08 November 1996
Supreme Court


Case number: C.A. No.-004077-004078 / 1992
Diary number: 85535 / 1992






DATE OF JUDGMENT:       08/11/1996




JUDGMENT: (With CA  Nos. 4079,  4080, 4042/92,  SLP(C) Nos. 10,747/92, 2422/93, 12271/93,  14027/93, 16075/93,  17609/93, 21462/93, 7717/94,  C.A.  Nos.  4710/94,  3136/95,  7832/95,  2872/93, SLP(C)  17023/92,   C.A.  Nos.  3864/93,  3865/93,  6226/90, 9384/95, 9416/95,  65/92, 2429/94,  15/91, 7367/93, 4369/90, 75/95, SLPC(C)  16076/93,  C.A.  No.  4458/96,  SLP(C)  Nos. 10472/95, 1170/96,  11949/96,  3706/92,  7187/95,  14102/95, 5344/94,   11469/94,    12383/94,   12971/94,    CA.    Nos. 11376/96,10486/95 10487/95  &  10488/95)(Civil  Appeal  Nos. 14493-14512/96  against   SLPs  10747/92,2422/93  etc.  etc. respectively mentioned above)                       J U D G M E N T  NANAVATI. J.      Leave granted.      The point which arises for consideration, in this batch of appeals,  is whether  an  ex-serviceman,  who  after  his retirement before  attaining the age of 55 is re-employed in civil service,  while getting  his pay fixed, is entitled to an advance  increment only  if his  pay  plus  pension  plus pension equivalent  of gratuity  is less  than The  last pay drawn at the time of retirement.      This question  arises in  the context  of the following facts and  circumstances. It  is unnecessary to refer to the facts of  all these  appeals and  therefore, we refer to the facts of  Civil Appeal  No. 4077  of 1992  only.  Ravindran, Applicant in  O.A. No.3  of 1989,  out of  which this appeal arises, after his retirement from Air Force, was re-employed as a  Postal Assistant on 29.11.83. He had served in the Air Force from  4.11.65 to  30.11.80. His  last pay  in the  Air Force was Rs. 400/ per month and his pension on the basis of the said  service was  fixed at  Rs. 187/-  per  month.  The pension equivalent  of gratuity  was Rs.  20.17. On  his re- employment as  a Postal Assistant In the scale of Rs. 260-8- 340-10-360-12-480 his  pay was  fixed at Rs. 260/- being the minimum of  the pay scale. According to him while fixing his pay and  determining hardship  the whole of military pension which he was getting was required to be ignored and he ought to  have   been  granted  one  advance  increment  for  each completed year of military service in view of the Government of India,  Ministry of Finance O.M. dated 25.11.58 read with



Government of  India Ministry  of Defence O.M. dated 8.2.83, as he was getting Rs. 140/- less than what he was getting at the time  of retirement from military service. As he had put in 11  years’ service  in equivalent  or higher grade in the Air Force  his pay  at the time of re-employment on 29.11.83 should have been fixed at Rs. 350/- per month. He was denied this benefit  and his  initial pay  was pegged  down to  the minimum of the pay scale at Rs. 260/- on the ground that his case cannot be regarded as a case of hardship in view of the clarification  made  by  the  Department  of  Personnel  and Training after consulting  the Ministry of Finance and which is contained in the circular letter dated 30.12.85 issued by The Director  General, P  &  T.  The  applicant,  therefore, approached  the   Central  6   Administrative  Tribunal  and challenged the  said  clarification  and  the  letter  dated 30.12.85 as  arbitrary and  against the  provisions  of  pay taxation of re-employed pensioners. The respondents in other appeals were  also denied  the benefit of advance increments for the same reason and, therefore, they had also challenged before the  Tribunal the  said clarification  and the letter dated 30.12.85.       The  contention of  the applicants before the Tribunal was that  it an  ex-serviceman on being re employed in civil service does not get by way of pay plus pension plus pension equivalent of  gratuity less  than the last pay drawn by him at the  time of  retirement then  it  cannot  be  said  that fixation of his initial pay at the minimum of the prescribed pay scale  has causes  undue hardship to him and, therefore, his pay  was not  required to  be fixed at a higher stage by allowing one  increment for  each year  of service which the officer had  rendered before  retirement in a post not lower than that in which he is re-employed. This was the policy of the Government right from 1958 and what was implied was made clear  by   department  of   Personnel  and  Training  after consulting the  Ministry of  Finance.  Therefore,  the  said clarification cannot be regarded as arbitrary or contrary to any statutory provision or a provision having force of law.      When O.A.  No.3 of  1989 along  with O.A. No.15 of 1989 came up  for  hearing  before  the  Division  Bench  of  the Tribunal Ernakulam  it noticed that a Single Member Bench of the Tribunal  had  upheld  this  contention  in  an  earlier matter. As  it was  inclined to  take a  different  view  it raised the  following two  issues and  referred  them  to  a larger Bench:      (a)  Whether  for  the  purpose  Of      granting  advance  increments  over      and above  the minimum  of the  pay      scale  or   re-employment  post  in      accordance  with   the  O.M   .  of      25.11.1958, the  whole or  part  of      the military  pension  of  the  ex-      servicemen which  is to  be ignored      for the  purpose of  pay  fixation,      can be taken into account to reckon      that the  minimum of  the pay scale      of  the   re-employment  post  plus      pension, is  more or  less than the      last military  pay drawn by the re-      employed  ex-serviceman   for   the      grant of  advance increments on re-      employment; and      (b) If Yes , i.e., if it is decided      that the ignorance pension also has      to be  reckoned for  the purpose of      admissibility      or       advance



    increments,   whether   the   order      issued to  this effect  in 1985  or      1987  can  be  given  retrospective      effect so  to adversely  affect the      initial pay  of  ex-servicemen  who      were re-employed prior to the issue      of these instructions."      A  Full   Bench  of   the  Tribunal      answered   those    questions    as      follows:      "(a) We  hold that  for the purpose      of granting advance increments over      and above  the minimum  of the  pay      scale of  the re-employed  post  in      accordance    with     the     1958      instructions (Annexures  IV in O.A.      No.3 of 1989), the whole or part of      the   military   pension   of   ex-      servicemen which  are to be ignored      for the  purpose of pay fixation in      accordance  with  the  instructions      issued  in   1964,  1978  and  1983      (Annexures   V,    V-a,   and   VI,      respectively), cannot be taken into      account  to   reckon  whether   the      minimum of the pay-scale of the re-      employed post  plus pension is more      or less  than the last military pay      drawn  by   the  re   employed  ex-      servicemen.      (b)  The   orders  issued   by  the      respondents   in   1985   or   1987      contrary  to   the   administrative      instructions of 1964, 1978 and 1983      cannot   be   given   retrospective      effect  to   adversely  affect  the      initial pay  of  ex-servicemen  who      were  re-  employed  prior  to  the      issue of these instructions."      Following the  decision of  the Full Bench, O.A.No.3 of 1978 and O.A. No.15 of 1989 were disposed of by the Division Bench by  declaring that  the applicants were entitled to be granted one  advance increment  for each  completed year  of their military  service in  equivalent grade in fixing their pay in  the post of Post Assistant with effect from the date from which  they were  appointed if the minimum of Rs. 250/- in  the   pay  scale   of  Postal  Assistant  together  with unignorable part  of   their pension did not exceed last pay drawn by them in the Armed Force. The Tribunal also directed the  respondents   in  those  applications  to  exclude  the ignorable part  of their  pension while deciding whether any undue hardship  was caused to the applicants by fixing their reemployment pay  at the  minimum of the pay scale of Postal Assistant. The  Tribunal set  aside the  impugned orders and also the  clarification to  the extent they were contrary to the said  declaration. Aggrieved by the orders passed by the Tribunal in  those two  applications    and  similar  orders passed in  other applications  the   appellants  have  filed these appeals after obtaining  special leave of this Court.      The learned  counsel for  the appellants submitted that the concept  of hardship  was introduce by the Government in O.M. dated  25.11.1958 to  ensure that  there was no drop in the total  package of  pay and  pension on re-employment. It was never  the intention  of the Government to allow advance increments after  comparing the  minimum  pay  to  The  pre-



retirement pay as that would nave entitled the ex-serviceman to double  and  unintended  benefit.  Thus  the  G.M.  dated 30.12.1985 was  clarificatory in  nature as it made explicit what was  implicit in  O.M. dated  25.11.1958.  The  learned counsel further  submitted that  the tribunal having rightly found that  the instructions  issued in  1964,1978  and 1983 did not deal with the concept of hardship committed an error in  holding   that  the   O.M.  dated   30.12.1985  was  not clarificatory  in  nature  and  was  inconsistent  with  the statutory  provision   contained  in   the   Civil   Service Regulations and  the instructions  issued  thereunder  which also  have   equally  binding   force.  As  the  O.M.  dated 30.12.1985 was  clarificatory  in  nature  the  question  of giving it  retrospective effect did not arise at all. It was submitted that  the view  taken by the Tribunal is therefore wholly misconceived.  As against  these submissions  made on behalf of  the appellant  the learned  counsel appearing for the  respondents   have  submitted  that  the  tribunal  has correctly interpreted  the O.Ms.  of 1958,  1964, 1978, 1983 end 1985  and the effect of making a corresponding amendment in  the  Civil  Service  Regulations  which  are  admittedly statutory in nature.      On 25.11.58  the Government  of  India  took  a  policy decision in  the matter  of the  procedure to  be adopted in fixing The  pay of  pensioners re-employed  in Central Civil Departments. It  is applicable  to all  such pensioners. The relevant part of the said policy decision is as  follows:      "(a) Re-employed  pensioners should      be  allowed   only  the  prescribed      scales  of   pay,   that   is,   no      protected time scales such as those      available  to   pre-1931   entrants      should be extended to them .      (b)  The   initial  pay,   on   re-      employment should  be fixed  at the      minimum stage  of the  scale of say      prescribed for the post in which an      individual is re-employed.      In cases  where it is felt that the      fixation of  initial pay of the re-      employed officers   at  the minimum      of the  prescribed pay  scale  will      cause undue  hardship, the  pay may      be  fixed  at  a  higher  stage  by      allowing  one  increment  for  each      year of  service which  the officer      has rendered before retirement in a      post not  lower than  that in which      he is re-employed.      (c) In  addition to  (b) above  the      Government servant may be permitted      to draw    separately  any  pension      sanctioned to him and to retain any      other form  of  retirement  benefit      for  which  he  is  eligible  e.g.,      Government’s  contribution   to   a      Contributory    Provident     Fund,      gratuity,   commuted    value    of      pension,  etc.  provided  that  the      total amount  of initial  pay as at      (b) above, plus the gross amount of      pension    and/or    the    pension      equivalent  of   other   forms   of      retirement benefit  does not exceed      :-



    i)  the  pay  he  drew  before  his      retirement (pre-retirement pay); or      ii) Rs. 3,000/-, whichever is less.      Note 1 :      In all  cases where either of these      limits is exceeded, the pension and      other retirement  benefits  may  be      paid  in  full  and  the  necessary      adjustments made  in the  pay 50 as      to ensure that the total of pay and      pensionary benefits  is within  the      prescribed limits.      Where, after  the pay  is fixed  at      the minimum or any higher stage, it      is reduced  below the  minimum as a      result  of  the  said  adjustments,      increase  in  pay  may  be  allowed      after each  year of  service at the      rates of  increments admission,  as      if the  pay had  been fixed  at the      admission  minimum  or  the  higher      stage as the case may be."      The Government  of India  felt that  the  capacity  and usefulness of  a person  could  not  be  greater  than  what it was  at the  time of  retirement but  this  consideration became irrelevant  when applied  to persons who retired much earlier than  the normal  age of  retirement  of  58  years. Moreover, some  of the  lower rank  in the Defence Services, e.g., sepoys  who retired  at a  very  early  age  qualified themselves  for   various  trades   and  professions   after undergoing  some  training.  It  therefore  thought  that  a distinction between  officers who  retired at the normal age of 58  and those  who retired at an early age was desirable. taking into  account the difficulties of low paid pensioners who retire  at an  early age.  It decided  that in  case  of persons retiring  before attaining  the age  of 55  years, a part of  the pension  may be  ignored in computing pay on re employment. Accordingly  an O.M. was issued directing  Civil pensions upto  Rs. 10  p.m. and Military pension upto Rs. 15 p.m. should  be ignored  in fixing  pay on re-employment. An amendment to  that effect  was also made in Articles 521 and 526 of  the Civil  Service Regulations.  As declared  by the dated 19.1.1964 the Government again raised the limit in the following terms :-      (i) in  the case  of  pensions  not      exceeding Rs.  50/- per  mensum the      actual pension,      (ii) in  other cases, the first Rs.      50/- of the pension.      A  corresponding   amendment  in   the  Civil   Service Regulation was also made. This limit was further raised from Rs. 50/-  to Rs.  125/- by  Ministry of  Finance O.M.  dated 19.7.1978. By  its O.M.  dated 8.2.1983  Ministry of Defence issued an  order by  raising the  limit  of  pension  to  be ignored in  fixing of  pay from  Rs. 125/ to Rs. 250/ in the case of  Service Officers  and  declaring  that  the  entire pension should  be ignored  in the  case of  personnel below Commissioned Officer’s  rank. All  these  orders  were  made effective from  the dates on which they were issued. We have referred to  only those  orders which  are relevant  for the purpose of these appeals.      It appears that the effect of making the entire pension ignorable in certain cases was examined by the Department of Personnel and  Training in consultation with the Ministry of Finance. It was decided to issue the following clarification



with respect  to the  mode of  pay fixation  of  re-employed pensioner :-      "  When   a  re-employed  pensioner      askes for  refixation of  pay under      the 1983  orders, his pay has to be      fixed at  the minimum of the scale.      The  question   of   granting   him      advance increments  arises only  if      there is  any hardship. Hardship is      seen from  the point  (whether  pay      plus    pension     plus    pension      equivalent  of   gratuity   whether      ignorable or  not) is less than the      last  pay  drawn  at  the  time  of      retirement. If there is no hardship      no  advance   increments   can   be      granted."      The said clarification was brought to the notice of all the concerned  authorities of  the postal  department by the Assistant  Director  General  of  Posts  by  circular  dated 30.12.1985  and  they  were  directed  to  review  all  such previous  cases   in  which   the  pay  of  the  re-employed pensioners/ex-serviceman  were  otherwise  fixed  under  the Ministry of  Defence order dated 8.2.1983. As stated earlier this circular  and the  consequent action  were the  subject matter of  the applications  filed by the respondents before the tribunal.      The effect of the order dated 8.2.1983 and the circular dated 30.12.1985  was that in case of a pensioner who was re employed on  or after  8.2.1983 his pay was to be refixed in terms of the said order and the clarification. In respect of those ex-servicemen  who opted  to come  under those  orders their pay was also to be fixed in the same manner.      It is  not in  dispute  that  the  original  order  for fixation of  pay of  re-employed pensioners was contained in O.M. dated  25.11.1958. In  the matter of fixation of pay of such re-employed  pensioners the  first step  required to be taken was  to fix  his initial  pay at  the minimum stage of scale of  pay prescribed  for the  post on  which he was re- employed. The  next step to be taken was to find out whether his pay  thus fixed plus pension (including other pensionary benefits)  exceeded   the  pay  which  he  drew  before  his retirement or  Rs. 3000/-.  If it  exceeded either  of those limits then  necessary adjustment  was to be made in the pay by reducing it  below the minimum stage so as to ensure that the total  pay including  pension was  within the prescribed limits. If  the initial pay plus the pension was found to be less then  it was to be regarded as a case of undue hardship and his  pay was  required to  be fixed  at higher  stage by allowing one  increment for  each year  of service which the officer had  rendered before  retirement in a post not lower than in  which he  was re-employed.  However,  when  it  was noticed that  this formula was not fair and just in cases of pensioners who  retired at  an early  age that  is before 55 years, the  Government in relaxation of the policy contained in the 1958 order decided to grant some benefits to such re- employed pensioners and issued an order directing that civil pension upto  Rs. 10 per month and military pension upto Rs. 15  per   month  should   be  ignored   in  fixing   pay  on reemployment. Thus  while totalling  up the  initial pay and the pension  for the  purpose of  finding  out  whether  the pensioner on  re-employment was  likely to  get more or less then what  he was  getting earlier Rs. 10/- in case of civil Pensioners and  Rs. 15/- in case of military pensioners were to be  ignored. In  other words  the amount of pension to be



added to  the initial  Pay was to be reduced to that extent. Thereafter his pay was to be adjusted depending upon whether the pensioner  would thus  get  more  or  less  on  his  re- employment. This relaxation was obviously in the nature of a modification of  the earlier  policy. As  narrated above the said limits  to be  ignored were increased from time to time and by  the O.M. dated 8.2.1983 in case of ex-serviceman the limit was  raised to  Rs. 250/-  in case of service officers and in  case of  personnel belonging to Commissioned Officer ranks the  entire pensionery  benefits were  to be  ignored. Though in  the beginning,  according to  the original policy contained in  the 1958  order the  entire pension  was to be added to  the initial  pay  to  find  out  whether  it  gave unintended advantage  or caused  undue hardship  to the  re- employed pensioner  the position  did not  remain  the  same after the  passing of  the  orders  in  1963  and  1964  and thereafter. The modifications thus made by the 1963 and 1954 orders were  given legal status by amending Articles 521 and 526 of the Civil Service Regulations accordingly.      However it was submitted by the learned counsel for the appellants that  the orders  which   were  issued  in  1963, 1964,1978 and  1983 did not deal with the aspect of hardship and were  not intended to replace or change the basic policy contained in  the 1958  instructions. They  were intended as relaxations and,  therefore, they cannot be said to have the effect of  altering or  modifying the  1958 policy. When the entire pension  was made  ignorable in the case of personnel below Commissioned  Officers rank the position substantially changed and  therefore the Government was obliged to clarity that as contemplated by the 1958 instructions hardship is to be seen from the point whether pay plus pension plus pension equivalent of  gratuity (whether  ignorable or not) was less than the  e time  of retirement. What the Government thereby did was  to reiterate  that it  there  was  no  hardship  no advance increment  should be  granted. What is overlooked by the learned  counsel is  that he intention behind the orders issued in  1963, 1964,  1978 and  1983 was to give some more benefit  to  the  re-employed  pensioner/ex-servicemen.  The effect of  the benefit  was to  be given at a stage prior to the consideration  of hardship.  The ignorable  part of  the pension was to be ignored while totalling up the initial pay plus the  pension in  order to  find out whether the retired pensioner thereby  was likely  to get more or less than what he was  getting at  the time  of the retirement. To that the 1958 policy  stood altered or modified. Though the said four order did not directly deal with the aspect of hardship they did by  widening the  gas between  the initial  pay plus the non-ignorale part  of the pension and the pay he drew before his retirement  and thereby  further necessitated  giving of advance increments  to alleviate hardship. It is, therefore, not correct to say that those orders had no concern with the aspect of  hardship. What the contention raised on behalf of the appellants  further overlooks  is that  pursuant to  the orders issued in 1963 and 1964 corresponding amendments were made in  Articles 521  and 526 of Civil Service Regulations. The said  Regulations were  some time  prior to 1914 and had acquired statutory  authority under  Section 96-B(4)  of the government of  India Act,  1919 and  have been  continued in force by  virtue of   Article  313 of the Constitution. They are, therefore.  statutory in nature. After its amendment in 1964 it read as under:-      "526(a) .... .... ....      (b) .... .... ....      (c) In  case of  service  personnel      who retire  from the  Forces before



    attaining the age of 55 and are re-      employed in civil posts on or after      16th January 1964 the pension shown      below shall  be ignored  in  fixing      their pay on re-employment-      (i) in  the case  of  pensions  not      exceeding Rs.  50 Per  mensem,  the      actual pension;      (ii) In other case the first Rs. 50      of the pension.      The subsequent  orders issued  in 1978  and  1983  were supplementary in  nature and did have a binding force. Under these circumstances,  the Government  could not  have, under the guise  of a  clarificatory order,  taken away  the right which  had  accrued  to  such  re-employed  pensioners  with retrospective effect  by declaring  that  while  considering hardship the last pay drawn at the time or retirement was to be compared  with  the  initial  pay  plus  pension  whether ignorable or  not. The  1985 clarificatory instructions were not only  in consistent  with the relevant provisions of the Civil Service  Regulations and  the 1978 and 1983 orders but its effect  was to  supersede the  said  provision  and  the orders. The  Tribunal was,  therefore, right  in holding the said instructions  in so  far as  it directed  to take  into consideration the  ignorable part  of the pension also while considering hardship  invalid and  without any  authority of law. These  appeals are,  therefore, dismissed with no order as to costs.