1995-SUPREME COURT JUDGMENT ON RESTORATION PENSION
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
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
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
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
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
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.
