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Ds Nakara

An important judgment Indian scene

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28 views28 pages

Ds Nakara

An important judgment Indian scene

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adv.ayushh

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All India Reporter

AIR 1983 SUPREME COURT 130

SUPREME COURT
Y. V. CHANDRACHUD , C.J.I. and V. D. TULZAPURKAR , J. and D. A.
DESAI , J. and O. CHINNAPPA REDDY , J. and BAHARUL ISLAM , J.

Writ Petns. Nos. 5939-41 of 1980, D/- 17 - 12 - 1982

D. S. Nakara and others Petitioners v. Union of India Respondents.

(A)Constitution of India, Art.14, Art.39(e), Art.41, Art.43(3), Preamble - Central Civil Services
(Pension) Rules (1972), R.34 - Ministry of Finance Memorandum No. F-19 (3) EV-79, D/-
25-5-1979 - Ministry of Defence Memorandum No. B / 40725 / AG / PS-4C / 1816 / AD (Pension),
D/- 28-9-1979 - Classification in revised pension formula between pensioners on basis of date of
retirement specified in memorandum - Arbitrary and violative of Art. 14 - Same being severable,
beneficial part is retained and made applicable to all pensioners.

With the expanding horizons of socioeconomic justice, the Socialist Republic and Welfare State which
the country endeavors to set up and the fact that the old men who retired when emoluments were
comparatively low are exposed to vagaries of continuously rising prices, the falling value of the rupee
consequent upon inflationary inputs, 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 being wholly unrelated to the objects sought to be achieved by grant of liberalised
pension and the eligibility criteria devised being thoroughly arbitrary, the eligibility for liberalised
pension scheme of "being in service on the specified date and retiring subsequent to that date" in the
memoranda, violates Art.14 and is unconstitutional and liable to be struck down. But, as the arbitrary
and discriminatory portion in the memoranda can be easily served, both the memoranda shall be
enforced and implemented after severance of the unconstitutional part. However, arrears of pension
prior to the spcified date are not required to be paid to those who have retired before the specified date
because to that extent the scheme is prospective. Accordingly, 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 their date of retirement.
(Para49 64)

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 differential which distinguishes persons or things that are grouped together
from those that are left out of the group and that deferentia must have a rational nexus to the object
sought to be achieved by the statute in question. The doctrine of classification was evolved to sustain
a legislation or State action designed to help weaker sections of the society or some such segments
of the society in need of succour. 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 correlates it to the objects sought to be achieved. Where all

Registered To : Adv Gajanan Chavan 1

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 cannot be done
when they are in service, can that be done during their retirement? Expanding this principle, it can
confidently be said 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.
(Para15 16 32)

Further, 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. Article 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

@page-SC131

unemployment, old age, sickness and disablement, and in other cases of undeserves want. Article
43 (3) requires the State to endeavour to secure amongst other things full enjoyment of leisure and
social and cultural opportunities. Furthermore, the principle aim of a socialist State as envisaged in the
Preamble 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.
(Paras32 33)

(B)Constitution of India, Art.226 - Writ petition - Locus standi - Co-operative Society registered
under Co-operative Societies Act and consisting of public spirited citizens seeking to espouse
cause of retirees individually unable to seek redress through labyrinths of costly legal judicial
process - Its locus standi is unquestionable.
(Para64)

Cases Referred Chronological Paras

AIR 1982 SC 149 : 1981 (Supp) SCC 87 64
AIR 1982 SC 879 : (1982) 1 SCC 618 : 1982 Lab IC 806 32 , 60
AIR 1981 SC 487 : (1981) 2 SCR 79 14
AIR 1981 SC 1829 : (1982) 1 SCR 438 : 1981 Lab IC 1313 14
AIR 1980 SC 271 : (1980) 1 SCR 804 57
AIR 1980 SC 1789 : (1981) 1 SCR 206 34
AIR 1979 SC 478 : (1979) 2 SCR 476 12
AIR 1979 SC 1628 : (1979) 3 SCR 1014 16
AIR 1978 SC 597 : (1978) 2 SCR 621 10 , 13 , 14
AIR 1976 SC 667 : (1976) 3 SCR 360 : 1976 Lab IC 474 20
AIR 1975 SC 1436 : 1975 (Supp) SCR 428 54 , 60
AIR 1974 SC 555 : (1974) 2 SCR 348 : 1974 Lab IC 427 13
AIR 1974 SC 2349 : (1975) 2 SCR 573 : 1975 Tax LR 1223 55 , 57

Registered To : Adv Gajanan Chavan 2

Cases Referred Chronological Paras

AIR 1971 SC 1409 : 1971 (Supp) SCR 634 : 1971 Lab IC 881 20
AIR 1967 SC 1301 : (1967) 2 SCR 325 52
AIR 1958 SC 538 : 1959 SCR 279 11
(1937) 302 US 74 : 82 Law Ed 57, Dodge v. Board of 28
Education
(1927) 277 US 32 : 72 Law Ed 770, Louisville Gas and 56
Electric Co. v. Clell Coleman

Mr. Anil B. Divan, Sr. Advocate, Mrs. Vineeta Sen Gupta and Mr. P. H. Parekh, Advocates with
him, for Petitioners; Mr. L. N. Sinha, Attorney General, Mr. M. M. Abdul Khader, Sr. Advocate, Mr.
N. Nettar and Miss A. Subhashini, Advocates with him, for Union of India; Mr. G. L. Sanghi, Sr.
Advocate, Mr. Randhir Jain, Mr. S. R. Srivastava and Mr. K. K. Gupta, Advocates, for Interverners.

Judgement

1. DESAI, J. :-With a slight variation to suit the context Wolsey'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.

2. 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 Art. 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.

3. 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

@page-SC132

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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/- Union of India has been revising and liberalising the pension rules from
time to time. Some landmark changes may be noticed

4. The First Central Pay Commission (1946-47) recommended that the age of retirement in future
should be uniformly 58 years in all services and the scale of pension should be 1/80 of the emoluments
for each you 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) reaffirmed that the age of superannuation should be 58 years
for all classes of public servants but did not recommened 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 1969 took vote 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. 1,000/- 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/-.

5. 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 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 Sept. 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).

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6. 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.

7. 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

@page-SC133

and, therefore, would be violative of Article.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.

8. 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 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'.

9. 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?

10. The scope, content and meaning of Art. 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

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save and except referring to the latest decision on the subject in Maneka Gandhi v. Union of India,
(1978) 2 SCR 621 : (AIR 1978 SC 597) 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 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 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 Art. 14 like a brooding omnipresence."

11. 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 that differentia must have a rational relation
to the objects sought to be achieved by the statute in question. (See Ram Krishna Dalmia v. S. R.
Tendolkar, 1959 SCR 279 at P. 296: (AIR 1958 SC 538 at p. 547)). 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 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 substanstive law but also by a law of procedure.

12. 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,

@page-SC134

(1979) 2 SCR 476 at p. 534: (AIR 1979 SC 478 at P. 509) restated the settled propositions which
emerged from the judgments of this Court undoubtedly in so far 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 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

Registered To : Adv Gajanan Chavan 6

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 a 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."

13. The other facet of Article 14 which must be remembered is that it eschews arbitrariness in
any form. Article 14 has, therefore, not to be held identical with the doctrine of classification. As
was noticed in Maneka Gandhi's case (AIR 1978 SC 597) 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 Article 14 forbids discrimination and there will be no discrimination where the
classification making the differentia fulfils the aforementioned two conditions. However, in E. P.
Royappa v. State of Tamil Nadu, (1974) 2 SCR 348: (AIR 1974 SC 555) it was held that the basic
principle which informs both Articles 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."

14. Justice Iyer has in his inimitable style dissected Article 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 is 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." ((1978)
2 SCR 621 at p. 728: AIR 1978 SC 597 at p. 661). Affirming and explaining this view, the Constitution
Bench in Ajay Hasia etc. v. Khalid Mujib Sahravardi, (1981) 2 SCR 79 : (AIR 1981 SC 487) held
that it must, therefore, now be taken to be well settled that what Article 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 Article 14. After a review of large

Registered To : Adv Gajanan Chavan 7

@page-SC135

number of decisions bearing on the subject, in Air India etc. v. Nargesh Meerza, (1982) 1 SCR 438 :
(AIR 1981 SC 1829) the Court formulated propositions emerging from an analysis and examination
of earlier decisions. One such proposition held well established is that Article 14 is certainly attracted
where equals are treated differently without any reasonable basis.

15. Thus the fundamental principle is that Article 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 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.

16. As a corollary 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 Article 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 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 the doctrine
of classification such legislation is likely to flounder on the bed rock of equality enshrined in Article
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 such segments of
the society in need of succour. 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 correlates it to the objects sought to be achieved. This
approach is noticed in Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3
SCR 1014 at p. 1034 : (AIR 1979 SC 1628 at pp. 1637-38) 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.

17. 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 the
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:

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"The contentions in parts 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 pensioner is not suggested as a criterion for classification as that
would lead to an absured result because in that event every pensioner relevant to his date of retirement
will form a class up to (unto?) himself. What is suggested is that when a pension scheme undergoes
a revision and is enforced effective from 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

@page-SC136

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.

18. 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 ?

19. 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 answers to these and incidental questions so
as to render just justice between parties to this petition.

20. The antiquated notion of pension being a bounty, a gratuitous 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, 1971 (Supp) SCR 634 : (AIR 1971 SC 1409) 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 anyone's discretion. It is only for the purpose of 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 v. lqbal Singh, (1976) 3. SCR 360 : (AIR 1976 SC 667).

Registered To : Adv Gajanan Chavan 9

21. 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.

22. 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 the 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 Bleekney,
page 33).

23. 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 the public offices. It was passed in 1810. The 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.

24. 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

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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 "Northoote 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
youth to endeavour to obtain for them employment in the service of the Government, and the extent

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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 Rhedes, Public Sector Pensions, pp. 18-19).

25. 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.

26. 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, 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 in 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 the past. We owe it to them and ourselves that they live, not merely exist. That
philosophy prevailing in a given society at various stages of its development profoundly influences
is 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).

27. 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 magnitude. There are other views about pensions such as
charity, paternalism, deferred pay, rewards for service rendered, or as a means of promoting general
welfare (see Encyclopaedia Britannica, Vol. 17, p. 575). But these views have become otiose.

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28. Pensions 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 Dodge v. Board of
Education, (1937) 302 US 74: 82 Law Ed 57 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

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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.

29. 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 ageing process and therefore, one is required to fall back on savings. One
such saving in kind is when you gave your best in the he 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 allowances 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 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.

30. 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).

31. 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 Article 309 and Clause (5) of Article 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
retirement, that is, since the cessation of the contract of service and that it can be reduced or withdrawn
as a disciplinary measure.

32. 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

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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. Article 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, (1982) 1 SCC 618 : (AIR 1982 SC 879).
Revealing the scope and content of this facet of equality, Chinnappa Reddy, J. speaking for the Court
observed as under (para 1) :

"Now, thanks to the rising social and political consciousness and the expectations roused as a
consequence and the forward looking posture of this Court, the underprivileged also are clamouring
for their 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

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solely on the ground that some retired earlier and some retired later. Article 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.Article 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 underserved want.Article
43 (3) requires the State to endeavour to secure amongst other things full enjoyment of leisure and
social and cultural opportunities.

33. Recall at this stage the Preamble, the floodlight 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... ... ..

It is, therefore, proposed to amend the Constitution to spell out expressly the high ideals of
socialism... .. .. ..to make the directive principles more comprehensive.. ... ... ..."

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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 intelligent 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
here 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, relieving the boredom and the
humility of dependence in old age. This is what Article 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 (illegible) taken must be directed, and
must be so interpreted, as to take the society one step towards the goal.

34. To some extent this approach will find support in the judgment In Minerva Mills Ltd. v. Union
of India, (1981) 1 SCR 206 : (AIR 1980 SC 1789) speaking for the majority, Chandrachud, C. J.
observed an under :

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"This is not mere semantic. 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."

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At a later stage it was observed that the fundamental rights are not an end in themselves but are
the means to an and, 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.

35. 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.

36. 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.

37. 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 might 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 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

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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
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

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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.

38. 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 necessitiaed liberalisation
of the pension scheme?

39. 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 pre-liberalised pension 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 fact
that continuous upward movement of the post 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 fell
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.

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40. 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 Govt. 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 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 provision of a law to maintain its constitutionality.

41. The last submission, the absence of precedent need not deter us for a moment. Every new norm
of socio-economic justice, every now measure of social justice

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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 usher in socio-economic justice. In fact, social security in old age commanded
itself in earlier stages as a moral concept but in course of time it acquired legal connotation. The
rules of natural justice owned 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.

42. 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 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

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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 worse off then 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 Article 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.

43. 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 out ?

44. The learned Attorney-General conetended 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 benefitted by the scheme will be comparatively smaller
and as they are not before the

@page-SC143

Court, no relief can be given to the pensioners.

45. 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.

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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 division of a cake, larger the number of shares, smaller the shares 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.

46. 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 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, 6th Edn., 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 liberalized 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 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

Registered To : Adv Gajanan Chavan 19

the contention that the Court by its approach would be making the scheme retroactive, became it is
implicit in theory of wages.

@page-SC144

47. 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 that date cannot be served
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 ?

48. 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.

49. 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 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 R. 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 that 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 served 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.

50. 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

Registered To : Adv Gajanan Chavan 20

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 legitimated 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 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

@page-SC145

operative. That removes the nefarious unconstitutional part and retains the beneficial portion. It does
not adversely affect future pensioners and their presence in these 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 para 5 :

"The date of effect of the impugned orders has been selected on the basis of relevant and valid
considerations."

51. 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.

52. Having examined the matter on principle, let us turn to some precedents. In D. R. Nim v. Union
of India, (1967) 2 SCR 325 : (AIR 1967 SC 1301) 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 :

Registered To : Adv Gajanan Chavan 21

"It would be noticed that the date, May 19, 1951, to begin with had nothing to do with the finalisation
of the 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 required 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,
B. R. L. 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 Dec. 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 Aug., 1955, will not be applicable to those SCS/SPS Officers, who were appointed to
IAS/IPS prior to the promulgation of IAS/JPS (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 Oct., 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 consulation with the Commission considering all the relevant facts.
The Central Government 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."

@page-SC146

53. 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 has 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.

54. Similarly in Jaila Singh v. State of Rajasthan, 1975 (Supp) SCR 428: (AIR 1975 SC 1436), 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

Registered To : Adv Gajanan Chavan 22

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 come 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.

55. As against this the learned Attorney General invited our attention to Union of India v.
Parameswaran Match Works, (1975) 2 SCR 573: (AIR 1974 SC 2349). 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 of manufacturers with
higher capacity to avail of the concessional 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 Sept. 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 Sept. 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 Sept. 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."

56. In reaching this conclusion the Court relied on Louisville Gas Co. v. Alabama Power Co., (1927)
240 US 30 at 32 : ( (1927) 277 US 32 ?). 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 un-
related 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 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 cast 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

Registered To : Adv Gajanan Chavan 23

@page-SC147

rustrated, if, by adopting the device of ragmentation, the larger units could become the ultimate
beneficiaries of the bounty. This was the weighty consideration which promoted the Court to uphold
the date.

57. The teamed Attorney General next referred to D. C. Gouse and Co. v. State of Kerala, (1980)
1 SCR 804: (AIR 1980 SC 271). 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 Parameswaran Match Works (AIR 1974 SC 2349).
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 homogeneoes 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 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 spacious plea that that was the choice of the Legislature.

58. 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 interpretes keeping in view the underlying
intention and the object, the impugned measure seeks to sub-serve? 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
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

Registered To : Adv Gajanan Chavan 24

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.

59. In reading down the memoranda, is this Court legislating? Of course 'not'. When we delete basis of
classification as violative of Article 14, we merely set at naught the unconstitutional portion retaining
the constitutional portion.

60. 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.

@page-SC148

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 (AIR 1975 SC 1436) (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 pro tanto reduce
the quantum to each beneficiary included in the class. Similarly when this Court in Randhir Singh's
case (AIR 1982 SC 879) (supra) held that the principle of 'equal pay for equal work' may be property
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 arid 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.

61. 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

Registered To : Adv Gajanan Chavan 25

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.

62. 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 than 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 need 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, 1979. While examining their
representation for better

@page-SC149

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 standpoint 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.

Registered To : Adv Gajanan Chavan 26

63. The financial implication in such matters have 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 year 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 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, it they are brought within the purview of the liberalised pension scheme.
The difference up to 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 thedifference is however necessary
to refer to one figure relied upon by respondent. It was said that if pensioners who retired prior to
31st Mar.,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 and 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.

64. 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 take 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 protected,
and, therefor, 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, 1981 (Supp) SCC 87 : (AIR 1982 SC 149 at p. 194), rules that any member of
the public having sufficient interest can maintain an action for such judicial redress for public injury
arising from a breach of public duty or from violation

@page-SC150

Registered To : Adv Gajanan Chavan 27

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 importance because locus standi of petitioners Nos. 1 and 2 was never
questioned.

65. 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 sub-sequent to that
date' in impugned memoranda, Exhibits P-1 and P-2, violates Article 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 Ext. 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.

Order Accordingly .

Registered To : Adv Gajanan Chavan 28

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Ds Nakara

Uploaded by

Ds Nakara

Uploaded by

All India Reporter

AIR 1983 SUPREME COURT 130

Writ Petns. Nos. 5939-41 of 1980, D/- 17 - 12 - 1982

D. S. Nakara and others Petitioners v. Union of India Respondents.

Registered To : Adv Gajanan Chavan 1

Cases Referred Chronological Paras

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Cases Referred Chronological Paras

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Court, no relief can be given to the pensioners.

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pensionary benefit, the Committee concluded as under :

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and in Exhibit P-2, the words:

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