D.S. Nakara v. Union of India, 1983 (1) SCC 305

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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.

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 treate 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.

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]

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 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 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.

,,,,

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.

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 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 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.

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 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"

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.

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