PETITIONER:
D.S. NAKARA & OTHERS
Vs.
RESPONDENT:
UNION OF INDIA
DATE OF JUDGMENT17/12/1982
BENCH:
DESAI, D.A.
BENCH:
DESAI, D.A.
CHANDRACHUD, Y.V. ((CJ)
TULZAPURKAR, V.D.
REDDY, O. CHINNAPPA (J)
ISLAM, BAHARUL (J)
CITATION:
1983 AIR 130 1983 SCR (2) 165
1983 SCC (1) 305 1982 SCALE (2)1213
CITATOR INFO :
R 1983 SC 937 (34)
R 1984 SC 121 (28)
R 1984 SC1064 (18)
R 1984 SC1247 (1)
RF 1984 SC1361 (19)
RF 1984 SC1560 (2)
F 1985 SC1196 (2,7)
D 1985 SC1367 (39,43)
RF 1986 SC 210 (19,20,22,26)
R 1986 SC 584 (1)
R 1986 SC1907 (1,2)
R 1987 SC 943 (8)
RF 1987 SC2359 (17)
D 1988 SC 501 (3,4,6,7)
RF 1988 SC 740 (13)
D 1988 SC1291 (9)
R 1988 SC1645 (8)
D 1989 SC 665 (7)
F 1989 SC2088 (7)
R 1990 SC 334 (104)
RF 1990 SC 883 (6)
E 1990 SC1760 (9)
RF 1990 SC1923 (3)
D 1990 SC2043 (2,7)
E 1991 SC1182 (6 TO 16,18,19,23)
RF 1991 SC1743 (1,2,4)
R 1992 SC 96 (11)
R 1992 SC 767 (2,4,TO 8,10)
ACT:
Constitution of India, Art. 14-Central Civil Services
(Pension) Rules, 1972 and Regulations governing pension for
Armed Forces Personnel-Liberalisation in computation of
pension effective from specified date-Divides pensioners so
as to confer benefit on some while denying it to others-
Classification arbitrary, devoid of rational nexus to object
of liberalisation and violative of Art. 14
Constitution of India, Art. 14-Doctrine of
severability-Severance may have effect of enlarging scope of
legislation.
Rules and Regulations governing grant of pension-
Pension is a right-Deferred portion of compensation for
service rendered-Also a social-welfare measure.
HEADNOTE:
By a Memorandum dated May 25, 1979 (Exhibit P-1) the
Government of India liberalised the formula for computation
of pension in respect of employees governed by the Central
Civil Services (Pension) Rules, 1972 and made it applicable
to employees retiring on or after March 31, 1979. By another
Memorandum issued on September 23, 1979 (Exhibit P-2) it
extended the same, subject to certain limitations, to the
Armed Forces’ personnel retiring on or after April 1, 1979.
Petitioners 1 and 2 who had retired in the year 1972 from
the Central Civil Service and the Armed Forces’ service
respectively, and petitioner No. 3, a registered society
espousing the cause of pensioners all over the country,
challenged the validity of the above two memoranda in so far
as the liberalisation in computation of pension had been
made applicable only to those retiring on or after the date
specified and the benefit of liberalisation had been denied
to all those who had retired earlier.
Counsel for petitioners contended that all pensioners
entitled to receive pension under the relevant rules form a
class irrespective of the dates of their retirement and
there cannot be a mini-classification within this class;
that the differential treatment accorded to those who had
retired prior to the specified date is violative of Art. 14
as the choice of specified date is wholly arbitrary and the
classification based on the fortuitous circumstance of
retirement before or subsequent to the specified date is
invalid; and that the scheme of liberalisation in
computation of pension must be uniformly enforced with
regard to all pensioners.
166
Counsel for respondents contended that a classification
based on the date of retirement is valid for the purpose of
granting pensionary benefits; that the specified date is an
integral part of the scheme of liberalisation and the
Government would never have enforced the scheme devoid of
the date; that the doctrine of severability cannot be
invoked to sever the specified date from the scheme as it
would have the effect of enlarging the class of pensioners
covered by the scheme and when the legislature has expressly
defined the class to which the legislation applies it would
be outside the judicial function to enlarge the class; that
there is not a single case where the court has included some
category within the scope of provisions of a law to maintain
its constitutionality; that since the scheme of
liberalisation has financial implications, the Court cannot
make it retroactive; that if more persons divided the
available cake the residue falling to the share of each,
especially to the share of those who are not before the
court would become far less and therefore no relief could be
given to the petitioners that pension is always correlated
to the date of retirement and the court cannot change the
date of retirement and impose fresh commutation benefit
which may burden the exchequer to the tune of Rs. 233
crores; and that the third petitioner has no locus standi in
the case.
Allowing the petitions,
^
HELD: Article 14 strikes at arbitrariness in State
action and ensures fairness and equality of treatment. It is
attracted where equals are treated differently without any
reasonable basis. The principle underlying the guarantee is
that all persons similarly circumstanced shall be treated
alike both in privileges conferred and liabilities imposed.
Equal laws would have to be applied to all in the same
situation and there should be no discrimination between one
person and another if as regards the subject-matter of the
legislation their position is substantially the same.
Article 14 forbids class legislation but permits reasonable
classification for the purpose of legislation. The
classification must be founded on an intelligible
differentia which distinguishes persons or things that are
grouped together from those that are left out of the group
and that differentia must have a rational nexus to the
object sought to be achieved by the statute in question. In
other words, there ought to be causal connection between the
basis of classification and the object of the statute. The
doctrine of classification was evolved by the Court for the
purpose of sustaining a legislation or State action designed
to help weaker sections of the society. Legislative and
executive action may accordingly be sustained by the court
if the State satisfies the twin tests of reasonable
classification and the rational principle correlated to the
object sought to be achieved. A discriminatory action is
liable to be struck down unless it can be shown by the
Government that the departure was not arbitrary but was
based on some valid principle which in itself was not
irrational, unreasonable or discriminatory.
[176 B, 178 D-E, 179 B-C, 177 C-D, 179 C-D, 176 E-F,
179 H, 180 A-C]
Maneka Gandhi v. Union of India, [1978] 2 S.C.R. 621;
Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar & Ors.,
[1959] S.C.R. 279; In re Special Courts Bill, [1979] 2
S.C.R, 476; E.P Royappa v. State of Tamil Nadu, [1974] 2
S.C.R. 348; Ajay Hasia etc. v. Khalid Mujib Sehravardi &
Ors., [1981] 2 S.C.R. 79; Air India etc. v. Nargesh Meerza &
Ors., [1982] 1 S.C.R. 438 and Ramana Dayaram Shetty v.
International Airport Authority of India & Ors., [1979] 3
S.C.R. 1014, referred to.
167
In the instant case, looking to the goals for the
attainment of which pension is paid and the welfare State
proposed to be set up in the light of the Directive
Principles of State Policy and Preamble to the Constitution
it indisputable that pensioners for payment of pension from
a class. When the State considered it necessary to
liberalise the pension scheme in order to augment social
security in old age to government servants it could not
grant the benefits of liberalisation only to those who
retired subsequent to the specified date and deny the same
to those who had retired prior to that date. The division
which classified the pensioners into two classes on the
basis of the specified date was devoid of any rational
principle and was both arbitrary and unprincipled being
unrelated to the object sought to be achieved by grant of
liberalised pension and the guarantee of equal treatment
contained in Art. 14 was violated inasmuch as the pension
rules which were statutory in character meted out
differential and discriminatory treatment to equals in the
matter of computation of pension from the dates specified in
the impugned memoranda. [190 F-H, 194 A-C, 194 F-H]
(ii) Prior to the liberalisation of the formula for
computation of pension average emoluments of the last 36
months’ service of the employee provided the measure of
pension. By the liberalised scheme, it is now reduced to
average emoluments of the last 10 months’ service. Pension
would now be on the higher side on account of two fortuitous
circumstances, namely, that the pay scales permit annual
increments and usually there are promotions in the last one
or two years of the employee’s service. Coupled with it a
slab system for computation has been introduced and the
ceiling of pension has been raised. Pensioners who retired
prior to the specified date would suffer triple jeopardy,
viz., lower average emoluments, absence of slab system and
lower ceiling.
[191 A-D]
(iii) Both the impugned memoranda do not spell out the
raison d’etre for liberalising the pension formula. In the
affidavit in opposition it is stated that the liberalisation
was decided by the government in view of the persistent
demand of the employees represented in the scheme of Joint
Consultative Machinery. This would clearly imply that the
pre-liberalised scheme did not provide adequate protection
in old age, and that a further liberalisation was necessary
as a measure of economic security. The government also took
note of the fact that continuous upward movement of the cost
of living index and diminishing purchasing power of rupee
necessitated upward revision of pension. When the government
favourably responded to the demand it thereby ipso facto
conceded that there was a larger available national cake,
part of which could be utilised for providing higher
security to retiring employees. With this underlying
intendment of liberalisation, it cannot be asserted that it
was good enough only for those who would retire subsequent
to the specified date but not for those who had already
retired. [191 F-G, 192 A, 191 H, 192 B]
2. If removal of arbitrariness can be brought about by
severing the mischievous portion, the discriminatory part
ought to be removed retaining the beneficial portion.
[198 F]
In the instant case, the petitioners do not challenge,
but seek the benefit of the liberalised pension scheme.
Their grievance is of the denial to them of the same by
arbitrary introduction of words of limitation. There is
nothing
168
immutable about the choosing of an event as an eligibility
criteria subsequent to a specified date. If the event is
certain but its occurrence at a point of time is considered
wholly irrelevant and arbitrarily selected having an
undesirable effect of dividing a homogeneous class and of
introducing discrimination the same can be easily severed
and set aside. It is therefore just and proper that the
words introducing the arbitrary fortuitous circumstance
which are vulnerable as denying equality be severed and
struck down. In Exhibit P-1 the words:
“That in respect of the Government servants who
were in service on the 31st March, 1979 and retiring
from service on or after that date.
and in Exhibit P-2, the words:
“the new rates of pension are effective from Ist
April 1979 and will be applicable to all service
officers who became/become noneffective on or after
that date”
are unconstitutional and are struck down with the
specification that the date mentioned therein will be
relevant as being one from which the liberalised pension
scheme becomes operative. Omitting the unconstitutional part
it is declared that all pensioners governed by the 1972
Rules and Army Pension Regulations shall be entitled to
pension as computed under the liberalised pension scheme
from the specified date, irrespective of the date of
retirement. Arrears of pension prior to the specified date
as per fresh computation is not admissible. [190A-C, 198 G,
198 E-F, 205 F-H, 209 F-H, 210 A-D]
D.R. Nim v. UNion of India, [1967] 2 S.C.R. 325; and
Jaila Singh & Anr. v. State of Rajasthan & Ors., [1975]
Supp. S.C.R. 428, relied on.
Union of India & Anr. v. M/s. Parameswaran Match Works
etc., [1975] 2 S.C.R. 573; and D.C. Gouse & Co. etc. v.
State of Kerala & Anr. etc., [1980] 1 S.C.R. 804, explained
and distinguished.
Louisville Gas Co. v. Alabama Power Co., 240 U.S. 30
[1927], referred to.
(ii) The reading down of the impugned memoranda by
severing the objectionable portion would not render the
liberalised pension scheme vague, unenforceable or
unworkable. The Court is not legislating in reading down the
memoranda; when the Court strikes down the basis of
classification as violative of Art. 14 it merely sets at
naught the unconstitutional portion retaining the
constitutional portion. There is no difficulty in
implementing the scheme omitting the event happening after
the specified date, retaining the more human formula for
computation of pension. The pension will have to be
recomputed in accordance with the provisions of the
liberalised pension scheme as salaries were required to be
recomputed in accordance with the recommendation of the
Third Pay Commission but becoming operative from the
specified date. The Court is satisfied that the additional
financial liability that may be imposed by bringing
169
in pensioners who retired prior to April 1, 1979 within the
fold of the liberalised pension scheme is not too high to be
unbearable or such as would have detracted the Government
from covering the old pensioners under the scheme. The
severance of the nefarious unconstitutional part does not
adversely affect future pensioners and their presence in
these petitions is irrelevant.
[204 G-H, 197 E-F, 206 B, 196 G, 208 G, 199 B]
(iii) To say that by its approach the Court is
restructuring the liberalised pension scheme is to ignore
the constitutional mandate. The Court is not conferring
benefits by its approach; it is only removing the
illegitimate classification and after its removal the law
takes its own course. [206 D-E]
(iv) It is not correct to say that if the
unconstitutional part is struck down the Parliament would
not have enacted the measure. The executive, with
parliamentary mandate, liberalised the pension scheme. It is
implicit in the scheme that the need to grant a little
higher rate of pension to the pensioners was considered
eminently just. One could have understood persons in the
higher pay bracket being excluded from the benefit of the
scheme because it would have meant that those in the higher
pay bracket could fend for themselves. Such is not the
exclusion. The exclusion is of a whole class of people who
retired before a certain date. Parliament would not have
hesitated to extend the benefit otherwise considered
eminently just and this becomes clearly discernible from
p.35 of the 9th Report of the Committee on Petitions (6th
Lok Sabha), April 1979. [206 H, 207 A-E]
(v) Whenever classification is held to be impermissible
and the measure can be retained by removing the
unconstitutional portion of the classification, the
resultant effect may be of enlarging the class. In such a
situation the court can strike down the words of limitation
in an enactment. That is what is called reading down the
measure. There is no principle that severance limits the
scope of legislation but can never enlarge it. [205 B-C]
Jaila Singh & Ors. v State of Rajasthan & Ors., [1975]
Supp. S.C.R. 428 and Randhir Singh v. Union of India & Ors.
[1982] 1 S.C.C. 618, relied on.
(vi) The absence of precedent does not deter the court.
Every new norm of socio-economic justice, every new measure
of social justice commenced for the first time at some point
of time in history. If at that time it was rejected as being
without a precedent, law as an instrument of social
engineering would have long since been dead. [193 G, 193 C-
D]
(vii) The court is not making the scheme of
liberalisation retroactive by its approach. Retroactiveness
is implicit in the theory of wages. When revised pay-scales
are introduced from a certain date, all existing employees
are brought on to the revised scales adopting a theory of
fitments and increments for past service. The benefit of
revised scales is not limited to those who enter service
subsequent to the date fixed for introducing revised scales
but is extended to all those in service prior to that date.
Even in the case of the new retiral benefit of gratuity
under the Payment of Gratuity Act, 1972, past service was
taken into consideration. The scheme of liberalisation is
not a new retiral benefit; it is
170
an upward revision of an existing benefit. Pension has
correlation to average emoluments and the length of
qualifying service and any liberalisation would pro tanto
ber etroactive in the narrow sense of the term. Assuming the
government had not prescribed the specified date and thereby
provided that those retiring, pre and past the specified
date, would all be governed by the liberalised pension
scheme it would be both prospective and retroactive. Only
the pension will have to be recomputed in the light of the
formula enacted in the liberalised pension scheme and
effective from the date the revised scheme comes into force.
A statute is not properly called retroactive because a part
of the requisites for its action is drawn from a time
antecedent to its passing.
[195 H, 196 H, 196 G, 196 D, 196 B-D]
Craies on Statute Law, Sixth Edition, p. 387 referred
to.
(viii) There is no question of pensioners dividing the
pension fund which, if more persons are admitted to the
scheme, would pro rata affect the share. The pension scheme,
including the liberalised scheme, is non-contributory in
character. The payment of pension is a statutory liability
undertaken by the Government. Whatever becomes due and
payable on account of pension is recognised as an item of
expenditure and is budgeted for every year. At any given
point of time there is no fixed or pre-determined pension
fund which is divided amongst eligible pensioners. [195 C-G]
(ix) The date of retirement of each employee remaining
as it is, there is no question of fresh commutation of
pension of the pensioners who retired prior to 31st March
1979 and have already availed of the benefit of commutation.
It is not open to them to get that benefit at this late date
because commutation has to be availed of within the
specified time limit from the date of actual retirement.
[206 C-D]
3. The discernible purpose underlying the pension
scheme must inform the interpretative process and it should
receive a liberal construction. [185 G-H]
(i) Pension is a right; not a bounty or gratuitous
payment. The payment of pension does not depend upon the
discretion of the Government but is governed by the rules
and a government servant coming within those rules is
entitled to claim pension. [186 A-B]
Deoki Nandan Prasad v.State of Bihar & Ors.,[1971]
Supp. S.C.R. 634 and State of Punjab & Anr.v Iqbal Singh,
[1976] 3 S.C.R. 360, referred to.
(ii) The pension payable to a government employee is
earned by rendering long and efficient service and therefore
can be said to be a deferred portion of the compensation for
service rendered. [185 F]
(iii) Pension also has a broader significance in that
it is a social-welfare measure rendering socio-economic
justice by providing economic security in old age to those
who toiled ceaselessly in the hey-day of their life. [185 D-
E, 186 B-C]
(iv) Pension as a retirement benefit is in consonance
with and in furtherance of the goals of the Constitution.
The goals for which pension is
171
paid themselves give a fillip and push to the policy of
setting up a welfare state. The preamble to the Constitution
envisages the establishment of a socialist republic. The
basic framework of socialism is to provide a decent standard
of life to the working people and especially provide
security from cradle to grave. Article 41 enjoins the State
to secure public assistance in old age, sickness and
disablement. Every state action whenever taken must be
directed and must be so interpreted as to take society one
step towards the goal of establishing a socialist welfare
society. While examining the constitutional validity of
legislative/administrative action, the touchstone of
Directive Principles of State Policy in the light of the
Preamble provides a reliable yardstick to hold one way or
the other. [190 E,187 F,189 A-B,189 H]
Randhir Singh v. Union of India & Ors., [1982] I S.C.C.
618 and Minerva Mills Ltd. & Ors. v. Union of India & Ors.,
[1981] I S.C.R. 206, referred to.
4. Any member of the public having sufficient interest
can maintain an action for judicial redress for public
injury arising from breach of public duty or from violation
of some provision of the Constitution or the law and seek
enforcement of such public duty and observance of such
constitutional or legal provision. The locus standi of
petitioner No. 3 which seeks to enforce rights that may be
available to a large number of old, infirm retirees is
unquestionable as it is a non-political, non-profit,
voluntary organisation registered under the Societies
Registration Act, 1860 and its members consist of public
spirited citizens who have taken up the cause of ventilating
legitimate public problems. [208 H, 209 A-C]
S.P.Gupta v. Union of India, [1981] Supp. S.C.C.87,
referred to.
JUDGMENT:
ORIGINAL JURISDICTION : Writ Petition Nos. 5939-41 of
1980.
Anil B. Divan, Mrs. Vineeta Sen Gupta and P.H.Parekh
for the Petitioners
L.N.Sinha,Attorney General, M.M. Abdul Khader, N.
Nettar and Miss A. Subhashini for Union of India.
G.L. Sanghi and Randhir Jain for the interveners.
S.R.Srivastava for the Intervener.
K.K. Gupta for the Intervener.
The Judgment of the Court was delivered by
DESAI,J.With a slight variation to suit the context
Woolesey’s prayer : “had I served my God as reverently as I
did my king, I would not have fallen on these days of
penury” is chanted by petitioners in this group of petitions
in the Shellian tune : ‘I fall on
172
the thorns of life I bleed.’ Old age, ebbing mental and
physical prowess, atrophy of both muscle and brain powers
permeating these petitions, the petitioners in the fall of
life yearn for equality of treatment which is being meted
out to those who are soon going to join and swell their own
ranks,
Do pensioners entitled to receive superannuation or
retiring pension under Central Civil Services (Pension)
Rules, 1972 (’1972 Rules’ for short) form a class as a whole
? Is the date of retirement a relevant consideration for
eligibility when a revised formula for computation of
pension is ushered in and made effective from a specified
date ? Would differential treatment to pensioners related to
the date of retirement qua the revised formula for
computation of pension attract Article 14 of the
Constitution and the element of discrimination liable to be
declared unconstitutional as being violative of Art. 14 ?
These and the related questions debated in this group of
petitions call for an answer in the backdrop of a welfare
State and bearing in mind that pension is a socio-economic
justice measure providing relief when advancing age
gradually but irrevocably impairs capacity to stand on one’s
own feet.
Factual matrix has little relevance to the issues
raised and canvassed at the hearing. Petitioners 1 and 2 are
retired pensioners of the Central Government, the first
being a civil servant and the second being a member of the
service personnel of the Armed Forces. The third petitioner
is a society registered under the Societies Registration
Act, 1860, formed to ventilate the legitimate public
problems and consistent with its objective it is espousing
the cause of the pensioners all over the country. Its locus
standi is in question but that is a different matter. The
first petitioner retired in 1972 and on computation, his
pension worked out at Rs. 675/- p.m. and along with the
dearness relief granted from time to time, at the relevant
time he was in receipt of monthly pension of Rs. 935/-. The
second petitioner retired at or about that time and at the
relevant time was in receipt of a pension plus dearness
relief of Rs. 981/- p.m. Union of India has been revising
and liberalising the pension rules from time to time. Some
landmark changes may be noticed.
The First Central Pay Commission (1946-47) recommended
that the age of retirement in future should be uniformly 58
years for all services and the scale of pension should be
1/80 of the emoluments for each year of service, subject to
a limit of 35/80 with
173
a ceiling of Rs. 8,000 per year for 35 years of service,
which the Government of India while accepting the
recommendation raised to Rs. 8,100 per year which would earn
a monthly pension of Rs. 675 at the maximum. The Second
Central Pay Commission (1957-58) re-affirmed that the age of
superannuation should be 58 years for all classes of public
servants but did not recommend any increase in the non-
contributory retirement benefits and recommended that if in
future any improvement is to be made, it was the considered
view of the Commission that these benefits should be on a
contributory basis. The Administrative Reforms Commission
(‘ARC’ for short) set up by the Government of India in 1956
took note of the fact that the cost of living has shot up
and correspondingly the possibility of savings has gone down
and consequently the drop in wages on retirement is in
reality much steeper than what the quantum of pension would
indicate, and accordingly the ARC recommended that the
quantum of pension admissible may be raised to 3/6 of the
emoluments of the last three years of service as against the
existing 3/8 and the ceiling should be raised from Rs. 675
p.m. to Rs. 1000 p.m. Before the Government could take its
decision on the recommendations of the ARC, the Third
Central Pay Commission was set up. One of the terms of
reference of the Third Pay Commission was ‘death-cum-
retirement benefits of Central Government employees’. The
Third Pay Commission did not examine the question of relief
to pensioners because in its view unless the terms of
reference were suitably amended it would not be within their
jurisdiction to examine this question and on a reference by
them, the Government of India decided not to amend the terms
of reference. With regard to the future pensioners the Third
Pay Commission while reiterating that the age of
superannuation should continue to be 58 years further
recommended that no change in the existing formula for
computing pension is considered necessary. The only
important recommendation worth noticing is that the
Commission recommended that the existing ceiling of maximum
pension should be raised from Rs. 675 to Rs. 1,000 p.m. and
the maximum of the gratuity should be raised from Rs. 24,000
to Rs. 30,000.
On May 25, 1979, Government of India, Ministry of
Finance, issued Office Memorandum No. F-19(3)-EV-79 whereby
the formula for computation of pension was liberalised but
made it applicable to Government servants who were in
service on March 31, 1979 and retire from service on or
after that date (specified date for short). The formula
introduced a slab system for computation of
174
pension. This liberalised pension formula was applicable to
employees governed by the 1972 Rules retiring on or after
the specified date. The pension for the service personnel
which will include Army, Navy and Air Force staff is
governed by the relevant regulations. By the Memorandum of
the Ministry of Defence bearing No. B/40725/AG/PS4-C/1816/AD
(Pension)/Services dated September 28, 1979, the liberalised
pension formula introduced for the government servants
governed by the 1972 rules was extended to the Armed Forces
personnel subject to limitations set out in the memorandum
with a condition that the new rules of pension would be
effective from April 1, 1979, and may be applicable to all
service officers who become/became non-effective on or after
that date. (for short specified date).
The chronology of events herein narrated would bring to
surface the contentions raised in these petitions. The
liberalised pension formula shall be applicable
prospectively to those who retired on or after March 31,
1979 in case of government servants covered by 1972 Rules
and in respect of defence personnel those who became/become
non-effective on or after April 1, 1979. Consequently those
who retired prior to the specified date would not be
entitled to the benefits of the liberalised pension formula.
Petitioners accordingly contend that this Court may
consider the raison d’etre for payment of pension. If the
Pension is paid for past satisfactory service rendered, and
to avoid destitution in old age as well as a social welfare
or socio-economic justice measure, the differential
treatment for those retiring prior to a certain date and
those retiring subsequently, the choice of the date being
wholly arbitrary, would be according differential treatment
to pensioners who form a class irrespective of the date of
retirement and, therefore, would be violative of Art. 14. It
was also contended that classification based on fortuitous
circumstance of retirement before or subsequent to a date,
fixing of which is not shown to be related to any rational
principle, would be equally violative of Art. 14.
Primary contention is that the pensioners of the
Central Government form a class for purpose of pensionary
benefits and there could not be mini-classification within
the class designated as pensioners. The expression
‘pensioner’ is generally understood in contra-distinction to
the one in service. Government servants in service, in other
words, those who have not retired, are entitled to
175
salary and other allowances. Those who retire and are
designated as ‘pensioners’ are entitled to receive pension
under the relevant rules. Therefore, this would clearly
indicate that those who render service and retire on
superannuation or any other mode of retirement and are in
receipt of pension are comprehended in the expression
‘pensioners’.
Is this class of pensioners further divisible for the
purpose of ‘entitlement’ and ‘payment’ of pension into those
who retired by certain date and those who retired after that
date ? If date of retirement can be accepted as a valid
criterion for classification, on retirement each individual
government servant would form a class by himself because the
date of retirement of each is correlated to his birth date
and on attaining a certain age he had to retire. It is only
after the recommendations of the Third Central Pay
Commission were accepted by the Government of India that the
retirement dates have been specified to be 12 in number
being last day of each month in which the birth date of the
individual government servant happens to fall. In other
words, all government servants who retire correlated to
birth date on attaining the age of superannuation in a given
month shall not retire on that date but shall retire on the
last day of the month. Now, if date of retirement is a valid
criterion for classification, those who retire at the end of
every month shall form a class by themselves. This is too
microscopic a classification to be upheld for any valid
purpose. Is it permissible or is it violative of Art. 14 ?
The scope, content and meaning of Article 14 of the
Constitution has been the subject-matter of intensive
examination by this Court in a catena of decisions. It
would, therefore, be merely adding to the length of this
judgment to recapitulate all those decisions and it is
better to avoid that exercise save and except referring to
the latest decision on the subject in Maneka Gandhi v. Union
of India(1) from which the following observation may be
extracted:
“…… what is the content and reach of the great
equalising principle enunciated in this article ? There
can be no doubt that it is a founding faith of the
Constitution. It is indeed the pillar on which rests
securely the foundation of our democratic republic.
And, therefore, it must
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not be subjected to a narrow, pedantic or lexicographic
approach. No attempt should be made to truncate its
all-embracing scope and meaning for, to do so would be
to violate its activist magnitude. Equality is a
dynamic concept with many aspects and dimensions and it
cannot be imprisoned within traditional and doctrinaire
limits….. Article 14 strikes at arbitrariness in
State action and ensures fairness and equality of
treatment. The principle of reasonableness, which
legally as well as philosophically, is an essential
element of equality or non-arbitrariness pervades
Article 14 like a brooding omnipresence.”
The decisions clearly lay down that though Art. 14
forbids class legislation, it does not forbid reasonable
classification for the purpose of legislation. In order,
however, to pass the test of permissible classification, two
conditions must be fulfilled, viz., (i) that the
classification must be founded on an intelligible
differentia which distinguishes persons or things that are
grouped together from those that are left out of the group;
and (ii) that differentia must have a rational relation to
the objects sought to be achieved by the statute in
question. (see Shri Ram Krishna Dalmia v. Shri Justice S.R.
Tendolkar & Others.(1) The classification may be founded on
differential basis according to objects sought to be
achieved but what is implicit in it is that there ought to
be a nexus i.e., causal connection between the basis of
classification and object of the statute under
consideration. It is equally well settled by the decisions
of this Court that Art. 14 condemns discrimination not only
by a substantive law but also by a law of procedure.
After an exhaustive review of almost all decisions
bearing on the question of Art. 14, this Court speaking
through Chandrachud, C.J. in Re. Special Courts Bill (2)
restated the settled propositions which emerged from the
judgments of this Court undoubtedly insofar as they were
relevant to the decision on the points arising for
consideration in that matter. Four of them are apt and
relevant for the present purpose and may be extracted. They
are:
“3. The constitutional command to the State to afford
equal protection of its laws sets a goal not
attainable
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by the invention and application of a precise
formula. Therefore, classification need not be
constituted by an exact or scientific exclusion or
inclusion of persons or things. The Courts should
not insist on delusive exactness or apply
doctrinaire tests for determining the validity of
classification in any given case. Classification
is justified if it is not palpably arbitrary.
4. The principle underlying the guarantee of Article
14 is not that the same rules of law should be
applicable to all persons within the Indian
territory or that the same remedies should be made
available to them irrespective of differences of
circumstances. It only means that all persons
similarly circumstanced shall be treated alike
both in privileges conferred and liabilities
imposed. Equal laws would have to be applied to
all in the same situation, and there should be no
discrimination between one person and another if
as regards the subject matter of the legislation
their position is substantially the same.
6. The law can make and set apart the classes
according to the needs and exigencies of the
society and as suggested by experience. It can
recognise even degree of evil, but the
classification should never be arbitrary,
artificial or evasive.
7. The classification must not be arbitrary but must
be rational, that is to say, it must not only be
based on some qualities or characteristics which
are to be found in all the persons grouped
together and not in others who are left out but
those qualities or characteristics must have a
reasonable relation to the object of the
legislation. In order to pass the test, two
conditions must be fulfilled, namely, (1) that the
classification must be founded on an intelligible
differentia which distinguishes those that are
grouped together from others and (2) that
differentia must have a rational relation to the
object sought to be achieved by the Act.”
The other facet of Art. 14 which must be remembered is
that it eschews arbitrariness in any form. Article 14 has,
therefore, not
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to be held identical with the doctrine of classification. As
was noticed in Maneka Gandhi’s case in the earliest stages
of evolution of the Constitutional law, Art. 14 came to be
identified with the doctrine of classification because the
view taken was that Art. 14 forbids discrimination and there
will be no discrimination where the classification making
the differentia fulfils the aforementioned two conditions.
However, in EP. Royappa v. State of Tamil Nadu(1), it was
held that the basic principle which informs both Arts. 14
and 16 is equality and inhibition against discrimination.
This Court further observed as under:
“From a positivistic point of view, equality is
antithetic to arbitrariness. In fact, equality and
arbitrariness are sworn enemies; one belongs to the
rule of law in a republic while the other, to the whim
and caprice of an absolute monarch. Where an act is
arbitrary it is implicit in it that it is unequal both
according to political logic and constitutional law and
is, therefore, violative of Art. 14, and if it affects
any matter relating to public employment, it is also
violative of Art. 16. Articles 14 and 16 strike at
arbitrariness in State action and ensure fairness and
equality of treatment.
Justice Iyer has in his inimitable style dissected Art.
14 as under:
“The article has a pervasive processual potency
and versatile quality, equalitarian in its soul and
allergic to discriminatory diktats. Equality is the
antithesis of arbitrariness and ex cathedra ipse dixit
is the ally of demagogic authoritarianism. Only knight-
errants of ‘executive excesses’-if we may use current
cliche-can fall in love with the Dame of despotism,
legislative or administrative. If this Court gives in
here it gives up the ghost. And so it that I insist on
the dynamics of limitations on fundamental freedoms as
implying the rule of law; be you ever so high, the law
is above you.”(2)
Affirming and explaining this view, the Constitution
Bench in Ajay Hasia etc. v. Khalid Mujib Sehravardi & others
etc. (3) held
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that it must, therefore, now be taken to be well settled
that what Art.14 strikes at is arbitrariness because any
action that is arbitrary must necessarily involve negation
of equality. The Court made it explicit that where an act is
arbitrary it is implicit in it that it is unequal both
according to political logic and constitutional law and is,
therefore, violative of Art. 14. After a review of large
number of decisions bearing on the subject, in Air India
etc. etc. v. Nargesh Meerza & Ors. etc etc. (1) the Court
formulated propositions emerging from analysis and
examination of earlier decisions. One such proposition held
well established is that Art. 14 is certainly attracted
where equals are treated differently without any reasonable
basis.
Thus the fundamental principle is that Art. 14 forbids
class legislation but permits reasonable classification for
the purpose of legislation which classification must satisfy
the twin tests of classification being founded on an
intelligible differntia which distinguishes persons or
things that are grouped together from those that are left
out of the group and that differentia must have a rational
nexus to the object sought to be achieved by the statute in
question.
As a corrolary to this well established proposition,
the next question is, on whom the burden lies to
affirmatively establish the rational principle on which the
classification is founded correlated to the object sought to
be achieved ? The thrust of Art. 14 is that the citizen is
entitled to equality before law and equal protection of
laws. In the very nature of things the society being
composed of unequals a welfare state will have to strive by
both executive and legislative action to help the less
fortunate in the society to ameliorate their condition so
that the social and economic inequality in the society may
be bridged. This would necessitate a legislation applicable
to a group of citizens otherwise unequal and amelioration of
whose lot is the object of state affirmative action. In the
absence of doctrine of classification such legislation is
likely to flounder on the bed rock of equality enshrined in
Art. 14. The court realistically appraising the social
stratification and economic inequality and keeping in view
the guidelines on which the State action must move as
constitutionally laid down in part IV of the Constitution,
evolved the doctrine of classification. The doctrine was
evolved to sustain a legislation or State action designed to
help weaker sections of the society or some
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such segments of the society in need of succor. Legislative
and executive action may accordingly be sustained if it
satisfies the twin tests of reasonable classification and
the rational principle correlated to the object sought to be
achieved. The State, therefore, would have to affirmatively
satisfy the Court that the twin tests have been satisfied.
It can only be satisfied if the State establishes not only
the rational principle on which classification is founded
but correlate it to the objects sought to be achieved. This
approach is noticed in Ramana Dayaram Shetty v. The
International Airport Authority of India & Ors.(1) when at
page 1034, the Court observed that a discriminatory action
of the Government is liable to be struck down, unless it can
be shown by the Government that the departure was not
arbitrary, but was based on some valid principle which in
itself was not irrational, unreasonable or discriminatory.
The basic contention as hereinbefore noticed is that
the pensioners for the purpose of receiving pension form a
class and there is no criterion on which classification of
pensioners retiring prior to specified date and retiring
subsequent to that date can provide a rational principle
correlated to object, viz., object underlying payment of
pensions. In reply to this contention set out in para 19 of
the petition, Mr. S.N. Mathur, Director, Ministry of Finance
in part 17 of his affidavit-in-opposition on behalf of the
respondents has averred as under:
“The contentions in part 18 and 19 that all
pensioners form one class is not correct and the
petitioners have not shown how they form one class.
Classification of pensioners on the basis of their date
of retirement is a valid classification for the purpose
of pensionary benefits.”
These averments would show at a glance that the State action
is sought to be sustained on the doctrine of classification
and the criterion on which the classification is sought to
be sustained is the date of retirement of the Government
servant which entitled him to pension. Thus according to the
respondents, pensioners who retire from Central Government
service and are governed by the relevant pension rules all
do not form a class but pensioners who retire prior to a
certain date and those who retire subsequent to a certain
date form distinct and separate classes. It may be made
clear that the date of retirement of each individual
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pensioner is not suggested as a criterion for classification
as that would lead to an absurd result, because in that
event every pensioner relevant to his date of retirement
will form a class unto himself. What is suggested is that
when a pension scheme undergoes a revision and is enforced
effective form a certain date, the date so specified becomes
a sort of a Rubicon and those who retire prior to that date
form one class and those who retire on a subsequent date
form a distinct and separate class and no one can cross the
Rubicon. And the learned Attorney General contended that
this differentiation is grounded on a rational principle and
it has a direct correlation to the object sought to be
achieved by liberalised pension formula.
The approach of the respondents raises a vital and none
too easy of answer, question as to why pension is paid. And
why was it required to be liberalised ? Is the employer,
which expression will include even the State, bound to pay
pension ? Is there any obligation on the employer to provide
for the erstwhile employee even after the contract of
employment has come to an end and the employee has ceased to
render service ?
What is a pension ? What are the goals of pension ?
What public interest or purpose, if any, it seeks to serve ?
If it does seek to serve some public purpose, is it thwarted
by such artificial division of retirement pre and post a
certain date ? We need seek answer to these and incidental
questions so as to render just justice between parties to
this petition.
The antiquated notion of pension being a bounty a
gratituous payment depending upon the sweet will or grace of
the employer not claimable as a right and, therefore, no
right to pension can be enforced through Court has been
swept under the carpet by the decision of the Constitution
Bench in Deoki Nandan Prasad v. State of Bihar & Ors. (1)
wherein this Court authoritatively ruled that pension is a
right and the payment of it does not depend upon the
discretion of the Government but is governed by the rules
and a Government servant coming within those rules is
entitled to claim pension. It was further held that the
grant of pension does not depend upon any one’s discretion.
It is only for the purpose of
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quantifying the amount having regard to service and other
allied matters that it may be necessary for the authority to
pass an order to that effect but the right to receive
pension flows to the officer not because of any such order
but by virtue of the rules. This view was reaffirmed in
State of Punjab & Anr. v. Iqbal Singh (1).
There are various kinds of pensions and there are
equally various methods of funding pension programmes. The
present enquiry is limited to non-contributory
superannuation or retirement pension paid by Government to
its erstwhile employee and the purpose and object underlying
it. Initially this class of pension appears to have been
introduced as a reward for loyal service. Probably the alien
rulers who recruited employees in lower echelons of service
from the colony and exported higher level employees from the
seat of Empire, wanted to ensure in the case of former
continued loyalty till death to the alien rulers and in the
case of latter, an assured decent living standard in old age
ensuring economic security at the cost of the colony.
In the course of transformation of society from feudal
to welfare and as socialistic thinking acquired
respectability, State obligation to provide security in old
age, an escape from undeserved want was recognised and as a
first step pension was treated not only as a reward for past
service but with a view to helping the employee to avoid
destitution in old age. The quid pro quo, was that when the
employee was physically and mentally alert he rendered unto
master the best, expecting him to look after him in the fall
of life. A retirement system therefore exists solely for the
purpose of providing benefits. In most of the plans of
retirement benefits, everyone who qualifies for normal
retirement receives the same amount. (see Retirement Systems
for Public Employees by Bleakney, page 33.)
As the present case is concerned with superannuation
pension, a brief history of its initial introduction in
early stages and continued existence till today may be
illuminating. Superannuation is the most descriptive word of
all but has become obsolescent because it seems ponderous.
Its genesis can be traced to the first Act of Parliament (in
U.K.) to be concerned with the provision of pensions
generally in public offices. It was passed in 1810. The
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Act which substantively devoted itself exclusively to the
problem of superannuation pension was superannuation Act of
1834. These are landmarks in pension history because they
attempted for the first time to establish a comprehensive
and uniform scheme for all whom we may now call civil
servants. Even before the 19th century, the problem of
providing for public servants who are unable, through old
age or incapacity, to continue working, has been recognised,
but methods of dealing with the problem varied from society
to society and even occasionally from department to
department.
A political society which has a goal of setting up of a
welfare State, would introduce and has in fact introduced as
a welfare measure wherein the retiral benefit is grounded on
‘considerations of State obligation to its citizens who
having rendered service during the useful span of life must
not be left to penury in their old age, but the evolving
concept of social security is a later day development’. And
this journey was over a rough terrain. To note only one
stage in 1856 a Royal Commission was set up to consider
whether any changes were necessary in the system established
by the 1834 Act. The Report of the Commission is known as
“Northcote-Trevelyan Report”. The Report was pungent in its
criticism when it says that: “in civil services comparable
to lightness of work and the certainty of provision in case
of retirement owing to bodily incapacity, furnish strong
inducements to the parents and friends of sickly youths to
endeavour to obtain for them employment in the service of
the Government, and the extent to which the public are
consequently burdened; first with the salaries of officers
who are obliged to absent themselves from their duties on
account of ill health, and afterwards with their pensions
when they retire on the same plea, would hardly be credited
by those who have not had opportunities of observing the
operation of the system” (see Gerald Rhodes, Public Sector
Pensions, pp. 18-19).
This approach is utterly unfair because in modern times
public services are manned by those who enter at a
comparatively very young age, with selection through
national competitive examination and ordinarily the best
talent gets the opportunity.
Let us therefore examine what are the goals that
pension scheme seeks to subserve ? A pension scheme
consistent with available resources must provide that the
pensioner would be able to live: (i) free from want, with
decency, independence and self-respect,
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and (ii) at a standard equivalent at the pre-retirement
level. This approach may merit the criticism that if a
developing country like India cannot provide an employee
while rendering service a living wage, how can one be
assured of it in retirement ? This can be aptly illustrated
by a small illustration. A man with a broken arm asked his
doctor whether he will be able to play the piano after the
cast is removed. When assured that he will, the patient
replied, ‘that is funny, I could not before’. It appears
that determining the minimum amount required for living
decently is difficult, selecting the percentage representing
the proper ratio between earnings and the retirement income
is harder. But it is imperative to note that as self-
sufficiency declines the need for his attendance or
institutional care grows. Many are literally surviving now
than in the past. We owe it to them and ourselves that they
live, not merely exist. The philosophy prevailing in a given
society at various stages of its development profoundly
influences its social objectives. These objectives are in
turn a determinant of a social policy. The law is one of the
chief instruments whereby the social policies are
implemented and ‘pension is paid according to rules which
can be said to provide social security law by which it is
meant those legal mechanisms primarily concerned to ensure
the provision for the individual of a cash income adequate,
when taken along with the benefits in kind provided by other
social services (such as free medical aid) to ensure for him
a culturally acceptable minimum standard of living when the
normal means of doing so failed’. (see Social Security law
by Prof. Harry Calvert, p. 1).
Viewed in the light of the present day notions pension
is a term applied to periodic money payments to a person who
retires at a certain age considered age of disability;
payments usually continue for the rest of the natural life
of the recipient. The reasons underlying the grant of
pension vary from country to country and from scheme to
scheme. But broadly stated they are (i) as compensation to
former members of the armed forces or their dependents for
old age, disability, or death (usually from service causes),
(ii) as old age retirement or disability benefits for
civilian employees, and (iii) as social security payments
for the aged, disabled, or deceased citizens made in
accordance with the rules governing social service
programmes of the country. Pensions under the first head are
of great antiquity. Under the second head they have been in
force in one form or another in some countries for over a
century but those coming under the third head are relatively
of recent origin, though they are of the greatest
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magnitude. There are other views about pensions such as
charity, paternalism, deferred pay, rewards for service
rendered, or as a means or promoting general welfare (see
Encyclopaedia Britannica, Vol. 17 p.575.) But these views
have become otiose.
Pension to civil employees of the Government and the
defence personnel as administered in India appear to be a
compensation for service rendered in the past. However, as
held in Douge v. Board of Education(1) a pension is closely
akin to wages in that it consists of payment provided by an
employer, is paid in consideration of past service and
serves the purpose of helping the recipient meet the
expenses of living. This appears to be the nearest to our
approach to pension with the added qualification that it
should ordinarily ensure freedom from undeserved want.
Summing-up it can be said with confidence that pension
is not only compensation for loyal service rendered in the
past, but pension also has a broader significance, in that
it is a measure of socio-economic justice which inheres
economic security in the fall of life when physical and
mental prowess is ebbing corresponding to aging process and
therefore, one is required to fall back on savings. One such
saving in kind is when you gave your best in the hey-day of
life to your employer, in days of invalidity, economic
security by way of periodical payment is assured. The term
has been judicially defined as a stated allowance or stipend
made in consideration of past service or a surrender of
rights or emoluments to one retired from service. Thus the
pension payable to a Government employee is earned by
rendering long and efficient service and therefore can be
said to be a deferred portion of the compensation or for
service rendered. In one sentence one can say that the most
practical raison d’etre for pension is the inability to
provide for oneself due to old age. One may live and avoid
unemployment but not senility and penury if there is nothing
to fall back upon.
The discernible purpose thus underlying pension scheme
or a statute introducing the pension scheme must inform
interpretative process and accordingly it should receive a
liberal construction and the courts may not so interpret
such statute as to render them inane (see American
Jurisprudence 2d. 881).
186
From the discussion three things emerge : (i) that
pension is neither a bounty nor a matter of grace depending
upon the sweet will of the employer and that it creates a
vested right subject to 1972 rules which are statutory in
character because they are enacted in exercise of powers
conferred by the proviso to Art. 309 and clause (5) of Art.
148 of the Constitution ; (ii) that the pension is not an
ex-gratia payment but it is a payment for the past service
rendered ; and (iii) it is a social welfare measure
rendering socio-economic justice to those who in the hey-day
of their life ceaselessly toiled for the employer on an
assurance that in their old age they would not be left in
lurch. It must also be noticed that the quantum of pension
is a certain percentage correlated to the average emoluments
drawn during last three years of service reduced to ten
months under liberalised pension scheme. Its payment is
dependent upon an additional condition of impeccable
behaviour even subsequent to requirement, that is, since the
cessation of the contract of service and that it can be
reduced or withdrawn as a disciplinary measure.
Having succinctly focussed our attention on the
conspectus of elements and incidents of pension the main
question may now be tackled. But, the approach of court
while considering such measure is of paramount importance.
Since the advent of the Constitution, the state action must
be directed towards attaining the goals set out in Part IV
of the Constitution which, when achieved, would permit us to
claim that we have set up a welfare State. Article 38 (1)
enjoins the State to strive to promote welfare of the people
by securing and protecting as effective as it may a social
order in which justice social, economic and political shall
inform all institutions of the national life. In particular
the State shall strive to minimise the inequalities in
income and endeavour to eliminate inequalities in status,
facilities and opportunities. Art. 39 (d) enjoins a duty to
see that there is equal pay for equal work for both men and
women and this directive should be understood and
interpreted in the light of the judgment of this Court in
Randhir Singh v. Union of India & Ors.(1) Revealing the
scope and content of this facet of equality, Chinnappa
Reddy, J. speaking for the Court observed as under :
“Now, thanks to the rising social and political
consciousness and the expectations aroused as a
consequence and the forward looking posture of this
Court, the under-
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privileged also are clamouring for the rights and are
seeking the intervention of the Court with touching
faith and confidence in the Court. The Judges of the
Court have a duty to redeem their Constitutional oath
and do justice no less to the pavement dweller than to
the guest of the Five Star Hotel.”
Proceeding further, this Court observed that where all
relevant considerations are the same, persons holding
identical posts may not be treated differently in the matter
of their pay merely because they belong to different
departments. If that can’t be done when they are in service,
can that be done during their retirement? Expanding this
principle, one can confidently say that if pensioners form a
class, their computation cannot be by different formula
affording unequal treatment solely on the ground that some
retired earlier and some retired later. Art. 39 (e) requires
the State to secure that the health and strength of workers,
men and women, and children of tender age are not abused and
that citizens are not forced by economic necessity to enter
avocations unsuited to their age or strength. Art. 41
obligates the State within the limits of its economic
capacity and development, to make effective provision for
securing the right to work, to education and to provide
assistance in cases of unemployment, old age, sickness and
disablement, and in other cases of undeserved want. Art. 43
(3) requires the State to endeavour to secure amongst other
things full enjoyment of leisure and social and cultural
opportunities.
Recall at this stage the Preamble, the flood light
illuminating the path to be pursued by the State to set up a
Sovereign Socialist Secular Democratic Republic. Expression
‘socialist’ was intentionally introduced in the Preamble by
the Constitution (Forty-Second Amendment) Act, 1976. In the
objects and reasons for amendment amongst other things,
ushering in of socio-economic revolution was promised. The
clarion call may be extracted :
“The question of amending the Constitution for
removing the difficulties which have arisen in
achieving the objective of socio-economic revolution,
which would end poverty and ignorance and disease and
inequality of opportunity, has been engaging the active
attention of Government and the public for some
time………
188
It is, therefore, proposed to amend the
Constitution to spell out expressly the high ideals of
socialism……..to make the directive principles more
comprehensive……”
What does a Socialist Republic imply? Socialism is a much
misunderstood word. Values determine contemporary socialism
pure and simple. But it is not necessary at this stage to go
into all its ramifications. The principal aim of a socialist
State is to eliminate inequality in income and status and
standards of life. The basic framework of socialism is to
provide a decent standard of life to the working people and
especially provide security from cradle to grave. This
amongst others on economic side envisaged economic equality
and equitable distribution of income. This is a blend of
Marxism and Gandhism leaning heavily towards Gandhian
socialism. During the formative years, socialism aims at
providing all opportunities for pursuing the educational
activity. For want of wherewithal or financial equipment the
opportunity to be fully educated shall not be denied.
Ordinarily, therefore, a socialist State provides for free
education from primary to Ph. D. but the pursuit must be by
those who have the necessary intelligence quotient and not
as in our society where a brainy young man coming from a
poor family will not be able to prosecute the education for
want of wherewithal while the ill-equipped son or daughter
of a well-to-do father will enter the portals of higher
education and contribute to national wastage. After the
education is completed, socialism aims at equality in
pursuit of excellence in the chosen avocation without let or
hindrance of caste, colour, sex or religion and with full
opportunity to reach the top not thwarted by any
considerations of status, social or otherwise. But even here
the less equipped person shall be assured a decent minimum
standard of life and exploitation in any form shall be
eschewed. There will be equitable distribution of national
cake and the worst off shall be treated in such a manner as
to push them up the ladder. Then comes the old age in the
life of everyone, be he a monarch or a Mahatma, a worker or
a pariah. The old age overtakes each one, death being the
fulfilment of life providing freedom from bondage. But there
socialism aims at providing an economic security to those
who have rendered unto society what they were capable of
doing when they were fully equipped with their mental and
physical prowess. In the fall of life the State shall ensure
to the citizens a reasonably decent standard of life,
medical aid, freedom from want, freedom from fear and the
enjoyable leisure,
189
relieving the boredom and the humility of dependence in old
age. This is what Art. 41 aims when it enjoins the State to
secure public assistance in old age, sickness and
disablement. It was such a socialist State which the
Preamble directs the centres of power Legislative Executive
and Judiciary-to strive to set up. From a wholly feudal
exploited slave society to a vibrant, throbbing socialist
welfare society is a long march but during this journey to
the fulfilment of goal every State action whenever taken
must be directed, and must be so interpreted, as to take the
society one step towards the goal.
To some extent this approach will find support in the
judgment in Minerva Mills Ltd. & Ors. v. Union of India &
Ors.(1). Speaking for the majority, Chandrachud, C.J.
observed as under :
“This is not mere semantics. The edifice of our
Constitution is built upon the concepts crystallised in
the Preamble. We resolved to constitute ourselves into
a Socialist State which carried with it the obligation
to secure to our people justice-social, economic and
political. We, therefore, put Part IV into our
Constitution containing directive principles of State
policy which specify the socialistic goal to be
achieved.”
At a later stage it was observed that the fundamental rights
are not an end in themselves but are the means to an end,
the end is specified in part IV. Bhagwati, J. in his
minority judgment after extracting a portion of the speech
of the then Prime Minister Jawahar Lal Nehru, while
participating in a discussion on the Constitution (First
Amendment) Bill, observed that the Directive Principles are
intended to bring about a socio-economic revolution and to
create a new socio-economic order where there will be social
and economic justice for all and everyone, not only a
fortunate few but the teeming millions of India, would be
able to participate in the fruits of freedom and development
and exercise the fundamental rights. It, therefore, appears
to be well established that while interpreting or examining
the constitutional validity of legislative/administrative
action, the touchstone of Directive Principles of State
Policy in the light of the Preamble will provide a reliable
yardstick to hold one way or the other.
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With this background let us now turn to the challenge
posed in these petitions. The challenge is not to the
validity of the pension liberalisation scheme. The scheme is
wholly acceptable to the petitioners, nay they are ardent
supporters of it, nay further they seek the benefit of it.
The petitioners challenge only that part of the scheme by
which its benefits are admissible to those who retired from
service after a certain date. In other words, they challenge
that the scheme must be uniformly enforced with regard to
all pensioners for the purpose of computation of pension
irrespective of the date when the Government servant retired
subject to the only condition that he was governed by the
1972 Rules. No doubt, the benefit of the scheme will be
available from the specified date, irrespective of the fact
when the concerned Government servant actually retired from
service.
Having set out clearly the society which we propose to
set up, the direction in which the State action must move,
the welfare State which we propose to build up, the
constitutional goal of setting up a socialist State and the
assurance in the Directive Principles of State Policy
especially of security in old age at least to those who have
rendered useful service during their active years, it is
indisputable, nor was it questioned, that pension as a
retirement benefit is in consonance with and furtherance of
the goals of the Constitution. The goals for which pension
is paid themselves give a fillip and push to the policy of
setting up a welfare State because by pension the socialist
goal of security of cradle to grave is assured at least when
it is mostly needed and least available, namely, in the fall
of life.
If such be the goals of pension, if such be the welfare
State which we propose to set up, if such be the goals of
socialism and conceding that any welfare measure may
consistent with economic capacity of the State be
progressively augmented with wider width and a longer
canvass yet when the economic means permit the augmentation,
should some be left out for the sole reason that while in
the formative years of the nascent State they contributed
their mite but when the fruits of their labour led to the
flowering of economic development and higher gross national
produce bringing in larger revenue and therefore larger cake
is available, they would be denied any share of it ?
Indisputably, viewed from any angle pensioners for payment
of pension form a class. Unquestionably pension is linked to
length of service and the last pay drawn but the last pay
does not imply the pay on the last day of retirement
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but average emoluments as defined in the scheme. Earlier
average emoluments of 36 months’ service provided the
measure of pension because the pension was related to the
average emoluments during 36 months just preceding
retirement. By the liberalised scheme it is now reduced to
average emoluments of 10 months preceding the date. Any one
in government service would appreciate at a glance that with
an average of 10 months it would be on the higher side on
account of the two fortuitous circumstances that the pay-
scales, if one has not reached the maximum, permit annual
increments and there are promotions in the last one or two
years. With a view to giving a higher average the scheme was
liberalised to provide for average emoluments with reference
to last 10 months’ service. Coupled with it, a slab system
for computation is introduced and the ceiling is raised.
This is liberalisation. Now, if the pensioners who retired
prior to the specified date and had to earn pension on the
average emoluments of 36 months’ salary just preceding the
date of retirement, naturally the average would be lower and
they will be doubly hit because the slab system as now
introduced was not available and the ceiling was at a lower
level. Thus they suffer triple jeopardy, viz., lower average
emoluments, absence of slab system and lower ceiling.
What then is the purpose in prescribing the specified
date vertically dividing the pensioners between those who
retired prior to the specified date and those who retire
subsequent to that date? That poses the further question,
why was the pension scheme liberalised ? What necessitated
liberalisation of the pension scheme ?
Both the impugned memoranda do not spell out the raison
d’etre for liberalising the pension formula. In the
affidavit in opposition by Shri S.N. Mathur, it has been
stated that the liberalisation of pension of retiring
Government servants was decided by the Government in view of
the persistent demand of the Central Government employees
represented in the scheme of Joint Consultative Machinery.
This would clearly imply that the preliberalised pension
scheme did not provide adequate protection in old age and
that a further liberalisation was necessary as a measure of
economic security. When Government favourably responded to
the demand it thereby ipso facto conceded that there was a
larger available national cake part of which could be
utilised for providing higher security to erstwhile
government servants who would retire. The Government also
took note of the
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fact that continuous upward movement of the cost of living
index as a sequel of inflationary inputs and diminishing
purchasing power of rupee necessitated upward revision of
pension. If this be the underlying intendment of
liberalisation of pension scheme, can any one be bold enough
to assert that it was good enough only for those who would
retire subsequent to the specified date but those who had
already retired did not suffer the pangs of rising prices
and falling purchasing power of the rupee ? What is the sum
total of picture ? Earlier the scheme was not that liberal
keeping in view the definition of average emoluments and the
absence of slab system and a lower ceiling. Those who
rendered the same service earned less pension and are
exposed to the vagary of rising prices consequent upon the
inflationary inputs. If therefore, those who are to retire
subsequent to the specified date would feel the pangs in
their old age, of lack of adequate security, by what stretch
of imagination the same can be denied to those who retired
earlier with lower emoluments and yet are exposed to the
vagaries of the rising prices and the falling purchasing
power of the rupee. And the greater misfortune is that they
are becoming older and older compared to those who would be
retiring subsequent to the specified date. The Government
was perfectly justified in liberalising the pension scheme.
In fact it was overdue. But we find no justification for
arbitrarily selecting the criteria for eligibility for the
benefits of the scheme dividing the pensioners all of whom
would be retirees but falling on one or the other side of
the specified date.
Therefore, let us proceed to examine whether there was
any rationale behind the eligibility qualification. The
learned Attorney-General contended that the scheme is one
whole and that the date is an integral part of the scheme
and the Government would have never enforced the scheme
devoid of the date and the date is not severable from the
scheme as a whole. Contended the learned Attorney-General
that the Court does not take upon itself the function of
legislation for persons, things or situations omitted by the
legislature. It was said that when the legislature has
expressly defined the class with clarity and precision to
which the legislation applies, it would be outside the
judicial function to enlarge the class and to do so is not
to interpret but to legislate which is the forbidden field.
Alternatively it was also contended that where a larger
class comprising two smaller classes is covered by a
legislation of which one part is constitutional, the Court
examines whether
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the legislation must be invalidated as a whole or only in
respect of the unconstitutional part. It was also said that
severance always cuts down the scope of legislation but can
never enlarge it and in the present case the scheme as it
stands would not cover pensioners such as the petitioners
and if by severance an attempt is made to include them in
the scheme it is not cutting down the class or the scope but
enlarge the ambit of the scheme which is impermissible even
under the doctrine of severability. In this context it was
lastly submitted that there is not a single case in India or
elsewhere where the Court has included some category within
the scope of provisions of a law to maintain its
constitutionality.
The last submission, the absence of precedent need not
deter us for a moment. Every new norm of socio economic
justice, every new measure of social justice commenced for
the first time at some point of history. If at that time it
is rejected as being without a precedent, the law as an
instrument of social engineering would have long since been
dead and no tears would have been shed. To be pragmatic is
not to be unconstitutional. In its onward march law as an
institution ushers in socio-economic justice. In fact,
social security in old age commended itself in earlier
stages as a moral concept but in course of time it acquired
legal contention. The rules of natural justice owed their
origin to ethical and moral code. Is there any doubt that
they have become the integral and inseparable parts of rule
of law of which any civilised society is proud ? Can anyone
be bold enough to assert that ethics and morality are
outside the field of legal formulations ? Socio-economic
justice stems from the concept of social morality coupled
with abhorrence for economic exploitation. And the advancing
society converts in course of time moral or ethical code
into enforceable legal formulations. Over-emphasis on
precedent furnishes an insurmountable road-block to the
onward march towards promised millennium. An overdose of
precedents is the bane of our system which is slowly getting
stagnant, stratified and atrophied. Therefore absence of a
precedent on this point need not deter us at all. We are all
the more happy for the chance of scribbling on a clean
slate.
If it appears to be undisputable, as it does to us that
the pensioners for the purpose of pension benefits form a
class, would its upward revision permit a homogeneous class
to be divided by arbitrarily fixing an eligibility criteria
unrelated to purpose of revision, and would such
classification be founded on some rational
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principle ? The classification has to be based, as is well
settled, on some rational principle and the rational
principle must have nexus to the objects sought to be
achieved. We have set out the objects underlying the payment
of pension. If the State considered it necessary to
liberalise the pension scheme, we find no rational principle
behind it for granting these benefits only to those who
retired subsequent to that date simultaneously denying the
same to those who retired prior to that date. If the
liberalisation was considered necessary for augmenting
social security in old age to government servants then those
who retired earlier cannot be worst off than those who
retire later. Therefore, this division which classified
pensioners into two classes is not based on any rational
principle and if the rational principle is the one of
dividing pensioners with a view to giving something more to
persons otherwise equally placed, it would be
discriminatory. To illustrate, take two persons, one retired
just a day prior and another a day just succeeding the
specified date. Both were in the same pay bracket, the
average emolument was the same and both had put in equal
number of years of service. How does a fortuitous
circumstance of retiring a day earlier or a day later will
permit totally unequal treatment in the matter of pension ?
One retiring a day earlier will have to be subject to
ceiling of Rs. 8,100 p a. and average emolument to be worked
out on 36 months’ salary while the other will have a ceiling
of Rs. 12,000 p.a. and average emolument will be computed on
the basis of last ten months average. The artificial
division stares into face and is unrelated to any principle
and whatever principle, if there be any, has absolutely no
nexus to the objects sought to be achieved by liberalising
the pension scheme. In fact this arbitrary division has not
only no nexus to the liberalised pension scheme but it is
counter productive and runs counter to the whole gamut of
pension scheme. The equal treatment guaranteed in Art. 14 is
wholly violated inasmuch as the pension rules being
statutory in character, since the specified date, the rules
accord differential and discriminatory treatment to equals
in the matter of commutation of pension. A 48 hours
difference in matter of retirement would have a traumatic
effect. Division is thus both arbitrary and unprincipled.
Therefore the classification does not stand the test of Art.
14.
Further the classification is wholly arbitrary because
we do not find a single acceptable or persuasive reason for
this division. This arbitrary action violated the guarantee
of Art. 14. The next question is what is the way you ?
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The learned Attorney-General contended that the scheme
is to be taken as a whole or rejected as a whole and the
date from which it came into force is an integral and
inseparable part of the scheme. The two sub-limbs of the
submissions were that, (i) the Court cannot make a scheme
having financial implications retroactive, and (ii) this
Court cannot grant any relief to the pensioners who retired
prior to a specified date because if more persons divide the
available cake, the residue falling to the share of each
especially to those who are likely to be benefited by the
scheme will be comparatively smaller and as they are not
before the Court, no relief can be given to the pensioners.
Let us clear one misconception. The pension scheme
including the liberalised scheme available to the Government
employees is non-contributory in character. It was not
pointed out that there is something like a pension fund. It
is recognised as an item of expenditure and it is budgeted
and voted every year. At any given point of time there is no
fixed or predetermined pension fund which is divided amongst
eligible pensioners. There is no artificially created fund
or reservoir from which pensioners draw pension within the
limits of the fund, the share of each being extensive with
the available fund. The payment of pension is a statutory
liability undertaken by the Government and whatever becomes
due and payable is budgeted for. One could have appreciated
this line of reasoning where there is a contributory scheme
and a pension fund from which alone pension is disbursed.
That being not the case, there is no question of pensioners
dividing the pension fund which, if more persons are
admitted to the scheme, would pro rata affect the share.
Therefore, there is no question of dividing the pension
fund. Pension is a liability incurred and has to be provided
for in the budget. Therefore, the argument of divisions of a
cake, larger the number of sharers, smaller the share and
absence of residue and therefore by augmentation of
beneficiaries, pro rata share is likely to be affected and
their absence making relief impermissible, is an argument
born of desperation, and is without merits and must be
rejected as untenable.
By our approach, are we making the scheme retroactive ?
The answer is emphatically in the negative. Take a
government servant who retired on April 1, 1979. He would be
governed by the liberalised pension scheme. By that time he
had put in qualifying service of 35 years. His length of
service is a
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relevant factor for computation of pension. Has the
Government made it retroactive, 35 years backward compared
to the case of a Government servant who retired on 30th
March, 1979 ? Concept of qualifying service takes note of
length of service, and pension quantum is correlated to
qualifying service. Is it retroactive for 35 years for one
and not retroactive for a person who retired two days
earlier ? It must be remembered that pension is relatable to
qualifying service. It has correlation to the average
emoluments and the length of service. Any liberalisation
would pro tanto be retroactive in the narrow sense of the
term. Otherwise it is always prospective. A statute is not
properly called a retroactive statute because a part of the
requisites for its action is drawn from a time antecedent to
its passing. (see Craies on Statute Law, sixth edition, p.
387). Assuming the Government had not prescribed the
specified date and thereby provided that those retiring pre
and post the specified date would all be governed by the
liberalised pension scheme, undoubtedly, it would be both
prospective and retroactive. Only the pension will have to
be recomputed in the light of the formula enacted in the
liberalised pension scheme and effective from the date the
revised scheme comes into force. And beware that it is not a
new scheme, it is only a revision of existing scheme. It is
not a new retiral benefit. It is an upward revision of an
existing benefit. If it was a wholly new concept, a new
retiral benefit, one could have appreciated an argument that
those who had already retired could not expect it. It could
have been urged that it is an incentive to attract the fresh
recruits. Pension is a reward for past service. It is
undoubtedly a condition of service but not an incentive to
attract new entrants because if it was to be available to
new entrants only, it would be prospective at such distance
of thirty-five years since its introduction. But it covers
all those in service who entered thirty-five years back.
Pension is thus not an incentive but a reward for past
service. And a revision of an existing benefit stands on a
different footing than a new retiral benefit. And even in
case of new retiral benefit of gratuity under the Payment of
Gratuity Act, 1972 past service was taken into
consideration. Recall at this stage the method adopted when
pay-scales are revised. Revised pay-scales are introduced
from a certain date. All existing employees are brought on
to the revised scales by adopting a theory of fitments and
increments for past service. In other words, benefit of
revised scale is not limited to those who enter service
subsequent to the date fixed for introducing revised scales
but the benefit is extended to all those in service prior to
that date. This is just and fair. Now
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if pension as we view it, is some kind of retirement wages
for past service, can it be denied to those who retired
earlier, revised retirement benefits being available to
future retirees only ? Therefore, there is no substance in
the contention that the court by its approach would be
making the scheme retroactive, because it is implicit in
theory of wages.
That takes us to the last important contention of the
learned Attorney General. It was urged that the date from
which the scheme becomes operative is an integral part of
the scheme and the doctrine of severability cannot be
invoked. In other words, it was urged that date cannot be
severed from the main object of the scheme because the
Government would have never offered the scheme unless the
date was an integral part of it. Undoubtedly when an upward
revision is introduced, a date from which it becomes
effective has to be provided. It is the event of retirement
subsequent to the specified date which introduces
discrimination in one otherwise homogeneous class of
pensioners. This arbitrary selection of the happening of
event subsequent to specified date denies equality of
treatment to persons belonging to the same class, some
preferred and some omitted. Is this eligibility
qualification severable ?
It was very seriously contended, remove the event
correlated to date and examine whether the scheme is
workable. We find no difficulty in implementing the scheme
omitting the event happening after the specified date
retaining the more humane formula for computation of
pension. It would apply to all existing pensioners and
future pensioners. In the case of existing pensioners, the
pension will have to be recomputed by applying the rule of
average emoluments as set out in Rule 34 and introducing the
slab system and the amount worked out within the floor and
the ceiling.
But we make it abundantly clear that arrears are not
required to be made because to that extent the scheme is
prospective. All pensioners whenever they retired would be
covered by the liberalised pension scheme, because the
scheme is a scheme for payment of pension to a pensioner
governed by 1972 Rules. The date of retirement is
irrelevant. But the revised scheme would be operative from
the date mentioned in the scheme and would bring under its
umbrella all existing pensioners and those who retired
subsequent to that date. In case of pensioners who retired
prior to the specified date, their pension would be computed
afresh and
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would be payable in future commencing from the specified
date. No arrears would be payable. And that would take care
of the grievance of retrospectivity. In our opinion, it
would make a marginal difference in the case of past
pensioners because the emoluments are not revised. The last
revision of emoluments was as per the recommendation of the
Third Pay commission (Raghubar Dayal Commission). If the
emoluments remain the same, the computation of average
emoluments under amended Rule 34 may raise the average
emoluments, the period for averaging being reduced from last
36 months to last 10 months. The slab will provide slightly
higher pension and if someone reaches the maximum the old
lower ceiling will not deny him what is otherwise justly due
on computation. The words “who were in service on 31st
March, 1979 and retiring from service on or after the date”
excluding the date for commencement of revision are words of
limitation introducing the mischief and are vulnerable as
denying equality and introducing an arbitrary fortuitous
circumstance can be severed without impairing the formula.
Therefore, there is absolutely no difficulty in removing the
arbitrary and discriminatory portion of the scheme and it
can be easily severed.
There is nothing immutable about the choosing of an
event as an eligibility criteria subsequent to a specified
date. If the event is certain but its occurrence at a point
of time is considered wholly irrelevant and arbitrarily
selected having no rationale for selecting it and having an
undesirable effect of dividing homogeneous class and of
introducing the discrimination, the same can be easily
severed and set aside. While examining the case under Art.
14, the approach is not: ‘either take it or leave it’, the
approach is removal of arbitrariness and if that can be
brought about by severing the mischievous portion the court
ought to remove the discriminatory part retaining the
beneficial portion. The pensioners do not challenge the
liberalised pension scheme. They seek the benefit of it.
Their grievance is of the denial to them of the same by
arbitrary introduction of words of limitation and we find no
difficulty in severing and quashing the same. This approach
can be legitimised on the ground that every Government
servant retires. State grants upward revision of pension
undoubtedly from a date. Event has occurred revision has
been earned. Date is merely to avoid payment of arrears
which may impose a heavy burden. If the date is wholly
removed, revised pensions will have to be paid from the
actual date of retirement of each pensioner. That is
impermissible. The State
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cannot be burdened with arrears commencing from the date of
retirement of each pensioner. But effective from the
specified date future pension of earlier retired Government
servants can be computed and paid on the analogy of fitments
in revised pay-scales becoming prospectively operative. That
removes the nefarious unconstitutional part and retains the
beneficial portion. It does not adversely affect future
pensioners and their presence in the petitions becomes
irrelevant. But before we do so, we must look into the
reasons assigned for eligibility criteria, namely, ‘in
service on the specified date and retiring after that date’.
The only reason we could find in affidavit of Shri Mathur is
the following statement in paragraph 5 :
“The date of effect of the impugned orders has
been selected on the basis of relevant and valid
considerations.”
We repeatedly posed a question: what are those relevant
and valid considerations and waited for the answer in vain.
We say so because in the written submissions filed on behalf
of the Union of India, we find not a single valid or
relevant consideration much less any consideration relevant
to selection of eligibility criteria. The tenor is “we
select the date and it is unquestionable; either take it or
leave it as a whole”. The only submission was that the date
is not severable and some submissions in support of it.
Having examined the matter on principle, let us turn to
some precedents. In D.R. Nim v. Union of India(1) the
appellant questioned his seniority which was to be
determined in accordance with the provisions contained in
Indian Police Service (Regulation of Seniority) Rules, 1954.
These rules required first to ascertain the year of
allotment of the person concerned for the determination of
his seniority. In doing so, the Government of India directed
that officers promoted to the Indian Police Service should
be allowed the benefit of their continuous officiation with
effect only from 19th May, 1951. The appellant challenged
the order because the period of officiation from June 1947
to May 1951 was excluded for the purpose of fixation of his
seniority. His grievance was that there was no rationale
behind selecting this date. After taking into consideration
affidavit in opposition, this Court held as under :
“It would be noticed that the date, May 19, 1951,
to begin with had nothing to do with the finalisation
of the
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Gradation List of the Indian Police Service because it
was a date which had reference to the finalisation of
the Gradation List for the IAS. Further this date does
not seem to have much relevance to the question of
avoiding the anomalous position mentioned in para 9 of
the affidavit reproduced above. This date was
apparently chosen for the IAS because on this date the
Gradation List for all the earlier persons recruited to
the service had been finalised and issued in a somewhat
stable stage. But why should this date be applied to
the Indian Police Service has not been adequately
explained. Mr. BRL Iyengar, the learned counsel for the
appellant, strongly urges that selection of May 19,
1951, as a crucial date for classifying people is
arbitrary and irrational. We agree with him in this
respect. It further appears from the affidavit of Mr.
D.K. Guha, Deputy Secretary to the Government of India,
Ministry of Home Affairs, dated December 9, 1966 that
“the Government of India have recently decided in
consultation with the Ministry of Law that the Ministry
of Home Affairs letter No. 2/32/51-AIS, dated the 25th
August, 1955 will not be applicable to those SCS/SPS
officers, who were appointed to IAS/IPS prior to the
promulgation of IAS/IPS (Regulation of Seniority)
Rules, 1954, and the date of the issue of the above
letter if their earlier continuous officiation was
approved by the Ministry of Home Affairs and Union
Public Service Commission”. It further appears that “in
the case of Shri C.S. Prasad also, an IPS Officer of
Bihar, a decision has been taken to give the benefit of
full continuous officiation in senior posts and to
revise his year of allotment accordingly.” But, it is
stated that “as Shri Nim was appointed to IPS on the
22nd October 1955, i.e. after the promulgation of IPS
(Regulation of Seniority) Rules, 1954, and after the
issue of letter dated 25.8.1955, his case does not fall
even under this category”. The above statement of the
case of the Government further shows that the date, May
19, 1951 was an artificial and arbitrary date having
nothing to do with the application of the first and the
second provisos to Rule 3 (3). It appears to us that
under the second proviso to Rule 3 (3) the period of
officiation of a particular officer has to be
considered and approved or disapproved by the Central
Government in consultation with the Commission
considering all the relevant facts. The Central
Government
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cannot pick out a date from a hat-and that is what it
seems to have done in this case-and say that a period
prior to that date would not be deemed to be approved
by the Central Government within the second proviso.”
The Court held that the Central Government cannot pick
out a date from a hat and that is what it seems to have done
in saying that a period prior to that date would not be
deemed to be approved by the Central Government within the
second proviso. In case before us, the eligibility criteria
for being eligible for liberalised pension scheme have been
picked out from where it is difficult to gather and no
rationale is discernible nor one was attempted at the
hearing. The ratio of the decision would squarely apply to
the facts of this case.
Similarly in Jaila Singh & Anr. v. State of Rajasthan &
Ors.(1), this Court struck down as discriminatory the
division of pre-1955 and post-1955 tenants for the purpose
of allotment of land made by the Rules under the Rajasthan
Colonisation Act, 1954 observing that the various provisions
indicate that the pre-1955 and post-1955 tenants stand on
the same footing and therefore do not form different classes
and hence the division was held to be based on wholly
irrelevant consideration. The court further observed that it
is difficult to appreciate how it would make any difference
from the point of view of allotment of land, whether a
tenant has been in occupation for 16 years or 18 or 20 years
and why differentiation should be made with reference to the
date when Rajasthan Tenancy Act came into force. This
division for the purpose of allotment of land with reference
to certain date was considered both arbitrary and
discriminatory on the ground that it was wholly unrelated to
the objects sought to be achieved.
As against this the learned Attorney-General invited
our attention to Union of India & Anr. v. M/s Parameswaran
Match Works etc.(2) By a notification dated July 21, 1967,
benefit of a concessional rate of duty was made available if
a manufacturer of matches made a declaration that the total
clearance of matches from a factory would not exceed 75
million during a financial year. As framed the notification
extended the benefit to manufacturers with higher capacity
to avail of the concessional
202
rate of duty by filing a declaration as visualised in the
proviso to the notification by restricting their clearance
to 75 million matches. This notification was amended on
September 4, 1967 with a view to giving bona fide small
manufacturers, whose total clearance was not estimated to be
in excess of 75 million matches, the benefit of concessional
rate of duty prescribed under notification dated July 21,
1967. The respondent in the case applied for a licence for
manufacturing matches on September 5, 1967, that is, a day
after the date on which amended notification was issued and
filed a declaration that the estimated manufacture for the
financial year would not exceed 75 million matches, but this
was rejected. In a writ petition filed by the respondent,
the High Court held that the classification was unreasonable
inasmuch as the fixation of the date for making a
declaration had no nexus with the object of the Act. In the
appeal by the Union of India, this Court held that the
concessional rate of duty was intended for small bona fide
units who were in the field when the notification dated
September 4, 1967 was issued. The concessional rate of duty
was not intended to benefit the large units which had split
up into smaller units to earn the concession. With reference
to selection of the date this Court observed as under :
“The choice of a date as a basis for
classification cannot always be dubbed as arbitrary
even if no particular reason is forthcoming for the
choice unless it is shown to be capricious or whimsical
in the circumstances. When it is seen that a line or a
point there must be and there is no mathematical or
logical way of fixing it precisely, the decision of the
legislature or its delegate must be accepted unless we
can say that it is very wide of the reasonable mark.”
In reaching this conclusion the Court relied on
Louisville Gas Co. v. Alabama Power Co. (1) This decision is
not an authority for the proposition that whenever a date is
chosen, or an eligibility criteria which divides a class,
the purpose of choice unrelated to the objects sought to be
achieved must be accepted as valid. In fact it is made clear
in the decision itself that even if no particular reason is
forthcoming for the choice unless it is shown to be
capricious or whimsical, the choice of the legislature may
be accepted. Therefore, the choice of the date
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cannot be wholly divorced from the objects sought to be
achieved by the impugned action. In other words, if the
choice is shown to be thoroughly arbitrary and introduces
discrimination violative of Art. 14, the date can be struck
down. What facts influenced the Court’s decision in that
case for upholding the choice of the date are worth-
recalling. The Court held that the object of granting the
concessional rate of duty was to protect the smaller units
in the industry from the competition by the larger ones and
that object would have been frustrated, if, by adopting the
device of fragmentation, the larger units could become the
ultimate beneficiaries of the bounty. This was the weighty
consideration which prompted the court to uphold the date.
The learned Attorney General next referred to D.C.
Gouse and Co. etc. v. State of Kerala & Anr. etc. (1) This
Court while repelling the contention that the choice of
April 1, 1973 as the date of imposition of the building tax
is discriminatory with reference to Art. 14 of the
Constitution, approved the ratio in the case of M/s.
Parameswaran Match Works etc. supra. Even while reaching
this conclusion the Court observed that it is not shown how
it could be said that the date (April 1, 1973) for the levy
of the tax was wide of the reasonable mark. What appealed to
the Court was that earlier an attempt was made to impose the
building tax with effect from March 2, 1961 under the Kerala
Building Tax Act, 1961 but the Act was finally struck down
as unconstitutional by this Court as per its decision dated
August 13, 1968. While delivering the budget speech, at the
time of introduction of the 1970-71 budget, the intention to
introduce a fresh Bill for the levy of tax was made clear.
The Bill was published in June 73 in which it was made clear
that the Act would be brought into force from April 1, 1970.
After recalling the various stages through which the Bill
passed before being enacted as Act, this Court held that the
choice of date April 1, 1973 was not wide of the reasonable
mark. The decision proceeds on the facts of the case. But
the principle that when a certain date or eligibility
criteria is selected with reference to legislative or
executive measure which has the pernicious tendency of
dividing an otherwise homogeneous class and the choice of
beneficiaries of the legislative/executive action becomes
selective, the division or classification made by choice of
date or eligibility criteria must have some relation to the
objects sought
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to be achieved. And apart from the first test that the
division must be referable to some rational principle, if
the choice of the date or classification is wholly unrelated
to the objects sought to be achieved, it cannot be upheld on
the specious plea that was the choice of the Legislature.
Now if the choice of date is arbitrary, eligibility
criteria is unrelated to the object sought to be achieved
and has the pernicious tendency of dividing an otherwise
homogeneous class, the question is whether the liberalised
pension scheme must wholly fail or that the pernicious part
can be severed, cautioning itself that this Court does not
legislate but merely interprets keeping in view the
underlying intention and the object, the impugned measure
seeks to subserve ? Even though it is not possible to
oversimplify the issue, let us read the impugned memoranda
deleting the unconstitutional part. Omitting it, the
memoranda will read like this :
“At present, pension is calculated at the rate of
1/80th of average emoluments for each completed year of
service and is subject to a maximum of 33/80 of average
emoluments and is further restricted to a monetary
limit of Rs. 1,000/- per month. The President is, now,
pleased to decide that with effect from 31st March,
1979 the amount of pension shall be determined in
accordance with the following slabs.”
If from the impugned memoranda the event of being in service
and retiring subsequent to specified date is severed, all
pensioners would be governed by the liberalised pension
scheme. The pension will have to be recomputed in accordance
with the provisions of the liberalised pension scheme as
salaries were required to be recomputed in accordance with
the recommendation of the Third Pay Commission but becoming
operative from the specified date. It does therefore appear
that the reading down of impugned memoranda by severing the
objectionable portion would not render the liberalised
pension scheme vague, unenforceable or unworkable.
In reading down the memoranda, is this Court
legislating ? Of course ‘not’. When we delete basis of
classification as violative of Art. 14, we merely set at
naught the unconstitutional portion retaining the
constitutional portion.
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We may now deal with the last submission of the learned
Attorney General on the point. Said the learned Attorney-
General that principle of severability cannot be applied to
augment the class and to adopt his words ‘severance always
cuts down the scope, never enlarges it’. We are not sure
whether there is any principle which inhibits the Court from
striking down an unconstitutional part of a legislative
action which may have the tendency to enlarge the width and
coverage of the measure. Whenever classification is held to
be impermissible and the measure can be retained by removing
the unconstitutional portion of classification, by striking
down words of limitation, the resultant effect may be of
enlarging the class. In such a situation, the Court can
strike down the words of limitation in an enactment. That is
what is called reading down the measure. We know of no
principle that ’severance’ limits the scope of legislation
and can never enlarge it. To refer to the Jaila Singh’s case
(supra), when for the benefit of allotment of land the
artificial division between pre-1955 and post-1955 tenant
was struck down by this Court, the class of beneficiaries
was enlarged and the cake in the form of available land was
a fixed quantum and its distribution amongst the larger
class would protanto reduce the quantum to each beneficiary
included in the class. Similarly when this Court in Randhir
Singh’s case (supra) held that the principle of ‘equal pay
for equal work’ may be properly applied to cases of unequal
pay based on no classification or irrational classification
it enlarged the class of beneficiaries. Therefore, the
principle of ‘severance’ for taking out the unconstitutional
provision from an otherwise constitutional measure has been
well recognised. It would be just and proper that the
provision in the memoranda while retaining the date for its
implementation, but providing ‘that in respect of Government
servants who were in service on the 31st March, 1979 but
retiring from service in or after that date’ can be legally
and validly severed and must be struck down. The date is
retained without qualification as the effective date for
implementation of scheme, it being made abundantly clear
that in respect of all pensioners governed by 1972 Rules,
the pension of each may be recomputed as on April 1, 1979
and future payments be made in accordance with fresh
computation under the liberalised pension scheme as enacted
in the impugned memoranda. No arrears for the period prior
to 31st March, 1979 in accordance with revised computation
need be paid.
In this context the last submission of the learned
Attorney General was that as the pension is always
correlated to the date of
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retirement, the Court cannot change the date of retirement,
and impose fresh commutation benefit. We are doing nothing
of this kind. The apprehension is wholly unfounded. The date
of retirement of each employee remains as it is. The average
emoluments have to be worked out keeping in view the
emoluments drawn by him before retirement but in accordance
with the principles of the liberalised pension scheme. The
two features which make the liberalised pension scheme more
attractive is the redefining of average emoluments in Rule
34, and introduction of slab system simultaneously raising
the ceiling. Within these parameters, the pension will have
to be recomputed with effect from the date from which the
liberalised pension scheme came into force i.e. March 31,
1979. There is no question of fresh commutation of pension
of the pensioners who retired prior to 31st March, 1979 and
have already availed of the benefit of commutation. It is
not open to them to get that benefit at this late date
because commutation has to be availed of within specified
time limit from the date of actual retirement. May be some
marginal retirees may earn the benefit. That is inevitable.
To say that by our approach we are restructuring the
liberalised pension scheme, is to ignore the constitutional
mandate. Similarly, the court is not conferring benefits by
this approach, the court only removes the illegitimate
classification and after its removal the law takes its own
course.
But in this context the learned Attorney submitted the
following quotation which appears to have been extracted
from a decision of American Court, citation of which was not
available. The quotation may be extracted from the written
submission. It reads as under:
“It remains to enquire whether this plea that
Congress would have enacted the legislation and the Act
being limited to employees engaged in commerce within
the district of Columbia and the Territory. If we are
satisfied that it would not or that the matter is in
such doubt that we are unable to say what Congress
would have done omitting the unconstitutional features
then the statute must fail.”
We entertain no such apprehension. The Executive with
parliamentary mandate liberalised the pension scheme. It is
implicit in liberalising the scheme that the deed to grant
little higher rate of pension to the pensioners was
considered eminently
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just. One could have understood persons in the higher pay
bracket being excluded from the benefits of the scheme
because it would have meant that those in higher pay bracket
could fend for themselves. Such is not the exclusion. The
exclusion is of a whole class of people who retire before a
certain date. Parliament would not have hesitated to extend
the benefit otherwise considered eminently just, and this
becomes clearly discernible from page 35 of 9th Report of
Committee on Petitions (Sixth Lok Sabha) April, 1976. While
examining their representation for better pensionary
benefit, the Committee concluded as under:
“The Committee are of the view that Government owe
a moral responsibility to provide adequate relief to
its retired employees including pre 1.1.1973
pensioners, whose actual value of pensions has been
eroded by the phenomenal rise in the prices of
essential commodities. In view of the present economic
conditions in India and constant rise in the cost of
living due to inflation, it is all the more important
even from purely humanitarian considerations if not
from the stand point of fairness and justice, to
protect the actual value of their meagre pensions to
enable the pensioners to live in their declining years
with dignity and in reasonable comfort.”
Therefore, we are not inclined to share the apprehension
voiced by the learned Attorney that if we strike down the
unconstitutional part, the parliament would not have enacted
the measure. Our approach may have a parliamentary flavour
to sensitive noses.
The financial implication in such matters has some
relevance. However in this connection, we want to steer
clear of a misconception. There is no pension fund as it is
found either in contributory pension schemes administered in
foreign countries or as in Insurance-linked pensions. Non-
contributory pensions under 1972 rules is a State
obligation. It is an item of expenditure voted year to pear
depending upon the number of pensioners and the estimated
expenditure. Now when the liberalised pension scheme was
introduced, we would justifiably assume that the Government
servants would retire from the next day of the coming into
operation of the scheme and the burden will have to be
computed as imposed by the liberalised scheme. Further
Government has been granting since nearly a decade temporary
increases from time to time to pensioners. Therefore, the
difference will be marginal.
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Further, let it not be forgotten that the old pensioners are
on the way out and their number is fast decreasing. While
examining the financial implication, this Court is only
concerned with the additional liability that may be imposed
by bringing in pensioners who retired prior to April 1, 1979
within the fold of liberalised pension scheme but effective
subsequent to the specified date. That it is a dwindling
number is indisputable. And again the large bulk comprises
pensioners from lower echelons of service such as Peons,
L.D.C., U.D.C., Assistant etc. In a chart submitted to us,
the Union of India has worked out the pension to the
pensioners who have retired prior to the specified date and
the comparative advantage, if they are brought within the
purview of the liberalised pension scheme. The difference
upto the level of Assistant or even Section Officer is
marginal keeping in view that the old pensioners are getting
temporary increases. Amongst the higher officers, there will
be some difference because the ceiling is raised and that
would introduce the difference. It is however necessary to
refer to one figure relied upon by respondents. It was said
that if pensioners who retired prior to 31st March, 1979 are
brought within the purview of the liberalised pension
scheme, Rs. 233 crores would be required for fresh
commutation. The apparent fallacy in the submission is that
if the benefit of commutation is already availed of, it
cannot and need not be reopened. And availability of other
benefits is hardly a relevant factor because pension is
admissible to all retirees. The figures submitted are thus
neither frightening nor the liability is supposed to be
staggering which would deflect us from going to the logical
end of constitutional mandate. Even according to the most
liberal estimate, the average yearly increase is worked out
to be Rs. 51 crores but that assumes that every pensioner
has survived till date and will continue to survive.
Therefore, we are satisfied that the increased liability
consequent upon this judgment is not too high to be
unbearable or such as would have detracted the Government
from covering the old pensioners under the scheme.
Locus standi of third petitioner was questioned.
Petitioner No. 3 is a Society registered under the Societies
Registration Act of 1860. It is a non-political non-profit
and voluntary organisation. Its members consist of public
spirited citizens who have taken up the cause of ventilating
legitimate public problems. This Society received a large
number of representations from old pensioners, individually
unable to undertake the journey through
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labyrinths of legal judicial process, costly and protracted,
and. therefore, approached petitioner No. 3 which espoused
their cause Objects for which the third petitioner-Society
was formed were not questioned. The majority decision of
this Court in S.P. Gupta v. Union of India(1) rules that any
member of the public having sufficient interest can maintain
an action for judicial redress for public injury arising
from breach of public duty or from violation of some
provision of the Constitution or the law and seek
enforcement of such public duty and observance of such
constitutional or legal provision. Third petitioner seeks to
enforce rights that may be available to a large number of
old infirm retirees. Therefore, its locus standi is
unquestionable. But it is a point of academic important
because locus standi of petitioners Nos. 1 and 2 was never
questioned.
That is the end of the journey. With the expanding
horizons of socio-economic justice, the socialist Republic
and welfare State which we endeavour to set up and largely
influenced by the fact that the old men who retired when
emoluments were comparatively low and are exposed to
vagaries of continuously rising prices, the falling value of
the rupee consequent upon inflationary inputs, we are
satisfied that by introducing an arbitrary eligibility
criteria: ‘being in service and retiring subsequent to the
specified date’ for being eligible for the liberalised
pension scheme and thereby dividing a homogeneous class, the
classification being not based on any discernible rational
principle and having been found wholly unrelated to the
objects sought to be achieved by grant of liberalised
pension and the eligibility criteria devised being
thoroughly arbitrary, we are of the view that the
eligibility for liberalised pension scheme of being in
service on the specified date and retiring subsequent to
that date’ in impugned memoranda, Exhibits P-I and P-2,
violates Art. 14 and is unconstitutional and is struck down.
Both the memoranda shall be enforced and implemented as read
down as under: In other words, in Exhibit P-1, the words:
“that in respect of the Government servants who
were in service on the 31st March, 1979 and retiring
from service on or after that date”
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and in Exhibit P-2, the words:
“the new rates of pension are effective from 1st
April 1979 and will be applicable to all service
officers who became/become non-effective on or after
that date.”
are unconstitutional and are struck down with this
specification that the date mentioned therein will be
relevant as being one from which the liberalised pension
scheme becomes operative to all pensioners governed by 1972
Rules irrespective of the date of retirement. Omitting the
unconstitutional part it is declared that all pensioners
governed by the 1972 Rules and Army Pension Regulations
shall be entitled to pension as computed under the
liberalised pension scheme from the specified date,
irrespective of the date of retirement. Arrears of pension
prior to the specified date as per fresh computation is not
admissible. Let a writ to that effect be issued. But in the
circumstances of the case, there will be no order as to
costs.
H.L.C. Petition allowed.
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