption  and  shall  be eligible  to  receive  retirement benefits  in  accordance with the orders of  the  Government applicable  to him.  It is not disputed that  the  appellant was  permitted  to  be absorbed in  the  Central  Government public  undertaking in public interest.  The  appellant,  as such,  shall  be  deemed to  have  retired  from  government service  from the date of his absorption and is eligible  to receive  the  retirement benefits.  It is no  doubt  correct that the retirement benefits envisaged under Rule 37 are  to be  determined in accordance with the government  order  but the  plain  language  of  the  rule  does  dot  permit   any classification while granting the retirement benefits.  When the  Rule  specifically provides that all  the  persons  who fulfil the pre-conditions prescribed therein shall be deemed to  have  retired from government service from the  date  of absorption  and  shall  be eligible  to  receive  retirement benefits then the government while granting benefits  cannot deny  the  same to some of them on the  basis  of  arbitrary classification.  All those persons who fulfil the conditions under   Rule   37  are  a  class  by   themselves   and   no discrimination can be permitted within the said class.   The government  action  in restricting the  benefits  under  the revised Memorandum dated June 16, 1967 only to those who are absorbed  after  that  date goes contrary to  the  Rule  and cannot be sustained. We,  therefore, allow the appeal, set aside the judgment  of the   Central   Administrative  Tribunal  and   direct   the respondents to grant pro-rata pension and other benefits  to the  appellant  under the office Memorandum dated  June  16, 1967.  The respondents are directed to finarise the benefits 1086 within  three  months  from today and  all  the  arrears  of pension etc. shall be paid to the appellant within one month thereafter with 12% interest.  Any payment already  received by  the appellant under the interim order of the High  Court has  to  be adjusted.  The appellant shall  be  entitled  to costs which we quantify as Rs. 10,000. We  allow I.A. 4/91 and direct that the  applicants  therein namely,  K.B.L.  Mathur, Jaswant Lal Jetlie  and  C.L.  Soni whose cases are identical to that of the appellant  be  also given  benefit  of  the Memorandum dated June  16,  1967  in similar terms as directed by us in respect of the appellant. These applicants shall, however, be not entitled to costs. G.N. Appeal allowed. 1087

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7