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CASE NO.: Appeal (civil)  3174 of 2006

PETITIONER: K.S. Krishnaswamy etc.

RESPONDENT: Union of India & Anr.

DATE OF JUDGMENT: 23/11/2006

BENCH: H.K.SEMA & P.K.BALASUBRAMANYAN

JUDGMENT: J U D G M E N T With Civil Appeal Nos. 3173, 3188, 3189 and 3190 of 2006

H.K. SEMA, J.

       Civil Appeal Nos. 3174 and 3173 of 2006 are preferred by  the pensioners against the judgment and order of the High  Court of Madras dated 29.4.2005 in Writ Petition Nos. 24444- 24451/2001, 14913/2002 and 32527/2004.  Civil appeal Nos.  3188, 3189 and 3190 of 2006 are preferred by the Union of  India against the judgments and orders of the Delhi High  Court dated 17.8.2005, 5.9.2005, 10.11.2005 and 3.8.2005  passed in W.P. Nos. 17745/2004, 16975/2005, 6831/2004,  4597/2003 respectively.           We have heard Mr. P.A. Kulkarni, Mr. T. Harish Kumar,   Mr. C.S. Rajan, Mr. Sanjeev Kumar Chaudhary and Mr.  Prashant Bhushan, learned counsel appearing for different  appellants/respondents.            In all these appeals, the controversy relates to the scale  of pay recommended by the 5th Pay Commission and  corresponding acceptance of the Government by a Policy  decision dated 30.9.1997 and Executive Instructions dated  17.12.1998 clarified by Executive Instructions dated  11.5.2001.          We may briefly notice the scale of pay enjoyed by the  employees at the time of retirement and corresponding  increase in the 4th and the 5th Pay Commission.

Civil Appeal No. 3174 of 2006         The appellants were holding the post of Superintending  Engineers in All India Radio.  They retired from service on  attaining the age of superannuation between 1982 to 1985.   Undisputedly, at the time of retirement, they were holding the  scale of pay of Rs. 1500-2000.  In the 4th Pay Commission,  their scale was revised to Rs. 3700-5000.  In the 5th Pay  Commission Report, which was accepted w.e.f. 1.1.1996, their  scale was correspondingly revised to 12000-16500.           The employees, who had rendered 13 years of service,  were granted special grade in the pay scale of Rs. 2000-2250.   This special scale of pay was confined to 20 senior  incumbents.  In the 4th Pay Commission, their scale was  correspondingly revised to 4500-5700.  In the 5th Pay  Commission, this scale was correspondingly revised to 14300- 18300 w.e.f. 1.1.1996.  It is undisputed that the appellants  never enjoyed the special scale of Rs. 2000-2250.  They  claimed the pensionary benefits on the basis of scale of Rs.  14300-18300, which was rejected by the High Court.  

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Civil Appeal No. 3173 of 2006         The appellant retired on 30.9.1993 as Member  (Personnel) Postal Services Board in the pay scale of Rs. 7300- 8000.  In the 5th Pay Commission, the scale was revised to Rs.  22400-26000 w.e.f. 1.1.1996.  The Ministry of Finance, by a  Memorandum dated 30.6.1999, revised scale of certain high  posts upwards and revised the scale of three posts of Members  as 24050-26000.  The appellant claimed that he is entitled to  the same upward revision of pay.  His claim was contested by  the Union of India that upward revision of Office Memorandum  dated 30.6.1999 is only prospective in nature and, therefore,  the same is not applicable to the case of the appellant, as he  was a Member only upto 30.9.1993. Civil Appeal No. 3188 of 2006 The respondents were the General Managers in the  Indian Railways, retired prior to 1.1.1996.  They were  holding  the pay scale of Rs. 7300-8000/- at the time of their  retirement.  In the 5th Pay Commission, their scale was  correspondingly revised to Rs. 24050-26000.  Their claim was  rejected by the Tribunal.  However, the High Court upset the  order of the Tribunal and, hence, the present appeal by the  Union of India.   Civil Appeal No. 3189 of 2006         The respondent was Technical Adviser in the Department  of Women and Child Development, Ministry of Human  Resource Development.  He retired on 30.11.1995 in the pay  scale of Rs. 3700-5000.  In the 5th Pay Commission, the scale  was correspondingly revised to Rs. 12000-16500.  The  respondent claimed the scale of Rs. 14300-18300.  His claim  was rejected by the Central Administrative Tribunal.  The  Tribunal’s order was, however, upset by the High Court by the  impugned order.  Civil Appeal No. 3190 of 2006         The respondent retired as Director in the Central  Secretariat Official Language Service on 30.6.1989 in the scale  of Rs. 3700-5000.  In the 5th Pay Commission, the scale was  correspondingly revised to Rs. 12000-16500.  The respondent  claimed the benefit of pay scale of Rs. 14300-18300, which  was rejected by the Tribunal.  However, the order of the  Tribunal was upset by the High Court by the impugned order  and, hence, this appeal by the Union of India.   

       At this stage, we may recite briefly the genesis leading to  the present controversy.  The recommendations of the 5th Pay  Commission were considered by the Union of India and on  30.9.1997 a Policy Resolution was notified.  In the said  Notification the scope and extent of the application of the 5th  Pay Commission recommendations accepted by the  Government of India was mentioned.   The Policy  Resolution  was notified under the Executive Business Rules of the  Government.   As is usual, the implementation and acceptance  of 5th Pay Commission Report was followed by a large number  of representations from pensioners which led to confusion and  litigations, culminated the Government of India to issue  Executive instructions in the Office Memorandum dated  17.12.1998 thereby clarifying the import and intent of the   applications of Policy Resolution notified on 30.9.1997.  It may  be pertinent to mention here that the substance of the Policy  Resolution notified on 30.9.1997 which led to the present  controversy was in the following terms:  "Accepted with modification that 40% of the basic  pension shall be added while consolidating the  pension as on 1.1.1976 but the consolidated as on  1.1.1996 shall not be raised to 50% of the minimum  of the revised pay of the post held by the pensioner

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at the time of retirement."

The aforesaid Policy Resolution was further clarified by  Executive Instructions in the form of Office Memorandum  dated 17.12.1998, the substance of which reads as under:  "The President is now pleased to decide that w.e.f.  1.1.1996, pension of all pensioners irrespective of  their date of retirement shall not be less than 50%  of the minimum pay in the revised scale of pay  introduced w.e.f. 1.1.1996 of the post last held by  the pensioner."                                                 (emphasis supplied)

As the controversy/confusion still persisted and for the  smooth and efficient implementation of the Policy Resolution,    the Government of India issued further Executive Instructions  by way of Office Memorandum dated 11.5.2001 clarifying the  Executive Instructions issued on 17.12.1998.  The substance  of the Executive Instructions dated 11.5.2001 (by which the  pensioners are aggrieved and the core question in these  appeals) reads as under:  "In the course of implementation of the above order,  clarifications have been sought by Ministries/  Departments of the "post last held" by the pensioner  at the time of his/ her superannuation.  The second  sentence of O.M. dated 17.12.1998, i.e. "pension of  all pensioners irrespective of their date of retirement  shall not be less than 50% of the minimum pay in  the revised scale of pay w.e.f. 1.1.1996 of the post  last held by the pensioner", shall mean that pension  of all pensioners irrespective of their date of  retirement shall not be less than 50% of the  minimum of the corresponding scale as on 1.1.96,  of the scale of pay held by the pensioner at the time  of superannuation/retirement."                                                 (emphasis supplied)

The clarification brought out in the O.M. dated  17.12.1998 and O.M. dated 11.5.2001 is clearly discernible.   Whereas O.M. dated 17.12.1998 speaks of the minimum pay  in the revised scale of pay w.e.f. 1.1.1996 of the post last held  by the pensioner,  the O.M. dated 11.5.2001 clarifies it as  minimum of the corresponding scale as on 1.1.1996 of the  scale of pay held by the pensioner at the time of  superannuation/ retirement.  The clarification brought about  in the O.M. dated 11.5.2001 is of the last post held by the  pensioner as the last scale of pay held by the pensioner at the  time of superannuation/ retirement.   It is  common knowledge that the corresponding increase  in any Pay Commission is of the scale of pay and not of the  post.  The grievances raised in the two sets of appeals are the  same.  The basic question that arises for consideration is as to  whether the Executive Instructions in the form of O.M. dated  11.5.2001 over-ride the O.M. dated 17.12.1998 and are null  and void.  In other words, as to whether the O.M. dated  11.5.2001 over-rides the earlier O.M. dated 17.12.1998  clarifying the Policy Resolution of the Government dated  30.9.1997.   The main thrust of the submissions of learned counsel  for the appellants is that the O.M. dated 11.5.2001 over-rides  the original O.M. dated 17.12.1998 and creates two classes of  pensioners.  We are unable to accept this contention.  As

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noticed above, the recommendations of the 5th Pay  Commission were accepted to the extent of Policy Resolution  dated 30.9.1997.  The aforesaid Policy Resolution was further  clarified by issuing instructions in O.M. dated 17.12.1998,  which were clarified by another Executive Instructions in O.M.  dated 11.5.2001.  It is well settled principle of law that  recommendations of the Pay Commission are subject to the  acceptance/ rejection with modifications of the appropriate  Government.  It is also well settled principle of law that a  policy decision of the Government can be reviewed/ altered/  modified by Executive Instructions.  It is in these  circumstances that a policy decision cannot be challenged on  the ground of estoppel.  In the present case, the  recommendations of the 5th Pay Commission were accepted by  a Policy Resolution dated 30.9.1997 that the ceiling on the  amount of pension will be 50% of the highest pay in the  Government.  The pension of all pre 1.1.96 retires including  pre-86 retires shall be consolidated as on 1.1.1996, but the  consolidated pension shall not be brought on to the level of  50% of the minimum of the revised pay of the post held by the  pensioner at the time of retirement.  The subsequent O.M.  dated 17.12.1998 clarified the Policy Resolution dated  30.9.1997 by Executive Instructions in O.M. dated 17.12.1998  and further clarified in the form of O.M. dated 11.5.2001   clarifying the contents of Policy Resolution of the Government  dated 30.9.1997.  They are both complementary to each other.   Both clarify the Government Policy Resolution dated  30.9.1997.    The appellants are not aggrieved by the  Executive Instructions in O.M. 17.12.1998.  In our view,  therefore, the contention of the appellant that the O.M. dated  11.5.2001 over-rides the original O.M. dated 17.12.1998,  thereby creates two classes of pensioners is absolutely ill- founded and untenable.   It is common knowledge that an increase in the pay scale  in any recommendation of a pay commission is a  corresponding increase in the pay scale.  In our view,  therefore, Executive Instructions dated 11.5.2001 have been  validly made keeping in view the recommendations of the Pay  Commission accepted by the Policy Resolution of the  Government on 30.9.1997, clarified by Executive Instructions  dated 17.12.1998.  The Executive Instructions dated  11.5.2001 neither over-ride the Policy Resolution dated  30.9.1997 nor Executive Instructions dated 17.12.1998  clarifying the Policy Resolution dated 30.9.1997.  The  Executive Instructions dated 11.5.2001 were in the form of  further clarifying the Executive Instructions dated 17.12.1998  and do not over-ride the same.   Counsel for the appellants heavily relied on the  Constitution Bench decision of this Court in D.S. Nakara v.  Union of India (1983) 1 SCC 305 where this Court at Page  345 SCC observed that "liberalised pension scheme becomes  operative to all pensioners governed by 1972 Rules irrespective  of the date of retirement." Nakara’s case (supra) has been distinguished by this  Court in  State of Punjab & Ors. v. Boota Singh & Anr.  (2000) 3 SCC 733; State of Punjab & Anr. v. J.L. Gupta &  Ors. (2000) 3 SCC 736; State of West Bengal and Anr. v.  W.B. Govt. Pensioners’ Association & Ors. (2002) 2 SCC  179; and State of Punjab & Ors. v. Amar Nath Goyal &  Ors. (2005) 6 SCC 754.  Nakara’s case (supra) was a case of revision of  pensionary benefits and classification of pensioners into two  groups by drawing a cut off line and granting the revised  pensionary benefits to employees retiring on or after the cut- off date.  The criterion made applicable was "being in service

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and retiring subsequent to the specified date".  This Court  held that for being eligible for liberalised pension scheme,  application of such a criterion is violative of Article 14 of the  Constitution, as it was both arbitrary and discriminatory in  nature.  It was further held that the employees who retired  prior to a specified date, and those who retired thereafter  formed one class of pensioners.  The attempt to classify them  into separate classes/groups for the purpose of pensionary  benefits was not founded on any intelligible differentia, which  had a rational nexus with the object sought to be achieved.   The facts of  Nakara’s case (supra) are not available in the  facts of the present case.  In other words, the facts in Nakara’s  case are clearly distinguishable.   In Indian Ex-Services League v. Union of India (1991)  2 SCC 104, this Court distinguished the decision in Nakara’s  case (supra) and held that the ambit of that decision cannot be  enlarged to cover all claim by retirees or a demand for an  identical amount of pension to every retiree, irrespective of the  date of retirement even though the emoluments for the  purpose of computation of pension be different.   In K.L. Rathee v. Union of India (1997) 6 SCC 7, this  Court, after referring to various judgments of this Court, has  held that Nakara case cannot be interpreted to mean that  emoluments of persons who retired after a notified date  holding the same status, must be treated to be the same.   In our view, therefore, the ratio in Nakara’s case (supra)  is not applicable in the facts of the present case.   Lastly, it is contended that against the decision of the  Delhi High Court, an SLP was dismissed by this Court on  8.7.2004 and, therefore, the doctrine of merger applies.  It is  not disputed that the SLP was dismissed in limine without a  speaking order.  This question has been set at rest by a three- Judge Bench of this Court in Kunhayammed & Ors. v. State  of Kerala & Anr. (2000) 6 SCC 359, where this Court after  referring to a two-Judge Bench, of this Court in V.M.  Salgaokar & Bros. (P) Ltd. v. CIT (2000) 5 SCC 373 held at  page 375 (para 22) SCC as under:  "22. We may refer to a recent decision, by a two- Judge Bench, of this Court in V.M. Salgaokar &  Bros. (P) Ltd. v. CIT (2000) 5 SCC 373 holding that  when a special leave petition is dismissed, this  Court does not comment on the correctness or  otherwise of the order from which leave to appeal is  sought.  What the Court means is that it does not  consider it to be a fit case for exercising its  jurisdiction under Article 136 of the Constitution.   That certainly could not be so when appeal is  dismissed though by a non-speaking order.  Here  the doctrine of merger applies.  In that case the  Supreme Court upholds the decision of the High  Court or of the Tribunal.  This doctrine of merger  does not apply in the case of dismissal of a special  leave petition under Article 136. When appeal is  dismissed, order of the High Court is merged with  that of the Supreme Court.  We find ourselves in  entire agreement with the law so stated.  We are  clear in our mind that an order dismissing a special  leave petition, more so when it is by a non-speaking  order, does not result in merger of the order  impugned into the order of the Supreme Court."

Therefore, when the special leave petition is dismissed  by the Supreme Court under Article 136 of the Constitution,  the doctrine of merger is not attracted.   For the reasons aforestated, the view taken by the

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Madras High Court that the clarificatory Executive  Instructions in O.M. dated 11.5.2001 are an integral part of  the O.M. dated 17.12.1998 clarifying the Policy Resolution of  the Government dated 30.9.1997 and do not over-ride the  original O.M. dated 17.12.1998 is correct law and it is,  accordingly, affirmed.  The view taken by the Delhi High Court  that O.M. dated 11.5.2001 over-rides the original O.M. dated  17.12.1998 and creates two classes of pensioners does not lay  down the correct law and is, hereby, set aside.   The net result is that the Civil Appeal Nos. 3174 and  3173 of 2006, preferred by the pensioners, are dismissed and  the Civil Appeal Nos. 3188, 3189 and 3190 of 2006, preferred  by the employer \026 Union of India, are allowed.  The Judgment  and order of the Madras High Court dated 29.4.2005 is  affirmed.  The Judgment and Orders of the Delhi High Court   dated 17.8.2005, 5.9.2005, 10.11.2005 and 3.8.2005 are set  aside.   Parties are asked to bear their own costs.