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PETITIONER: WELFARE ASSOCIATION OF ABSORBEDCENTRAL GOVERNMENT EMPLOYEES

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT15/12/1995

BENCH: VENKATASWAMI K. (J) BENCH: VENKATASWAMI K. (J) KULDIP SINGH (J) AHMAD SAGHIR S. (J)

CITATION:  1996 AIR 1201            1996 SCC  (2) 187  1995 SCALE  (7)295

ACT:

HEADNOTE:

JUDGMENT:                             WITH              WRIT PETITION (C) NO. 567 OF 1995 P.V. Sundararajan & Anr. V. Union of India                           JUDGMENT K.Venkataswami. J.      These two  writ petitions are filed under Article 32 of the Constitution  of India.  At the time of argument learned counsel appearing  in these  writ petitions  confined  their relief to  the restoration of one-third portion of the fully commuted pension as per the decision of this Court in Common Cause, Registered Society & Ors vs. Union of India, (1987) 1 SCR 497,  and consequently  to quash para 4 of O.M. 3412/86. P&PW issued by Government of India Department of Pension and Pensioner’s Welfare dated 5.3.1987.      Brief facts  leading to  the filing  of these  two writ petitions are as follows:-      The members  of the petitioner’s welfare association in W.P.(C) No.  11855/85  and  the  individual  petitioners  in W.P.(C) No.  567/85 were  Central Govt. Servants. Government of  India   some  years   ago  decided   to   start   public undertakings/enterprises in  the core  sector of industries. To start  with the  Government of  India, sent some of their officers to  the public  undertakings, on  deputation. As it was felt  that services  of the  officers having  sufficient experience  and   skill  were   necessary  for   the  public enterprises, the Government devised measures to induct those willing officers to continue in the public enterprises. Such officers  were  allowed  to  be  absorbed  in  those  public undertakings/enterprises. The  Government  offered  to  deem their  retirement   as  retirement   in  ’public  interest’. Consequent to their deemed retirement, such absorbed/retired Government servants  were offered  retrial  benefits.  These

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persons were  also offered  the usual  facility of commuting one-third of  their original  pension under  Civil  Pensions (Commutation)  Rules   and  were   also  offered  additional facility of  commuting the  balance two-thirds  pension also i.e. to  commute the  full pension.  This facility therefore creates three  categories of  these persons  (1) the persons who have  not commuted their pension and therefore draw full monthly pension  from the  Government; (2)  the persons  who have commuted  one-third of  the pension  and therefore will draw a  sliced monthly  pension, reduced  to the  extent  of commuted amount,  (3) the persons who have commuted the full pension and  who will  not be  given any  monthly pension by deeming monthly  pension to  have been  reduced to  nil. The persons falling in the first category continue to derive all the benefits  of being  Government pensioner and get all the Interim Relief,  liberalization and/or  whatever reliefs are given by  the Government to the petitioners. But the persons in the  second category  are denied  these benefits  to  the extent of  "one-third commutation".  The third  category are the worst hit and are totally denied of all these benefits.      The above-mentioned  second  category  of  the  retired Government servants  namely, those who got one-third pension commuted moved this Court for restoration of their one-third pension by  filing a  writ petition  under Article 32 of the Constitution of  India, (Vide"Common  Cause"  vs.  Union  of India (1987)  1 SCR  497). The  contention  put  forward  in support of  their claim  for restoration  of  the  one-third pension was  that the  lump sum amount paid gets adjusted by about 10  or 12  years and therefore, the Government must be directed  to  restore  the  commuted  portion  of  one-third pension. It  was also contended that lately there has been a substantial improvement in the life expectancy of the people in India  and therefore,  there  was  no  justification  for denying the restoration of the commuted one-third portion of pension which  gets adjusted  after a  period of  10  or  12 years. When  that  matter  came  up  before  this  court,  a suggestion was  made to the Government to give a new look to the  matter.   The  respondent   Government  accepting  that suggestion  came  forward  with  a  new  formula  and  after perusing the  same this  Court in  Common Cause vs. Union of India, (1987) 1 SCR 497 held as follows:-      "As the  position  now  stands,  when  a      pensioner  commutes   any  part  of  his      pension upto  the authorised  limit, his      pension is  reduced  for  the  remaining      part  of   his  life  by  deducting  the      commuted  portion   from   the   monthly      pension. The  petitioner have  contended      that the  commuted portion  out  of  the      pension is  ordinarily recovered  within      about 12  years and.  therefore there is      no justification  for fixing  the period      at 15  years. Commutation  brings  about      certain   advantages.    The   commuting      pensioner gets  a lump  sum amount which      ordinarily he  would  have  received  in      course of  a spread  over period subject      to his  continuing  to  live.  Thus  two      advantages are certainly forthcoming out      of commutation  - (1)  availability of a      lump sum amount and (2) the risk factor.      Again many of the State Governments have      already formulated schemes accepting the      15 year  rule. In this background, we do      not  think  we  would  be  justified  in

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    disturbing the 15 year formula so far as      civilian pensioners  are concerned.  The      age of  superannuation  used  to  be  55      until it  was reised  to 58.  It is  not      necessary to  refer to  the age  of  the      commuting  pensioner  when  the  benefit      would be  restored. It  is sufficient to      indicate that  on the  expire of fifteen      years from the period of retirement such      restoration  would   take   place.   The      respondent-Government  has  agreed  that      this benefit  should  be  extended  with      effect    from    1.4.86.    The    writ      applications were  filed  in  1983.  The      matter was  placed on  board for hearing      in February,  1984. The Union Government      took some  time for  responding  to  the      suggestion of  the Court and that is how      the  disposal   was  initially  delayed.      There-after, the  hearing of  the matter      has again  been delayed  on  account  of      pressing business in the Court. In these      circumstances,  we  think  it  just  and      equitable that  the benefit agreed to be      extended  in  respect  of  the  commuted      portion  of   the  pension   should   be      effective from  1.4.85  so  far  as  the      civilian employees are concerned."      The same  was made  applicable to the defence personnel as well in the same judgment.      The  respondent   while  giving  effect  to  the  above judgment denied  the same  benefit  to  the  petitioners  by inserting para  4 in  the impugned O.M. dated 5.3.1987 which reads as follows:-      "Central Government  employees  who  got      themselves absorbed under Central Public      Sector  Undertakings/autonomous   bodies      and have  received/or opted  to  receive      commuted value  for 1/3rd  of pension as      well as  terminal benefits  equal to the      commuted value  of the balance amount of      the pension  left after  commuting 1/3rd      of  pension  are  not  entitled  to  any      benefit under  these orders as they have      ceased   to    be   Central   Government      pensioners."      The petitioners in these petitions prayed that the same relief be  given to  them. As a matter of fact, in this case as well  the respondent was directed to consider the case of the petitioners  in the  light of  the judgment  in  ’Common Cause’ case.  Unfortunately, the  Government  did  not  came forward  with  favourable  reply.  Hence  this  decision  on merits.      To appreciate  the claim  of  the  petitioners.  it  is necessary to  set out  two  relevant  rules  in  the  C.C.S. Pension) Rules 1972. Rule 37 and 37A read as follows :-      Rule 37  : Pension  on absorption  in or      under a  corporation, company  or body :      (1) 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   of      pension he  shall  in  addition  to  the      (retirement gratuity)  be granted  :- a)      on an application made in this behalf, a

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    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-third of his pension."      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  Article 14  & 16  of the Constitution. 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.      No doubt the Government while declining to consider the case of  petitioners favorably  took into account a decision of this  court in  Welfare Association  of Absorbed  Central Government Employees  in Public  Enterprises  vs.  Union  of India reported  in  1991  (2)  SCC  265,  holding  that  the petitioners in  ’Common Cause’  case stand  on  a  different footing then that of the petitioners in the present case. In that judgment Rule 37-A was not brought to the notice of the Court. Another  reason given  by the Government was that the petitioners on  commuting their  pension in full cease to be Central  Government   pensioners.  This   is  too   broad  a contention to be accepted as no statute or rule is quoted in support  of   this  contention.  This  stand  taken  by  the Government does  not appear  to be  correct in view of their own counter-affidavit  filed in this case. In para 8 at page 14 of the counter-affidavit it has been stated as follows :-      "It would  be seen  from (b)  above that      the two-third terminal benefits received      by the absorbees who have opted for lump      sum payment  have not only commuted one-      third of  their  pension  but  also  the      remaining portion  of two-third  pension      which is  termed as "terminal benefits".      The absorbees  have in fact commuted the      entire  pension  and  not  one-third  of      pension."      It would  be seen  from (b)  above, two-third  terminal benefits received  by the  absorbees is nothing but pension. Further as  per the  condition  imposed  in  the  absorption order, the  family pension  when not  provided in the public

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undertakings in  which the  retired Government servants were absorbed, the  payment of family pension is continued by the Government. The relevant condition reads as follows :-      "(ii) As  regards entitlement  to family      pension, the  condition imposed  reads -      "On  his  permanent  absorption  in  the      Company his  family will be eligible for      family pension subject to the provisions      of Rule  54 of CCS (Pension) Rules, 1972      and  any  other  orders  issued  by  the      Government of  India from  time to  time      provided that  he is  not covered by any      other family  pension scheme  applicable      to the Company Staff." This was also the      condition  incorporated  in  respect  of      persons  who  had  opted  for  one-third      commutation."      This also indicates that the stand of the Government is not correct.  Therefore, the  denial of  restoration of one- third commuted pension is not justified.      If after  the expiry  of 15  years, the  pensioners who have opted  for one-third  commutation, becomes  entitled to restoration of  pension on  the ground  that  the  lump  sum amount paid  had got adjusted before the said period as held in ’Common  Cause’ case,  there is  no good  reason for  not applying the same to the petitioners who have commuted their one-third portion  of the  pension under  Rule 37-A  of  the Pension Rules  1972 without  any commitment for this portion of commutation.  Presumably  the  respondent  realising  the fallacy have  withdrawn the scheme of permitting commutation of  full  pension  by  O.M.  No.  4/42/91-  P&PW  (D)  dated 31.3.1995. Para  3 of the Office Memorandum reads as follows :-      "3. The  proposal to review the existing      terms and  conditions of  absorption had      been under  consideration of  the  Govt.      for quite  sometime past.  The President      is now  pleased to  ........ (sic)  that      the existing  terms  and  conditions  of      absorption   shall    stand    partially      modified to  the extent  indicated below      :-  (a)   The   existing   facility   of      receiving      capitalisation      value      equivalent  to   100%   commutation   of      pension  on   absorption   shall   stand      withdrawn; (b)  The existing facility to      draw pro-rata  monthly pension  from the      date  of   absorption  (with  option  to      commute    1/3rd     pension    wherever      admissible shall continue to exist."      This means this issue will not arise in future.      For the foregoing reasons, we hold that the petitioners are entitled  to the  benefits as  given by  this  Court  in ’Common Cause’  case so  far as it related to restoration of one-third  of   the  commuted   pension.  Consequently,  the impugned para  4 of  Office  Memorandum  dated  5.3.1987  is quashed. The  writ petitions  are accordingly allowed to the extent       indicated        above.       No        costs.