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CASE NO.: Appeal (civil)  5269 of 2006

PETITIONER: Accountant General of Orissa and Anr

RESPONDENT: R. Ramamurty and Anr

DATE OF JUDGMENT: 29/11/2006

BENCH: ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T (Arising out of SLP (C) Nos. 21647-648 of 2005)

ARIJIT PASAYAT, J.

Leave granted.  

Challenge in these appeals is to a judgment rendered by  a Division Bench of the Andhra Pradesh High Court in Writ  Petition No.8532 of 2003. The said writ petition had been filed  by the appellants questioning correctness of the decision  rendered by the Central  Administrative Tribunal, Hyderabad  Bench (in short the ’CAT’) in O.A.No. 1345 of 2001. The basic  issue which arose for consideration in the writ petition was  "what is the mode of calculating of restoration of pension in  respect of employees covered by Rule 37A of CCS (Pension)  Rules, 1972 (in short the ’Rules’). According to the appellants,  a conjoint reading of Rules 37 and 37A as operated upto  31.3.1995 has not been kept in view.  The High Court modified  the order of the CAT and held that in a case where an  employee had commuted minimum permissible pension i.e.  1/3 and even where lesser portion is commuted, the pro rata  commuted portion has to be deducted from the basic pension  to arrive at restorable pension, but however, he will get  dearness relief, interim relief etc. on full basic pension.  

       The High Court arrived at the aforesaid conclusion after  considering Rules 37 and 37A.  

       Challenge in these appeals is on the ground that the High  Court was not correct in calculating the commuted amount of  pension to be restorable pension without taking into  consideration the relevant pension rules and the Office  Memorandum No.4/59/97-P&PW(D) dated 14.7.1998, Office  Memorandum No.2/1/87-PIC-1 dated 16.4.1987 and Office  Memorandum No.45/86/97-P&PW(A) Part II dated  27.10.1997.  

       According to the appellants, these Memoranda’s laid  down the tables according to which the computation has to be  arrived at as issued by the Department of Pension.  

       Learned counsel for the respondents on the other hand  supported the judgment in question.  

Rules 37 and 37A read as follows:

"Rule 37: Pension on absorption in or under a

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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 owned or controlled by the  Central Government or a State Government or  in or under a Body controlled or financed by  the Central Government or a State  Government shall be deemed to have retired  from service from the date of such absorption  and subject to sub-rule (3) he 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 Central  Government applicable to him.

EXPLANATION: Date of absorption shall be:

(i) in case of Government employee joins a  Corporation or a company or body on  immediate absorption basis the date on which  he actually joins that corporation or company  or body;

(ii)    in case a Government employee initially  joins a corporation or company or body on  foreign service terms by retaining a lien under  the Government the date from which his  unqualified resignation is accepted by the  Government.

(2)     The provisions of sub-rule (1) shall also  apply to Central Government servants who are  permitted to be absorbed in joint sector  undertakings, wholly under the joint control of  Cenra1 Government and State Governments /  Union Territory Administrations or under the  joint control of two or more State  Government/Union Territory Administration.

(3)     Where there is a pension scheme in a  body controlled or financed by the Central  Government in which a Government servant is  absorbed, he shall be entitled to exercise  option either to count the service rendered  under the Central Government in that body for  pension or to receive pro rata retirement  benefits for the service rendered under the  Central Government in accordance with the  orders issued by the Central Government.

EXPLANATION: Body means autonomous body  or statutory body:-

RULE 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:

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(a) On an application made in this behalf, a  lump sum amount not exceeding the  computed value of one-third of his pension as  may be admissible to him in accordance with  the provisions of the Civil Pensions  (Commutation) Rules [now Central Civil  Services (Commutation of Pension) Rules,  1981]; 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."

       The respective stand have to be considered in the light of  this Court’s decision in P.V. Sundara Rajan v. Union of India  (2000 (4) SCC 469).  In para 11 it has been noted as follows:

"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 insofar 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 (1987 (1) SCC  142). In this respect, it would also be useful to  notice that "pension" as defined in Central  Civil Services (Pension) Rules, 1972 does not  include dearness relief. Rule 3(1)(o) reads as  under:

"3(1)(o) ’pension’ includes gratuity  except when the term pension is used  in contradistinction to gratuity, but  does not include dearness relief."  

       Further, in Paragraphs 12 and 13 it has been observed  as follows:

12. We may also reproduce Rule 55-A:

"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

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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"

13. 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 a part of pension has to  be paid in full insofar as those who have  commuted one-third pension."

       In view of what has been stated in the said case, more  particularly in the quoted paragraphs, there is no substance in  the appeals which we accordingly dismiss. No costs.