All India Insurance Pensioners Association and Ors v. Union of India and Ors

SANJIV KHANNA, J. For detailed order, see Writ Petition (Civil) No. 184/2007, Federation of Retired LIC Class I Officer versus Union of India and Others, pronounced today. (SANJIV KHANNA) JUDGE APRIL 27,2017 VKR / (CHAN^^EKHAR) JUDGE * + % + m THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 184/2007 Reservedon : 21®^February, 2017 Pronounced on: April, 2017 FEDERATION OF RETIRED LIC CLASS I OFFICER Petitioner Through Mr. Rakesh Khaima, Sr. Advocate with Mr. Rajiv K. Garg, Mr.Ashish Garg, Ms. Mahima Rathi & Mr. S. Bushra Kazim, Advocates. versus^'" W.P.(C)^40/2016 UOI&ORS. jf -M' ,.'%il^hrou. LIFEINSUIMNCE?^ j^odiiliMfe'i&sfor LIC. versus KRISHNA MURARILAL ASTHANA & ORS. Through Nemo. ?^.... Respondents Kuliar Yadav & Mr.Tan]|;i|I^p|^^dvocatesforU6| Petitioner Respondents W.P.(C) 9442./2016 LIFEINSURANCECORPORATIONOF INDIA&ORS..Petitioners Through Mr. Dayan ICrishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. versus WP(C)184/2007& Connected matters Page 1 of90 /^r KRISHNAMURARILALASTHANA&ANR Respondents Through Nemo. W.P.(C) 9441/2016 KRISHNA MURARI LAL ASTHANA & ORS. Through Nemo. versus Petitioners LIFE INSURANCE CORPORATION OF INDIA & ANR. Respondents Thr^j|h€K#rDa^nS^shnan,Sr. Advocate with Bhaduri & ^TviC^alMiLodha^^b^es^forLie. W.P.(C)5|l3y^6 ALLINDfej^IRED MPLOYEfiFfoERATION

1..... Petitioner Thrpugli Mr.R.K esh Gupta, Sr. i|ivocate with B.N. Dubeyfe Ms. Vriti LIFEES[SURMi®0E^QRATIONQKI®Ji«NR. Respondents TturoUg^^^^gQ^i^mnan,Sr. Advocate with Mr. AshoS^Tanigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. Mr. Bhagvan Swamp Shukla, CGSC & Mr.Shambhu Chaturvedi, Advocate for UOI. + W.P.(C) 5868/2016 ALL itolA INSURANCE PENSIONERS ASSOCIATION AND ORS. Petitioners Through Mr. Som Dutt Sharma, Advocate. versus WP(C)184/2007 & Connected matters Page 2 of90 + UNION OF INDIA AND ORS. Respondents Through Mr. Dev P. Bhardwaj, CGSC & Mr.Surender Kumar, Advocate for UOI. Mr. DayanKrishnan,Sr. Advocatewith Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms. Aakashi Lodha, Advocates for LIC. W.P.(C) 4894/2016 RETIRED LIC CLASS I OFFICERS ASSOCIATION HYDERABAD Petitioner Through Mr. Nidesh Gupta, Sr. Advocate with Mr.Ashi^ttePiwari;^^..Samar Agrawal & Mx. S. Murt^,fA4®0cstes..s^' LIFE INS X#* vetsiis^^'" ii® INEffliiAipANR. %• Respondents Krishnan^St.%dvocate with Mr. A^^^&ttgr^i, Mr. Surajm Bhaduri & Ms.Aak^shft^ftAdvocatesforLli. Mr. VivegjSo^i,CGSC &Ms. Vinya Khanna, A J ii. AdvOCatfefM^i;^ W.P.(C) «&:•% KRISHNAMl^0tSfc%S.i:HAM?f Ki^fe^jifav & Mr. P. Dayal, Adv6^aS^^yg3sg^- versus UNIONOF INDIAAND ORS. Respondents Through Mr. Ripu Daman Bhardwaj, CGSC, Mr.T.P. Singh & Ms. Abha Malhotra, Advocates forUOL Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms. Aakashi Lodha, Advocates for LIC. W.P.(C) 3983/2016 WP(C)i84/2007&Connectedmatters Page 3 of90 MADAN LAL GANDHI AND ORS. Petitioners Through Mr. Jay Savla & Mr. Bharat Aggarwal, Advocates. versus UNION OF INDIA AND ORS. Respondents Through Mr. Ripu Daman Bhardwaj, CGSC, Mr.T.P. Singh & Ms. Abha Malhotra, Advocates forUOI. Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms. Aakashi Lodha, Advocates for LIC. CORAM:^, # HON'BpFMK:JfeStlCESaW HON'#2e^£ -^HEiKHAR SANJIV

¶2This comni^pnjudgmentwouMMi^0S& the aforestated and CivilAppeals/ LettersPateif|Ap|)eals. I Writ Petitiok(C) Class -I Officersand 'Qr^^mn^ ofIndiaan^r^mM^ disposedof Iwrit petitions I by a shortorderdfte5^^|)Jjfe§3r|fii§ielyiftfe the decisionofa SingleJudgeofthe JaipuFBe^pgge.5rRSjlsthanHigh Court,affirmed by the DivisionBench in Civil Special Appeal (W)No.493-494/2010, Life Insurance Corporation Vs. Kishan Murari Lai Asthana and Anr. The decisionofthe DivisionBench ofthe RajasthanHigh Court, order of this court dated 30^'' January, 2013 and decision of the Punjab & HaiyanaHigh Court dated 9^^ November,2012 in Madan Lai Gandhi &Othersv. UnionofIndia&Others,CWP 16346/2010(againrelying upon the decision of the Rajasthan High Court), were made subject WP(C)184/2007& Connected matters Page 4 of90 rji matter of challenge before the Supreme Court in Civil Appeal Nos. 8959 to 8962/2013, 6995/2013, 9223/2013 and 9409-10/2013. The Supreme Court after referring to the Life Insurance Corporation Act, 1956 (for short, 'the LIC Act'), videjudgmentand orderdated March,2016,heldthatthe BoardResolutiondated24^^November,2001 to amend the LIC of India (Employees).PensionRules, 1955 (Pension Rules for short),for upgradingthe basicpensionto All IndiaConsumer Price Index of 1740 point and^MlQ per cent deamess allowance neutralizationthere^^^im^^g^ii^e^ t^ibi^^ August,1997was non estand woiild right.Qja;p^u'salofSection48 of the LIC Act,',It f clea#^^^',^^|;onfe^nJo| benefit,either •0 , . pensionary|)r^nythmg Pension R|les, and pr^lS^Rulehas to belabledbefore Parliamentinabsenceofar||| !jdf& couldbegrantldon thebasis fVP(C)l84/2007& Connectedmatters an® oftheresolii^n. Having held sdyl^e^^^premeC facet of the ' . 1 ^V-'"•%? '"'ft-.. controversy paragraph3(A) of Appendix-IVrestrictivel>^%f&3^Sf^byees,who had retiredon or after day of August, 1997 and not to the employees who had retiredearlierinpointoftime,andthe followingorderwaspassed: "21. It is urged by Mr. Gupta that oncie the employees are coveredunder Para 3A, being retirees after the cut-off date, the benefitcannotremainstaticbut has to changewith the pay revisionsregard being had to the price index, for otherwise the provision does not spring to life and, eventually,paves the path of arbitrariness.He has heavily reliedon paragraphs34, 35 and 39 ofKallakkurichiTaluk ||), has to bfccolferredby the Page 5 of90 n-y^ Retired OfficialsAssociation, Tamil Nadu and others v. State of TamilNadu apart from other paragraphs.We may hasten to add that we have referred to this aspect in extenso as Mr. Gupta would submit that nonconfermentof the benefit of the deamessrelief keeping in view the subsequent pay revisions of the similarlysituated employees leads to disastrous effect and in a way allows room for absurdity. Learned seniorcounselhas givenan exampleto highlightas to how the absurd situation can creep in. It is urged by him that if an Executive Director stood retired sometime in 1997, he would get approximatelyRs.7,000/- towardspension, whereas a person working in Class III, if he retires subsequentlywoul^eief^proxir^Mfedoubleof the said amount. appjTQximatel 'M r

22.We havealreadysMed||Ea$|fc-^^ Co^artbf^elhihas reallyndladSirtedto^|&® %lidityof Para 3A^o%t&eAppendil#Ai^MmMneotherdelitieaLtionsor J i.u k.Sr u ^ 'W-n'h. u o delibe|ationsare conce^^ptn|cf^»ighCourt of Punjab & Harya]|iaat Chandigarh |iWindependentlydea|twith the controversy,but follp||e®he|decisio renderedibythe Rajastto High Cour^^^K^^lreadyadverte#tothe reasoningofthe,,Mghl@ouM4^fMjllthaM it has £• j¥:

4.1. . r. rAferrA^*r^ ^hftcScleijije"ophe^AcMreeome^ of fefofe;^linionof India and p^^gebdedto apply %pMncmte^enste Ajrticle 14 of the Constitution, tho^^i^^pitiMM^ was not challenged. Be it'^sMtediSSie^afe^two categories of employees, namely, the employees who have retired prior to the cut-off date i.e. 1st August, 1997, as a consequence of which they are not getting the benefit of deamess relief, and the employees who have retired after the said date but are not extended the benefit of deamess relief, despite subsequentpay revisions.Needless to say, the quantum of pension is affected.

23.Regard being had to the piquant situation, we are inclined to set aside the orders passed by the High Courts of Rajasthan,Delhi and Punjab & Haryanaat Chandigarhand WP(C)184/2007 & Connected matters Page 6 of90 )7J> transfer the writ petitions from the High Courts of Rajasthan and Punjab & Haryana to the High Court of Delhi, which will decide the constitutional validity of Para 3A of the Appendix to the Rules, as argued by Mr. Panchu, learned senior counsel appearing for the respondents, and also deal with the cases of the persons, who have retired after the cut off date, consider the contentions raised by Mr. Gupta, learned senior counsel and the other contentions to be raised. However, we may clarify that we have not expressed any opinion on the merits of the case^ except that the resolution could not become operative unless it was conferred the status of a rule as provided under Section 48 ofthe Act."

¶5It was also directed^thatjhd T'pei^to|^bef6^r^the RajasthanHigh Court and the Delhi High^^^^ directionwefe?ffilled. Iaryan#MighCourtwour& decidedby the "29| As we are tratsferrmf^tliecases to Delh| High Co^, the Registry3;|ite4ghCourts of Pu^ab & Haiganaand the papersto tft High Coiirt.of Delhi^wiffiiilS^eei^^ ChieU shallbe filedbytl^fdnt^in^^aftTes withinthreeweeks from the date of filing the amendments.The High Court is requestedto dispose of the writ petitions by the end of August,2016. We ingeminatethat we have not expressed any opinion with regard to any of the aspects of the matter, except what we have finally concluded,namely, that the resolution could not have been given effect to without framing a rule by the Central Government. Till the matteris decidedby the HighCourtof Delhi,no other High Courtshallproceedwith the similarmatters,as it is desirablethat a singularjudgmentis passed so that the validityof thesamecanbeadjudged." WP(C)184/2007 & Connected matters the saii%;OTd%the following jleamed tested to ftbday. We Page 7 of90 77^ The SupremeCourtby an interimorder dated May, 2015 had directed that the Life Insurance Corporation (Corporation for short) shall release 20% of the amount in favour of the retired employees within six weeks, subject to final result. The controversy had arisen whether or not the Corporation had paid the said amount as the retired employees had contested the Corporation's claim. The Supreme Court, vide judgment and order dated 31®^ March, 2016, directedthat the Corporationshall pay 40%) as per paragraph 3(A) of Appendix IV to each of the retked employees and effect before the High Court. The amoi^"^^lre|.^^i?'d^posited^|'%he^febip before the SupremeCoi^^:^^Mlow^^^^^|^M|awrit(^!^';^d to the retired employees.^Dj^ibtions decidethe;G^)ntr^versy,viz. MfsiiM that the^igji court would -I. I^not the paymenthad been made to the employees,in termsoffine,iir^^^ givenby the Su|)remeCourt. of the High WP(C)184/2007 & Connected matters Corporationtha0^tlie3^^Ha(tc^mpJie.d::^\vith,tlie^Mfi:eitionsgiven by the SupremeCourtinthe'oM|rj^e&^ 3(A)ofAppendix-IV dealt only with deamess relief payable on the basic pay and not computation of the basic pension. The Supreme Court had not directed enhancementor increaseof basicpensionby 40%.

¶8In view of the aforesaid discussion, the issue which survives for considerationand has to be answered,relatesto the validityofRule3(A) which is restrictedto employeeswho have retired or died on or after day ofAugust, 1997. This, as noticedbelow, is not the primaryissue. Page 8 of90

¶9The core issueistheprayerofthe retiredemployees/associationsthatall retireespriorto 1''August, 1997 shouldbe given full neutralizationand upgradationofbasicpensionwith effectfrom 1®^ August,1997,ensuring uniform pension for all retired employees,irrespectiveof the date of retirementand emolumentsdrawn at the time of retirement. In other words, the retiredemployeesseek enforcementof the preceptof"One RankOne Pension",byjudicialverdictcontraryto the Ruleposition. The Corporation,i.e. LifeJ^ra^-C^prationofIndia,is established under Section3 to determine terms and s^^po^mploye^^^^Corporationare vested with .Ailfeitral vested with^^^^tral:^^^^^p^^^ectiorl^,jt]i^datesthat the Corporatioi^h^arryon business»^11so exercise luranceBusinessii developedto its powersib to securethatt^ the bestadvantageofthe co3^ lub-section3 to siction 6 states i|ion shall act so thatin the^harge^ far as "^^y that the Corporation ^^f the Corporation shall be creditedtherefei^p[^^^g^ Corporationshall be made therefrom. Section26 providesthatthe Corporationshall,once at least in everytwo years cause an investigationto be made by actuaries into the financial conditions of the business of the Corporation, includinga valuationof the liabilitiesof the Corporation,and submit reportofthe actuariesto the CentralGovernment. Section28 ofthe Act makes it mandatoryfor the Corporationto reserve or allocate95% or more ofthe surplus,as the CentralGovernmentmay approve,to the life insurancepolicyholders.Aftermeetingthe liabilitiesofthe Corporation fVP(C)184/2007&Connectedmatters Page 9 of90 m thatmay ariseunderSection9, the remaindershallbe paidto the Central Government or utilized for such purposes and in such manner as directed.Inthis manner,95% ormore surplusis allocated/transferredfor beingpaidasbonusetc. tothe policyholders.

¶10Consequent upon discussions held with the employees' Unions, in exercise of power vested under section 48 of the Act, the Central Government had notified the Pension Rules i.e. LIC of India (Employees)Pension Rul^JS95^id^^zettenotificationdated 28* Government,^(jl^^mp

¶11Earlier th^em^loyeesof Compulsorf:Contributory Fund and I^iscellaneousP opening of WP(C)184/2007 & Connected matters li in Piovide June, 1995. ThePensiongg^^(^^^5l^^werebasedupon consensus and,i^d.erlta1idingtet^^^pen the :C^i^Of|tion,the Central % 1 Ration were covered under the id as per Employees Provident 1952. The Sc|leme required ein^loieies^^^^ employer with an obligation of tMI|m|)lbyer, i.e. the CpipDrffidil^^tdmake an equal ^W' contributionto thal;'^n^e.^g|i!|^^m^f^^^pis?€ccount till he retires. On retirementthe entire^^Fifemtoryi^priS^entfund amountwas paidto the employees as retirement benefit. Thus on the retirement of the employee, the Corporation was not under obligation to contribute or pay any further amount to the said fund of the employee.

¶12For the sake of convenience, we would like to reproduce Rules 3 and 4 of the Pension Rules in entirety.

¶3Application - These rules shall apply to employees who,- (1) (a) were in the service of the Corporation on or after the 1st day of January, 1986 but had retired before the 1st day of November, 1993; and

(b) exercise an option in writing within one hundred and twenty days from the notified date to become member of the Fund; and

(c) refund within sixty days after the expiry of the said period of one hundred and twenty days specified in clause(b), the entire amount of the Corporation's contribution to the Provident Fund including interest accrued thereon together with a further simple interest at the rate of six ^er^ee'nPp^^Ma^i^^^ the said amount fi-omthedate^(^settl^m® ofthe#royiient Fundaccount till the date ol'^'reitiiidof.the afo'resaid,arhount to the Corpo^o^Qr^

(2) ^).fce retired! 1993: btifebefore the-i

(b){pxercisean option-twenty days from th^. the Fund; and m sr^^"1St day @pM%ember, ^'^^;and ( "s 'l |i|ingwithinone hund|^dand l&kateto becomememberof [^^%ieri|i^f&^%^thesaid contributiont6^ta|g|to^^nt<rFgft^af^^interestaccrued thereontogetherwim^fiirtH^^impleinterestat the rate of twelve per cent per annum on the said amount from the date of settlement of the Provident Fund account till the date of refund of the aforesaid amount to the Corporation; or

(3) (a) are in the service of the Corporation before the notified date and continue to be in the service of the Corporation on or after the notified date; and WP(C)184/2007 & Connected matters Page 11 of90 . t-lit'

(b) exercise an option in writing within one hundred and twenty days from the notified date to become member of the Fund; and

(c) authorise the trust of the Provident Fund to transfer the entire contribution of the Corporation to their Provident Fund alongwith the interest accrued thereon to the credit of the Fund constitutedfor the purposeunder rule 5; or

(4) join the service of the Corporation on or after the notified date; and

(5) were in theMei on or aft|ptheQ|-i^?oT afterr^ire^e|i^"butJje entitle to pension tilljithe date on wln^ deceased-any time November, M ^^^^;^notifiea^M|i?t|i^irfamily to ^^lieipiiey woiilfeha|e been les had thef^^eenalive ^d, if the familyfcfthe

(b) of the said period of one^femf^Sdsandat^ty^ayspecified in clause (a) above, tlie entM"amo^ofthe Corporation's contribution to the Provident Fund and interest accrued thereontogetherwith a ftirthersimpleinterestat the rate of twelveper centper annum from the date of settlement of the ProvidentFund accounttill the date of refiindof the aforesaidamounttothe Corporation; or

(6) joinedthe serviceof the Corporationon or after the 1st day of November, 1993 but who have died while in the service ofthe Corporationbefore the notifieddate, theirfamily shall be entitledto the familypensionunder these rules; WP(C)184/2007& Connectedmatters Page 12of90 y< 1^ Provided that the family of such a deceased employee refunds within one hundred and eighty days from the notified date the entire amount of the Corporation's contribution to the Provident Fund, if any, and interest accrued thereon together with further simple interest at the rate of twelve per cent per annum from the date of settlement of the Provident Fund account till the date of refund of the aforesaid amount to the Corporation; Provided further that the family of such a deceased employee shall apply in writing for grant of family pension; or j '(7) were in the5^se^ip| any time on or afte#thQ;^W%ii^'ofto l>98,6%ndhad died le SlstJMay oi October, while uf^sel^iceor^ _ 1993. Ml#retired|8S.i|Bf6l:^&e31st aayp%October, mJ 199ii!W^iedbefor||^^^fi^d^atein wHip^clsetheir famliy^slaallbe entitifei&^Ip:^feilypensiorfWhd^these rul&,ifthe familyofSS'^^f^l^sSd,- . twenty days the Fiind

(b) refun;^w®in^^^^^^^,a,i;eTthe|gp^ of the said period ofin clause (a) abov'e^th|^e|^i^3m|^t^^^ Corporation's contribution to the ProviHerff Fund and interest accrued thereon together with a further simple interest at the rate of six per cent per annum from the date of settlement of the Provident Fund account till the date of refund of the aforesaid amount to the Corporation; or

(8) joined the service of the Corporation on or before the 31st day of October, 1993 and who died while in service on or after the 1st day of November, 1993, but before the notified date in which case their families shall be entitled to family pension under these rules if the family of the deceased employee-WP(C)184/2007 & Connected matters A

13.

(a) exercisesan optionin writingwithinone hundredand twenty days from the notified date to become a member of the Fund; and

(b) refundwithinsixtydays fromthe date of expiryofthe said periodof one hundredand twentydays specifiedin clause (a) above, the entire amount of the Corporation's contributionto the Provident Fund, including interest accruedthereon,togetherwith a furthersimpleinterestat the rate of twelve per cent per annum from the date of settlementofthe ProvidentFundaccountofthe employee till the date of refund of the aforesaid amount to the Corporation. Opfion t^gsub&ribeto tHe^'royidfentFund - (1) In sub^kile (4) of ice, of the Coi|OT^non or'l^^^^mied dateage of thi^-fi^eyears or aperi^ofeninety da^ from the dateoMBfc|^ment, rightto pension,whei&|tt rule: hin|^

(2) 'ihe opti-^^lsl onceexerd^C^^s^iiW electto for|gohis rules shallnot a^plyto ^andjiii rule 3, B/ Rule 3ofthe Pensi^@^^^l|Jii|H|^i^]^ the employeesinto tour categories,namely,(i)*se^ on or after 1®^ day of January,1986 and before 1'^ day ofNovember,1993,(2) thosewho had retiredon or after 1®^ day ofNovember,1993 butbeforethe notifieddate, i.e. 28* June, 1995 (3) those who are in service of the Corporation beforethe notifieddate and continueto be in serviceand (4) lastlythose who joinedthe serviceof the Corporationon or after the notifieddate. In respectofthe 1®* threecategories,optionwas givento the retiredor in service employeeto give in writing within the time specifiedwhether WP(C)184/2007 & Connected matters Page 14 of90 they want to become members of the Pension Scheme. Retired employees,on exercisingthe option,had to refundthe entireamountof the Corporation'scontributionto the providentfund with simpleinterest @ 6% per annum in the case of employeeswho had retiredbefore November, 1993 and 12% per annum by others, who had retired on or after 1'^ November, 1993 and before the notified date, from the date of the settlement of provident fund accounttill the date of refund.

¶14On the question of computationof pension, we would like to reproduce clauses (d), (o) and (] id Y^i^is^'^il^r^^ provision 3£whickl^^da's^^der: as originallyen^^d.

¶2Defiiiitiaiis - otherwis^eq uires XXX ,,|

(d) '|averageemolumdnt|;|'|m|aisthe average of t^e pay drawiby an employeeJ|ji4ifgTO.elast ten monthi^ofhis servile; xxxx unlesi? the& context

(o) "pay"inciude|f^^p^'W •

(a) In relation to an employee who has retired or died on or after the 1®^ day of January, 1986 but before the last day of November, 1993.

(i). the basic pay including the stagnation increments if any; and

(ii) all allowances counted for the purpose of making contribution to the Provident Fund and for the payment of deamess allowance; and WP(C)184/2007 & Connected matters Page IS of 90

(b) In relationto an employeewho retiresor dies while inserviceon orafterthe day ofNovember,1993.

(i) the basic pay includingthe stagnationincrementsif any; and

(ii) all allowancescounted for the purpose of mflking contributionto the ProvidentFund and for the payment of deamess allowance; and

(iii) fixed personal allowance not exceedmg the last incrementin thescaleofpay; and

(iv) dearn^rfallowane©^^^^^ IndexNo.1148 in the AP"" Indi|jfverageC6iisjaidiertfeiceIndex for Indus|fal»tersa xxxx^. "W (pM'-I^sion" inc pasic pensife and the ad^ional pension iA||»pn Chapter VI S ruli;" Mfil "35. ^aytf're||ef^.f?lmployees who retired but before the 31st day of*Jul5^ia8iy»sjeifesiSnand additional pension will be updfflla"»'as==pef'^eformula given in Appendix-III.

(2)In the caseofan employeeretiringin accordancewiththe provisionsof the ServiceRules or ofthe StaffRegulations after completinga qualifyingserviceofnot less than thirty threeyearsthe amountofbasicpensionshallbe calculatedat fiftypercent,ofthe averageemoluments.

(3) (a) Additionalpension shall be fifty per cent, of the allowancesdrawnby an employeeduringthe lastten months of his service; WP(C)184/2007& Connected matters these Page 16 of90 .-j:-

(b) no deamess relief shall be paid on the amount of additional pension. Explanation ~ For the purpose of this sub-rule "allowances" means allowances which are admissible to the extent counted for the following purposes only, namely:-

(i) making contributions to the Provident Fund;

(ii)grant of house rent allowance;

(iii) payment of gratuity; and

(iv) re-fixation of salary on promotion.

(4) Pensionas compvite^gbpngrtht^gregateofsub-rules(2) and (3) above sM^b"^.|ubjectptoto pensionas specifiedintbJ iM/Mk _.

(5) An empt^^whq^fe^pgg^tha®^sfcportion ofhis p,^hsiQn%sperW^ro^ao^^E'rule 4lliofttfeserules pension ^ ^ shallre&j^ftnlytheS

(6) (afSnthe case ofan If a qu^ifying service compibtinga qualifyinglpMcekii 5v._i-_11 1-elision,monthiy?> pension admissibly amountofp|M^?|iall^lesstl^^eamomWf pensionspeciMg&m Jtiringbefore completing years, bi® after |bn years, the amountof :ii»nat;e?t©^ihe^-^ainount oflpension AS)'jan(d'In-i.no'^case the

(b) Notwithstandinf'M^hihgiseoHlainedin these rules, the amountof invalidpensionshall not be less than the ordinary rate of familypensionwhich wouldhave been payableto his family in the event of his death while in service.

(7) The amount of pension finally determined under this rule shall be expressed in whole rupee and where the pension contains a fraction of a rupee, it shall be rounded off to the next higher rupee."

¶15Clause (o) to Rule 2 defining the term pension was amended vide Governmentnotificationdated 14^*^May, 1999,to read:- WP(C)184/2007 & Connected matters m

(o) "pay" includes,-

(i) the basic pay including the stagnation increments if any; and

(ii) all allowances counted for the purpose of making contribution to the Provident Fund and for the payment of deamess allowance; and

(iii) fixed personal allowance not exceeding the last increment in the scale of pay; if any, and

(iv) in a case covered by the proviso to clause (j) or where the salary and other conditions have been fixed with the approval of the Central Govt., the deamess allowance calgulatM^^pto^ in the All India Aypa|e^o|p®ie3^P®!^^ Industrial workerp:ffithp§fe'6si%p^l00"ippli|'^9i^^ basicpay draw]^%«timinthe^^lfeq^^ notifiefc^theCentral Go#^.io^thepo if PrpvidS that for|||| emoluments,as deL_ respect of emp|^|e^e4[Moseten months',! before retirement ' scales and for%he pay as per deamesstlt^a^^p|oith^i|jI^M^Mhtherevised basicpayis peg|e|^gM^ggJliis. Clause(j) to Rule 2 which definesthe expression"employee"referred to in clause(iv) of clause(o) reads:- "G) "employee" means any person employed in the service of the Coiporation on full-time work on permanentbasisand who opts and is govemedbythese mles but does not include an employeeretired before the commencementof these mles and who is drawing pension from the Pension Fund of the Oriental Government Security Life Assurance Company WP(C)184/2007&Connectedmatters Page18of90 .?2r Limited in accordance with sub-regulation

(2) of regulation 76 of the Life Insurance Corporation of India (Staff) Regulations, 1960, made under the Act;"

¶16Rule 38 which relates to determination of the period of ten months for average emoluments, reads "38. Determination of the period of ten months for average emoluments -

(1) The period of the preceding ten months for the purpose of average emoluments shall be reckoned from the date of retirement ,

(2) In the ca^ej)i#SWt?p^et^^ periodofthe preceding^^^^^r^fetebl of average

(3) m the^case o^compulsoiy reti|m|Jor teHniflfe*ice the KiplSofthe pr^ediiig ten purpose 'of ^erage emolumentsshallbeiylcteffiomthe dateonwllchthe employee is dismis|p|^C|Mi;|movedor complisorily retifedorterminate(|%f|&ejfijoration.

(4) f duriM5|ieM^S sejice an emplo^e^W55|eto'ia®njMM'ap'^Jfex^aordina^ leaveonags^^j^^grhadbeenpiaer|^%ffionandthe periodwheTOf^a^^tSomtjalrf aforesaid penodofextrSomipfJ^^F^ shall not be taken into accounf^iffstlre'^^^culationof the average emolumentsand an equal period before the ten months shall be included."

¶17Rule 37 relates to deamess relief and reads as under: "DearnessRelief- (1) Deamess reliefshall be granted on basic pensionor familypensionor invalidpensionor on compassionateallowancein accordancewith the rates specified in appendixIV. WP(C)184/2007&Connectedmatters 29of90

(2) Deamessrelief shallbe allowedon fiill basicpension even after commutation."

¶18AppendixIVreferredto inRules37 is asunder: "Dearness relief on basic pension shall be as under:

(1) In the case of employeeswho retired on or after the 1st day of January, 1986, but before the 1st day of November, 1993, deamess relief shall be payable for every rise or be recoyexaljle^Jor,every fall, as that case may be ofevei^^^^^^"^er^^®^pjntsin the quarterly averageoLth^All^l^d|aMvera|i|<3fhs®^ Index, 4>J ^veraggpns^ for InduiffidipMersj^i^seriies^^^^^lOO.Such increa,rfojj4ecrea^^m|a^e^elief fo^p^eM^saidfour poin^l^pfbecale^^^^^^^innergi^^^^w: |Scale of bSiibI fpensionpernK^tjllS pM rate of dearness •E^Ug|;as a percentageof ^"a'sic^ension

(i) £0.i6f^Sif:Cer|^i^'

(ii) Rs.2,000/-^"''^^^^ai^roM|P^rof Rs.1250 5lSsi0f5^per cent ofbasic pension in excess of Rs.1250/-

(iii) Rs.2001/-to Rs.2130/-

0.67 per cent of Rs.l250/-plus 0.55 per cent of the difference between Rs.2000/-and Rs.l250/-plus 0.33 per cent of basic pension in excess of Rs.2000/-

(iv) aboveRs.2130/-

0.67 per cent of Rs.l250/-plus 0.55 per cent of the WP(C)184/2007 & Connected matters Page 20 of90 •n' difference between Rs.2000/-and Rs.l250/-plus 0.33 per cent of the difference between Rs.2130/-and Rs.2000/-plus 0.17 per cent of basic pension in excess of Rs.2130/-

(2) In the case of employeeswho retire on or after the 1st day of November, 1993, deamess relief shall be payablefor evep^ffSS^jifB^^^lv^ for everyfall, as the casempj^ the anarterlviljflver^p^^^ tlifi All TniHlfa' Prtnoiiwai-laiculatedinlihelmanner .iScale of fpensionper |l^ rate of dearnes^relief percentage o# basic tMisipn #

(i)

(ii) Rs.M^i^Wlll Rs.3850/-OSype^gniof Rs.2,400/-"plu;Si50S9 per cent of basic pension in excess of Rs.2,400/-

(iii) Rs.3,851to Rs.4,100/-

0.35 per cent of Rs.2,400/-plus 0.29 per cent of the difference between Rs.3,850 and Rs.2,400/-plus 0.17 per 8 cent of basic pension in excess of Rs.3,850/-

(iv) above Rs.4,100/-

0.35 per cent of Rs.2,400/-plus 0.29 per cent of the difference between Rs.3,850 WP(C)184/2007 & Connected matters Page 21 of90 and Rs.2,400/-plus 0.17 per cent of the difference between Rs.4,100/-and Rs.3,850/-plus 0.09 per cent of basic pension in excess of Rs.4,100/-

(3) Notwithstanding anything contained in Para (1) and Para (2), in respect of employees belonging to Class-Ill and Class-IV, who have retired on or after the 1st day of August, 1992 and in respect of Officers belonging to Class-Iand ClasssHffeifH^^^^feafter1st day ofApril, 3(A)JriG0e of retire:d^ciiedon or aftegtl^ptdayof^^^^^Miedeam^r^pfshall be,v|)iy%blefor evei^|i§^^^0® recoverai^^fell every If as the case mam iSf Mr " ®'li1>very4 points ovJI 1740 Such ' said 4 ;Ke Basic pointsin the quarterl)|Avei^|ConsumerPriceIrifi Industrial Workers of 1960 = loj incrfese or deoreai point% 3(B) In casei®J|a]^^^^^r^i^^^^fufurethe rate of deamess relief"%a|^g^^^n!K^imployeeshall be determined by the Corporation corresponding to the index to which the case is linked. (The Corporation has determined that in case of employeeswho have retired or died on or after the 1st day ofAugust2002, the dearnessreliefshall bepayable for every rise or to be recoverablefor everyfall, as the case may be, of every 4 points over 2328 points in the quarterly Average ConsumerPrice Indexfor Industrial Workers in the series of 1960 = 100 Such increase or decrease in dearnessrelieffor every said 4 points shall beat therate of0.18per centoftheBasicPension). WP(C)184/2007 & Connected matters

(4) Deamess relief shall be payable for the half year commencing from the 1st day of February and ending with 31st day of July on the quarterly average of the index figures published for the months of October, November and December of the previous year and for the half year commencing from the 1st day of August and ending with the 31st day of January on the quarterly average of the index figures published for the months of April, May and June of the same year;

(5) In the case of family pension, invalid pension and compassionate allowance, deamess relief shall be payable in.accordancewjthgth^£ti^ltfeni%ne4above.

(6) Deamess relM^iwill be allowed on^fulPbasic pension evenaftercommutatiGjaiY^^^^i^ \

(7)l^^b^l^ssrelief!! additil^jp^sion."

¶19There is also stipulation wi which is as ender: "36. M n mu pension ion^s|alfcl5%-^^ WP(C)184/2007 & Connected matters

(a) rupees threei-Mnd^ per month in respectof an emplofebpbdsSfing to ClassIIIor Class-IV, who had retired or died before 1st August,1992 and in respect of employee belonging to Class-I or Class-II, who had retired or died before 1st day of April, 1993.

(b) rupees seven hundred and twenty per month in respect of an employee belonging to Class-Ill or Class-IV, who had retired or died on or after 1st August, 1992, and in respect of an employee belonging to Class-I or Class-II, who had retired or died on or after 1st April, 1993. minimum pension in Rule 36, me ^amoun ^minimum

(c) rupees 1,100/- per month in respect of employees belonging to Class-I, Class-II, Class-Ill and Class-IV, who have retired or died on or after the first day of August, 1997;

(d) in case of any wage revision in future the amount of minimum pension payable to an employee shall be determined by the Corporation corresponding to the index to which the scale is linked"

¶20Lastly, we will refer to the provisionsrelating to the pension fund. Rules5, 7, 11 and 13 relatingJg^e-EensionFundare asunder: "5. Constit^ion (^^pfc&femrationshall constitutea|F^Me igdW^yfeIngu^e)!|prporation of India^^||gjioyeesjj^^^^|™^ und^iiM ii^vocable trust^#ii^periodl|i®g^^4nd tw^f^^cfesfrom the notilfiedtSate. % I

(2)Th|Fundshallhave?M purposetheprov^ionof thepaymentofpensionoj-ffamM^ in accordancewith theserulesto the empl#geMfl^wailY f

(3) The and shallensura^l^pM^sui^^g#i:Sg^»i'enablethe trusteesto niikgdja#?|pSpBfs^ under these rules. xxxxx

¶7Composition of the Fund -The Fundshallconsistofthe following,namely:-Forthepurposeofthisrule"pay"includes-

(i) the basicpay, WP(C)184/2007 & Connected matters Page 24 of90

(ii)allowances other than deamess allowance which count for the purposes of making contribution to the Provident Fund and payment of deamess allowance,

(iii) deamess allowance payable on the basic pay and the allowances specified in clause (ii) above, upto Index Number 1148 in the quarterly average of the All India Consumer Price Index for Industrial Workers in the series 1960=100; and

(iv) a;llowances to the extent they count for Provident Fund, house rent allowance, gratuity and for refixation of salary on promotion: Provided that the^£@o^ora^n^shal^^not make any contributiontox^ acciilSpfithi^f^ri^ilfentFund of the employee Explanationfe^On an'di Insurant.^gorporation| (Amendm^'nt)Rules, If^

(i) theibasicpay,

(ii) allowances other for the purpose^ allowances'to iat^ofpuBlic^tiqhofLife (Employes) pension allowance whicM> count contributionlto the

(iii) leV'CQunWor^ntribution to theProvk^|i]^^fi|)jase^^^Mm gratuityand forrefixatio^^of3jL^^^^^Sl"^^i^ff Provided that the Corporation shall not make any contribution to the account of the Provident Fund of the employee;

(b) the accumulated contributions of the Corporation to the Provident Fund and interest accmed thereon upto the date of such transfer in respect of the employees;

(c) the amount consisting of contributions of the Corporation along with interest refunded by the employees who had retired before the date of publication of these mles but who WP(C)184/2007 & Connected matters ^-y opt for pensionin accordancewith the provisionscontained in these rules;

(d) the investmentin annuitiesor securitiespurchasedout of the moneys of the Fund and interest thereon;

(e) amount of any capital gains arising from the capital assets of the Fund;

(f) the additional annual contribution made by the Corporation in accordance with the provisions contained in rule 11 of these rules;

(g) any incomeftomjnv^estg^^^^ ofth^amountscreditedto the Fund; ® « emplovee.-^ •-asp* '

¶11Actuarial investis Fund - The Co ration 31st day^'-of^^f^.^.and makej^sucb^^ditioh annual Provided that the Corporation shall cause an investigation to be made by an ,Actuary into the financial condition of the Fund, as on the 31st of day of March immediately following the financial year in which the Fund is constituted. xxxxx

¶13Payments out of the Fund -The payment of benefits by the trust shall be administered as follows, namely:-

(a) the trust shall purchase immediate annuities from the Corporation m respect of each employee or his family, as WP(C)184/2007 & Connected matters Page 26 of90 the case may be, at the time he or his family becomes eligible for the benefits under these rules;

(b) the trust shall, subjectto the availabilityof additional sums in the Fund, to be provided by the Corporation as required under rule 5 (3) purchase additional annuities as and when it becomes necessary to revise upwards the benefits payable in accordance with these rules;

(c) the trust shall, in the event of the benefits payable under these rules being revised downwards for any reason whatsoever, credit the benefits received from the

¶21Rule 35 relatg^Q^^>mp retired afler|^^®iuary. pensionanyadditionalpen^| Appendix-Ill. This formula M notbeexaifined. jjnsion.^F6i;''^emp,loyeeswho had fWole 3r^luly, l987 the basic imputedas per tfre fomula given in "npt challenged and:lierefore need

¶22Under sub-Rile (2¥Mf1i5^!fiil&emil^^ inpbcordance with the ServiceRules^^Sfaf&R|gulgi<m^ serviceofnot less than 33 years,t]ie>^Ji6|p^S'ii0n^^|^ 50% ofhis average emoluments. Under clause

(3) additional pension shall be 50% of the allowances drawn by the employee during the last 10 months of service. Clause (b) to sub-Rule (3) stipulates that no deamess relief is to be paid on the additional pension. The explanation defines the term "allowances" which are admissible for computing additional pension. WP(C)184/2007 & Connected matters Page 27 of90

¶23Sub-Rule (4) states that pension shall be the aggregate of basic pension and additional pension and shall be subject to the minimum pension specified in the Rules.

¶24Sub-Rules (6) relates to employees who have completed 10 years qualifying service and have retired before completing 33 years of qualifying service. In such cases, the amount of pension is proportionate to the amount of pension admissible, being the sum-total of basic pension and additional pensioii.^.^ia!^=...>.

¶25Rule 37 states ^shrtlle'grfnted.on basic pension family pensp^^^ahd^|^^^^^nipass^n^ accordance ratesspp^QiS'^dnf^ot^endix-lVI*^1 I allowance in

¶26As per thfe'Pension Rules, consists of twM parts; basic IjI: ® pay includinp|tagnat^^mcre^i(ts^HlF'an^J'and allowances c pensions does not vary and remains static, notwithstanding subsequent revision of pay applicable to in-service employees and not to retired employees. To off-set and negate the impact of inflation and loss of purchasing power, the Pension Rules provide for payment of deamess relief.

¶27Similarly, additional pension, added to basic pension, remains static and constant. Additional pension is 50% of the "allowances" drawn during the last 10 months of service. No deamess relief is payable on additional WP(C)I84/2007 & Connected matters trn^E^, pension. Noticeably,"allowances"counted for payments to Provident Fund,arereckonedforbothbasicpensionandadditionalpension.

¶28Amendment to clause (o) to Rule 2 of the Pension Rules with effect from 14^*^May, 1999,wouldnot make any difference.Substitutedclause

(iv) would apply to those retirees, who were in service as on 1®^ November, 1993 when the deamess allowancebenefitcalculatedup to IndexNo.1148 of All IndiaAverageConsumerPriceIndexforIndustrial Workerswas appliedon the,.b^gic^pay^drawnby him. This is clearfrom theprovisoto clausa^^i^)^ importantay.^fificantS^ employees.|)f& Corporat^^^^p . ti

¶29Beforewe be%ii?a&tofirst noticean i|^e^,five years the pay revision.!Such pay or wage revi^on had taken pl^|:|i||f^|theffect from 19|2, 1997 and thereafteri^i2002, 2007 time of wage revision,the deamess^llow^i^cepayablefe'-ithevihrse^ice^eihployees.^^^mergedand factoredin the%|ii|:et?#rgplacementpayMcale^OnW the pay revisions have beati deamess allowance. to basic pay and

¶30Appendix-IVdividesand classifiesretiredemployeesinto 4 categories. Paragraph1relatesto employees,who had retiredbetween 1®' January, 1986 and 1®' November, 1993. Deamess relief is payable at the percentageofbasicpensionspecifiedin the tablefor every4pointsover 600 points in the quarterlyaverageofthe All India AverageConsumer Price Index for IndustrialWorkers-1960 Series (AICPI-IW,for short). For basic pension upto Rs. 1250, deamess relief percentage or WP(C)184/2007 & Connected matters Page 29 of90 equalization is 0.67%, for basic pension between Rs. 1251 and 2000 deamess relief percentage or equalization is 0.55% in excess of Rs. 1250, the deamess relief percentage or equalization between Rs. 2001 and 2130 is 0.33% and above Rs. 2130 is 0.17%.

¶31For employeeswho have retiredbetween November, 1993 and 31^ July, 1997 the deamess relief payable is for every 4 points over 1148 points in the quarterly average of the AICPI-IW. 1148 points was the PriceIndexas on NovembUj^^B^g^ js thereforethe relevantfigure l^gvember, 1993 is also ' V for computing deamesr relifefi relevant for it.^refers •t©'? the, daites^on which®e^JlfensionRules were j j -'"^^-^^'^'^equaHz^i^^tablegiven in deemed to percentage 3850 will hav0^ome paragraph:|^ki^iatesthat^^ffl||^^^pionamouriSpt^Rs.2400,the '6f deamess relie®^ - ,,-^'0.35%and betwtoRs. 2401-be 0.29% of basicilels^^^ Rs. 385lfand4100 the L. >1 . , and percentageM dearnes4^re|^E4f'#C'k%017% of basE pension aboveRs. 41dto|ulpb^0;O9i^

¶32Paragraph3(A) reittfjJt<^mfl|^ee%iMto or died after WP(C)184/2007 & Connected matters August, 1997 but before 3l-^fuly7=20§2r"Ihthis case deamessrelief is payablefor every 4 points over 1740 pointsin the quarterlyaverageof the AICPI-IWatthe rate of0.23%of basicpension.The date August, 1997 has rationaleand was fixed, as coincidingwith the pay revisionof in-service employees.

¶33Paragraph 3(B) states that for any wage revision in future, deamess relief payable shall be determinedby the Corporationcorrespondingto the index to which the case is linked. For employeeswho have retired or died after 1®^ August, 2002 deamessrelief is payable for every 4 point rise over 2328 points in the quarterly average of the AICPI-IW at the rate 0.18% of basic pay. The deamess relief for employees retiring between

01.08.2007 to 31.07.2012 and 01.08.2012 to 31.07.2017 has been reduced to 0.15% and 0.10%, respectively.

¶34Thus deamess relief payable on basic pension for the employees retiring between 01.01.1982 to 31.07.2017 is as under:- Pensioner retired betweel^t^w:^^^

01.01.1986 to -Ratl^of^J^arnessRelief ^.6^^p^^p^taperingformula)

01.11.1993y31jOl1997 I^^pp0.09°/|f|^fiEingformula)

01.08.1997 |b 31"!07.2002 (SeeRule3(4) t rf ,1

01.08.2002 _'1to 31.07.2007 l^ll

01.08.20071|31

01.08.2012to 31?.(y7:Mj^

¶35The deamessreliefpayablethereforehas referenceto the basic pension. The principle of deamess relief acknowledgesthat basic pension would remain static and not account for the future increase in salary of in-service employees.

¶36The Pension Rules, exfacie, seek to provide beneficial deamess relief to retired employees depending upon their date of retirement, which has reference to the basic pension. Higher percentage of deamess relief is WP(C)184/2007 & Connected matters givento employeeswho had retiredbetween 1®^ January,1986 and 31^^ October,1993 for their basicpensionwas lower.However,for amounts aboveRs. 2130/-,the deamessreliefof 0.17%is lessthan deamessrelief in paragraph 3(A). Similarly, higher percentage of deamess relief is prescribedfor basic pension upto Rs. 3850/- for employees who had retiredbetween1®^ November,1993 and 31®^July, 1997in comparisonto the deamess relief of 0.23% applicableto employeeswho had retired between August, 1997 and 31'^ July, 2002. For amounts above Rs. 3850 and Rs. 4100^^e^^^^^^^^ratg.is 0.17% and 0.09% respectively.UndGir^^^^it^3^)funlf^ ofbasicpay for every 4po^s^veir'lJM|l^^^p:^|the of the AlCPI-IW.i^^able. thepensioiin^ntabove above Rs. :3851 in paragrapl below

¶37We shall, iri%he? variation^^rii^tralizationon Paragraph1and petisionamounts been dealt with Ind examined PensionRules di|cfesihgand adjudicating the contentions raisedN%». WP(C)184/2007&Connected matters

¶38To avoidprolixity,we are not elucidatingin detailthe argumentsraised by the retired employees/associationsand the Corporation,and would only refer to the fundamental points raised by the retired employees/associationsandthe responseofthe Corporation.

¶39The primary and the core issue raised by the retired employees / associationis that deamessrelief amountas per the Rules is not addedor mergedwith the basic pensionand this resultsin non-revisionofbasic Page 32 of90 pension. As a result, the pension amount being paid to the retirees prior to 31®' July, 1997 is restricted and remains at arbitrarily low levels resulting in invidious discrimination. Resultantly, the same rank officials retiring on different dates get different amount of pension. In fact, a lower rank officer who retires later ends up getting a higher pension solely because of the date of retirement. This defeats the very object of giving pension and violates Article 14 of the Constitution. Reliance is placed upon the meaning and concept of the term 'pension', as elucidatedmDeokir0tdii^^^" Vs^St^teofBihar&Ors. (1971) 2see 330. D.S.^qr^mi VI

(1983)1See 305 M and othercas|#'^fMlarit^^^|t#|g the Central eivil Servicif(|,e|sion)Rlll^^|gif^^^|ibableto^l^fntmlGovernment Employees MS projected to % pursuant to' i^iptiatlpentralGovernmentemployees, the decisionoff^e|^'^^|titutionBench in'|A*S'. Nakara (supra),ha-^e been given up!§r$|atf^ on acclptanceof the recommend&ns qilli^^6^^^/^®\^®)nMnissiof Reports. It is submitted that theliiild'%re.ated under Rules..5xan^''6#ead with Rule 13 ofthe PensionRmes4§^ni^^^ut^^3®seij^!iided. The Corporation has statutory obligation to lfetee#hat«aide^uate sums are made available to the trustees of the Fund for payments due under the Pension Rules including any shortfall resulting from upward revision. Reference is specifically made to Rules 5 (3) and 13(b) of the Pension Rules. Reference was also made to Rule 56, which is a residuary Rule and stipulatesthat mattersrelatingto pension and other benefitsin respectof r which no express provision has been made shall be governed by corresponding provisions contained in Central Civil Service (Pension) WP(C)184/2007 & Connected matters Page 33 of90 Rules 1972 or the Central Civil Services (Commutationof Pension) Rules 1981. It is assertedthat the ManagingDirectorand the Chairman of the Corporationare being treateddifferentlyand pensionis paid as per Rule 55-B of the Pension Rules at par with the Central Government Pensioners, whereas other retired employeeshave been left out and are beingdiscruninatedin violationof equalityenshrinedin Article 14. The financialimplicationas projectedby the Corporationis disputed [This argumenthas beenexaminedin detailseparately]. , Bfehe said submissions,

¶40The Corporationhas.#€liallpMef|ffl0b:. interalia statinglthatth^pensiomin-:respectof!ltnpfbyeesis fund based unlike the C|ntral":;GovernMftifj®^^ whovreceive their pension from Consdid^dFund o^r^^J^lh^Corporatio^^eo^butesto the Fund@l|k.ofeachmonth|t^|^^^chemployee. 0| the basisof actuarial ipmputation, the|f|oriM^ makes addiilonal annual M . 1 .M contnbutioiiMOthe Fund. Iwni&ny'afff^restricteHto SPf.n^Pi n{ivmf»nt of benefits und^ WP(C)I84/2007 & Connected matters calculationof pdnsi'4ft'whk;b^isr^eomputejdwi'tli reference to the last drawn pay under Rule5.35:^<2'),,lmad£wit&u^^^2 (d) and (o). The deamess relief is payable on the basic pension and increases and decreaseswith the rise or fall ofthe quarterlyaverageofthe AICPI-IW. The basicpensiongets crystallizedbasedupon pay drawn in the last 10 months. Thisamountdoesnot changebutthe pensioneris entitledtothe benefit of deamess relief The formula on deamess allowance is prescribedin Appendix-IV,as providedin Rule 37. Deamess relief for pensioners,who had retired before 1'* November, 1993 / 1®' August, 1997 is more beneficialvis-a-visthe deamessreliefformula applicable J^l to the retireesonor after 1®^ August, 1997 / 1®^ August,2002. Judgment and ratio of D.S. Nakara (supra)is not applicableand the judgmentsof the Constitution Bench of the Supreme Court in Krishena Kumar Vs. Union of India & Ors. (1990) 4 SCC 207 and Indian Ex-Services League Vs. Union of India (1991) 2 SCC 104, are apposite. Specific reference is also made to K.L. Rathi Vs. Union ofIndia (1997) 6 SCC 7 and State of West Bengal Vs. West Bengal GovernmentPensioners Association(2002)2 SCC 179. It is submittedthatthe retireesaregiven deamess allov^^ance, as^pef^^Ie^fapenhg^^formulaprescribedunder ih AptfeiaiitSvOftMfehsionRules.The formulais Paragraphs 1 andMI ,'.-4 \\ not arbitrary alor ViMates^Articre0.,4r!:::The'contentionsbased upon financial implication,are'^'cMlbnged.?!piiisaspeci^s indicatedabove wouldbe e&miribdseparatelv

¶41Beforerefe^-ingtoD.S. Naka^ ^mwe would first take;on record the 4-u^ context. The meaningari%concepy^.thM^%i^%^nsFon'%in. the India: meaning,concept,/and%§)ht®i:0f4^hat'is tenn "pension" are rather difficultto^^efiiS''inikass5lraitj'aGket'.>/Ihxdeveloped countries, 0,, -lifo. pensions are mostly contributoiy2jnr^naturej,:^non-contributory pensions being restrictedto invaliditypaymentsin the nature of social security measures rather than terminal service benefits. Item 17 of Article 366 of the Constitution defines the expression "pension" for the purpose of Constitutionas contributoryor of any kind whatsoever,payableto or in respect of any person, includingretired pay, gratuity and any sum or sums payable by way of return to subscriptionto a provident fond. However, in service law, the expression"pension" in India as defined means a series of periodicpayments,usuallypayable monthly for life. WP(C)184/2007& Connected matters Page 35 of90 for past services of himself or another. This concept involves recognition of the principle that there is an obligation to help the person who was in public employment and has reached the age of superannuationor incapacitated from rendering further service. The principle is that an employee should be paid compensationfor the gradual destructionof his wage earning capacity in the course of work. The aim is to provide social security in old age.

¶42In Pepsu Road Vs. Mangal Singh & Ors., (2011) 11 the earlier case ithfaiidbtplainirigtthe4expressionv''pen^ and also the Siti^tsof the'said4erM|iSnd?jtiadheld.^sunder: law dealing wit&^i^ text book defifiiti^ts . "39. Pension is a periodic payment of an amount to the employee, after his retirement from service by his employer till his death. In some cases, it is also payable to the dependants of the deceased employee as a family pension. Pension is in a nature of right which an employee has earned by rendering long service to the employer. It is a deferred payment of compensation for past service. It is dependable on the condition of rendering of service by the employee for a certain fixed period of time with decent behaviour. Like CPF, the object of providingpensionarybenefitunder the Pension Schemeis to provide social securityto the employeeand his family after his retirement from the service. The Government's/employer's obligation under the Pension Scheme begins only when the employee retires and it continues till the death of the employee. iQ, In Deokinandan Prasadv. State of Bihar {{\91\) 2 see 330], this Court has held: WP(C)184/2007&Connectedmatters Page36of90 "37. ... pension is not a bounty payable on the sweet will and pleasure of the Government and that, on the other hand, the right to pension is a valuable right vesting in a govemment servant."

¶43In D.S. Nakara (supra), the subject matter of challenge was the office memorandumdated 25^"^ May, 1979 issuedby the Ministiyof Finance, Govemment of India, propounding the modified formula for computationof pension. The formula made applicablefrom 1®^ April, 1979 had liberalized the compjitation of pension on the following accounts;-

(i) Application^plab^ystemforpg^culatidn^pension;

(ii) Calculati(|n' ^er the<,prece|^ing10 months instead of S& m'oht

(iii) Benefit of qualifying seilM 3 years insteadoi30 years; and

(iv) Raisingthe ceilinglimit'©'Ifp^gnsfoftofRs.l^ perrnonth. —^ ^-~-ma .tWs-Kvmade — said date. The employees who 5H9? had retired earlier,'%3^'WereZ^fej^^i^^i^ionon the basis .of. computation and average emoluments of 36 months' salary preceding the date of retirement. After exhaustive review of decisions explaining Article 14 of the Constitution and referring to the concept and meaning of the term 'pension' it was held that there was no reason for choosing 1®' April, 1979 as the cut-off date for applicationof the liberalized formula. The cut-off date was struck down as invalid observing that pensionersconstituteone class. The SupremeCourt howeverdid note that this was not a case of a contributoryscheme or a pension fund from WP(C)184/2007& Connected matters V which alone the pension was to be disbursed. Neither was it a case where a new retiral benefit was awarded. It was a case of an upward revision of an existing benefit. Argument of the Government regarding non availability or paucity of funds was rejected, observing, that it would make a marginal difference in the case of past pensioners, because the emoluments were not revised.

¶44The ratio In D.Si. Nakara (supra) was explained appropriately by the Constitutional Bench decision in Krishena Kumar (supra) wherein cut-off date,to be covered-b^he.presidentfiih®^bhemeor pensionscheme, was challenged.MS. (supra)aecTsiotiv The personscover|S;bj§!nepro^tiii^kSchemeari'dthois.ecoveredby the • if pension scheme%didnot fomy^/h&mfgfeneousclass. ^Therefore,basis for - U' i applyingAkicle 14 betweem1|i"eSwp® groups waS;not there. The I' iifilfilfl fl fixation of-cut-off date, to provi'deiW option to be covered under the . I . tev1 ^. pension scheme, was based^pn;wratitonaiHdifferentiation../frhus, fixing a L ..A, .1 not tantamount to

¶45More pertinent, and i^ss^^spe.(^i&cds«=tl^^^^ ConstitutionalBench decision in tlie case of Indian Ex-Services League (supra). The petitioners therein had relied on D.S. Nakara's case(supra) to allege discrimination for the pensioners constitute a homogeneous class and no distinction could be made between pensioners who had retired earlier or after a particular date. The concept of pension in the Indian context, was additbnally relied. The contention asserted was that the retirees, who held the same rank, irrespective of the date of retirement must get the same amount of pension. The Constitutional Bench held that in WP(C)184/2007& Connected matters Page 38 of90 • ^ D.S.Nakara (supra),the portionof the Memorandaby whichthe benefit ofthe Uberalizedpensionschemewas confinedto personsretiringon or after the specified date was struck down and the benefit was extended to all retirees, irrespective of the date of retirement. The ratio related to the mode of coniputation of pension and not revision of emoluments of earlier retirees. In other words claim for "One Rank One Pension" irrespectiveof date of retirement,was rejected in Indian Ex-Services League (supra)by the ConstitutionBench. D.S. Nakam's case (supra) was distinguishedon relatedtocomputation ofpensionapplyin^^Q^%beralize^^Q^ul^^^^which "average emoluments",fef^rj|determ#ed|^f^^ salary instead of 36' rff^Mhs' sal ceilinglimil^^pension. retirees uniformly, as the computation ofIpension was slab syS^^m%idraisingthe

¶1'•%: was held, must:|e givento all ;b liberalized,toe mode of 'apply to ,fl the retirees, I iliHf irrespective Mf the ie entitled to arre£ revised according^%c^inpMfe with the liberalizedformulafrom the'^atedtswas-applicable.If the pensionersare and form one class,then computationofpensioncannotbe by applying two differentformulae,therebyinflictingunequaltreatmentsolelybased upon date of retirement. In Indian Ex-ServicesLeague (supra),it was held:- "11. The conclusion of the Constitution Bench inNakaraiimS) 1 SCC 305 : 1983 SCC (L&S) 145 :

(1983) 2 SCR 165] was that the benefits of liberalisation and the extent thereof given in accordance with the WP(C)184/2007 & Connected matters TWeaLr®R^retirees'would not be ^e specifiedd^tg^^butM^r?f)ensionwouldbe Page 39 of90 liberalised pension scheme have to be given equally to all retirees irrespective of their date of retirement and those benefits cannot be confined only to the persons who retired on or after the specified date because for the purpose of grant of the benefits of liberalisation in pension, all retirees constituteone class irrespectiveoif their date of retirement. In order to give effect to this conclusion the only relief granted was to strike down that portion of the Memoranda by which the benefit of the liberalised pension scheme was confined only to persons retiring on or after the specified date with the result that the benefit was extended to all retirees, irrespective of their date of retirement. Once this position emerging fi*om the decision iniVa^ra [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 : (1983) 2 SCR 165] is borne in mind, the fallacy in the petitioners' contention in these writ petitions becomes obvious and their claim based only onNakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 :

(1983) 2 SCR 165] is untenable.

¶12The liberalised pension scheme in the context of which the decision was rendered mNakara{{\9^?>) SCC 305 : 1983 SCC (L&S) 145 : (1983) 2 SCR 165] provided for computation of pension according to a more liberal formula under which "average emoluments" were determined with reference to the last ten months' salary instead of 36 months' salary provided earlier yielding a higher average, coupled with a slab system and raising the ceiling limit for pension. This Court held that where the mode of computation of pension is liberalised from a specified date, its benefit must be given not merely to retirees subsequent to that date but also to earlier existing retirees irrespective of their date of retirement even though the earlier retirees would not be entitled to any arrears prior to the specified date on the basis of the revised computation made according to the liberalised formula. For the purpose of such a scheme all existing retirees irrespective of the date of their retirement, were held to constitute one class, any fiirther division within WP(C)184/2007& Connectedmatters Page 40 of90 . J that class being impermissible. According to that decision, the pension of all earlier retirees was to be recomputed as on the specified date in accordance with the liberalised formula of computation on the basis of the average emoluments of each retiree payable on his date of retirement. For this purpose there was no revision of the emoluments of the earlier retirees under the scheme. It was clearly stated that 'if the 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'. This according to us is the decision mNakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 : (1983) 2 SCR 165] and no more. U.Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 :

(1983) 2 SCR 165] decision came up for consideration before another Constitution Bench recently mKrishena Kumar V. Union ofIndia [(1990) 4 SCC 207 : 1991 SCC (L&S) 112] . The petitioners in that case were retired Railwayemployeeswho were coveredby or opted for the Railway Contributory Provident Fund Scheme. It was held that PF retirees and pension retirees constitute differentclassesand it was never held mNakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 : (1983) 2 SCR 165] that pension retirees and PF retirees formed a homogeneous class, even though pension retirees alone did constitute a homogeneous class within which any further classification for the purpose of a liberalised pension scheme was impermissible. It was pointed out that mNakara[{\9^?>)1 SCC 305 : 1983 SCC (L&S) 145 : (1983) 2 SCR 165], it was never required to be decided that all the retirees for all purposes formed one class and no further classification was permissible. We have referred to this decision merely to indicate that another Constitution Bench of this Court also has xQ3idiNakara[(1983) 1 SCC 305 : 1983 SCC (L&S) 145 :

(1983) 2 SCR 165] decisionas one of limited application and there is no scope for enlarging the ambit of that WP(C)184/2007&Connectedmatters Page41of90 '-r decision to cover all claims made by the pension retirees or a demand for an identical amount of pension to every retiree from the same rank irrespective of the date of retu-ement,even though the reckonable emolumentsfor thepurposeofcomputationoftheirpensionbe different."

¶46Indian Ex-ServicesLeague (supra) case relates to Army personnel. K.L. Raihi (supra) is a case relatingto retiredgovernmentemployees. Relyingupon the decisionin D.S. Nakara (supra)the plea was that on revisionof pay scales of in-serviceemployeesthere shouldbe revision ofpensionfor the retirees^oi^^^¥^si^|rsofthe same rank were »=rpa entitled to the sa contentionwasfreje^fedob||] the average&i©|pnents The said riile il^applicable;|®a|® retirement.!This definition^ retirement=^f the employ^^^ ofemolumentsas'pr^^^ij^^m5|i||p||s^^^l|g^^ thatthepension e.^Ste:of retirement. The basic^^si^mis computedon le last lO^mbttths of service, piers irrespective|6fthe date of lents in force al the time of dergo a change. The same }'M formula of the date of retirement. Sse the definition was to be recalculated"^Wthe^fWsiii&f^evisedpay. Benefit of the liberalized formula based on the last 10 months' emoluments was applied universally. This meant those who were drawing higher emolumentsas salarywould get higherpension. In clear and categoric terms, it was held thatD.S. Nakara (supra)case does notlay down that same amount of pension must be paid to all persons retiring from Governmentservice,irrespectiveof date of retirement. Referencewas WP(C)184/2007& Connectedmatters <>'7 made to other two Constitutional Bench decisions in Krishena Kumar (supra) and Indian Ex-Services League (supra).

¶47A lucid and clear pronouncement is to be found on the said subject in the State of West Bengal (supra). This decision refers to the earlier decisions and also judgment in the case of Union of India Vs. P.N. Menon & Ors. (1994) 4 SCC 68, wherein vide Office Memorandum dated 25.05.1979 a portion of the deamess allowance was to be treated aspay in respectofthe govemm^t servants,who had retiredonor after 30"^ September,1977.<,';^Sffwas^challenffl-asdiscriminatoryto those who had retired^prior0<0%b^^ challenge was ^_lot#rnergea part o'feidqamess •I ^ I to the paid pay, it was^o|'0j|v.e||fwas taken in -wiew of the recommendkionof the 3*^^ P£iyk(lbyfriission.Thus, the decisionto fix the cut-offdate withthe re4'M^®#Sly?wasnot arbitraryas the cut-off date allowanceinto pay wbM^^^nouijttQias'h^ benefit,whereas D.S. Nakara's (supra) ratio and mandate was limited to upward revision of an existing benefit. The challenge made by the retired employees had failed to distinguishbetweenthe in force pension scheme and the revised pay scale. When there is a revision of pay, it applies to existing employeesor in some cases even to retired employees,when given a retrospective effect. However, this does not mean that the pension should be revised on the basis of the new or upgraded emoluments. Unless there is a change in emoluments as defined in the pension WP(C)I84/2007 & Connected matters Page 43 of90 scheme,the basic pensionpayablewould continueto remainas per the pay drawn by the employeesimmediatelybefore his retirement. It was held:- "20. What is noticeable is that the definition of the word "emoluments" in the 1971 Rules was not amended. As such pension continued to be calculated on the basis of emolumentsas defined in the 1971 Rules, namely, the last pay drawn immediatelypriorto retirement.The pay of the pre-1986 pensioners was not revised. The Third Pay Commissionhad given a reason for choosing 1-1-1986, as the cut-off date. As held in Krishena Kumar V. Union ofIndia [(1990) 4 SCC 207 : 1991 SCC (L&S) 112 : (1990) 14 ATC 846] and of India v.P.N. Menon[{\99A)4 SCC 68 : 1994 SCC (L&S) 860 : (1994) 27 ATC 515] merely because a cut-off date is fixed would not make the exercise invalid although persons in the service immediatelybefore the cut-off date would be deprived of the benefit of the revised scales of pay. It would depend upon the relevancy of the consideration underlying the choice of such date. The reason stated by the Third Paj^ Commissioncannot be saidtobearbitraryorirrelevant.;;#^

¶21Because the scales of pay had been revised from 1-1-1986, the recomputationof pension for such employees as had been grantedthe revised scales of necessitywas limited to the same cut-off date. All that the impugned Memorandum No. 4056-F dated 25-4-1990 did was to recompute the benefits in favour of post-1-1-1986 retirees according to the existing formula as provided by Memorandum No. 7530-F and No. 7531-F, both dated 6-7-1988. The same formula continuesto be applied to the pre-1986 retirees. The difference between pre-1986 pensioners and the post-1986 pensioners is only on account of the revision of pay scales and not on account of failureof the State Governmentto equitablyapplythe liberalisedPension Schemeformula.The quantum of the WP(C)184/2007& Connectedmatters Page44of90 emoluments formed no part of the formula for grant of pension during 1986 to 1995."

¶49We would now refer to some of the judgments of the retired employees and their associations and see to what extent the ratio in Indian Ex Services League (supra) and other decisions have been differed from or distinguished and on what grounds and for what reasons.

¶50We would begin by referring to K.J.S. Buttar Vs. Union of India & Am. 2011 (11) see 429. In^isaidsSas^gieappellant,who was an ex-Captainin the Ind|.n^^^^iai|^|^ijwg^ui^^ to military servicewas entitfed>,t^ensionQ^s^^^ tfid',degreeof disabilityof 50%. Howei/er/videthei^Cir^Mia1|~irid/& 31®^ January, 2001 the degree^ofdisabilit; January, li96. The said St iHe|'ihfuiywas raisedSto|75%w.e.f. 1 iso stipulatedgr|nt of service element oflull 10 years of sepfcfe instead of 2 years and revision of the -^-.Supreme Court he would employee, that be entifledCo^reyisi'on'^'as---prayedvanAismisability shouldbe treated as 75% instead'of^50%5fcobsefying^that the letter dated 31 January,2001 would be applicablenot only to those officers,who had been invalidatedout of serviceafter 1®^ January, 1996, but also to those who were invalidated earlier.

¶51This case, we would observe, is again a case of enhancement of existing pensionary benefits covered by the decision in the case of D.S. Nakara (supra). It relates to calculation of the disability factor and not parity of emoluments.By the letter/instructionsdated 31®^ January,2001, it was WP(C)184/2007 & Connected matters Page 45 of90 :V held that where disabilitywas assessedbetween50 and 75 percentthe same wouldbetreatedas 75%. As this instructionwas made applicable w.e.f. 1®^ January, 1996, it was held that the appellantwouldbe entitled to benefitof the said instructionsfrom 1'^ January, 1996 and it did not matter, and made no difference,whetherthe employeewas invalidated from servicebeforeor after January,1996.

¶52In Kallakkurichi Taluk Retired Officials Tamil Nadu and Ors. Vs. Stateof TamilNadu SupremeCourtwas dealing with a case where retr^^.pc^sQTJun'giIj^%weredrawing a lower pension on acG0unt5,,,df^1;he,rule®p©sitionrelkjtmg'io, merger of fixed percentage^d^iess qlTo^iif|€||^^^earness^^^ calculating pension.In|jii^|Gntext,thi DivisionBpnchofthe HighO^^^^fMldthattherewasliscrimination gurtreversedjthe-decisionofthe as two differentparameters|Q|,eo|m|tationcannot be appliedfor the M,Ji' purpose of|addmg ^aQjnPlinent'^wo^dl^ as pay for computingtKe^molumM^^^ purpose of adding the componentof "deamesspay" to wages for calculatingpensionwas to offsetthe effect of inflaitionand in thatthe retireespriorto 1®^ June, 1986 should be given higher pension than those who retire immediatelypost the said date. This objectivehad to be kept in mind while deciding the controversy whether the Rule was arbitrary or violativeof Article 14. There was historicalpattern and exemplar of inclusion of "deamess allowance" as "deamess pay" for calculating pension. The State, vide the Rules, had given effect to equationfrom time to time. Whenever there was discrimination, on account of addition of deamessallowancein pay in the computationof pension,byjudicial WP(C)184/2007 & Connected matters Page 46 of90 intervention parity was restored. Thus, where the rules or government orders grant/require computation by adding "deamess allowance" to "deamess pay" in the fixed percentage, it must be applied to all pensioners, and none should be discriminated. Having so observed, the Supreme Court was conscious and had added the caveat that no employee has the right to draw deamess allowance as deamess pay till such time the State Government decides to grant and treat deamess allowance as deamess pay. The (State) Government has the right to choosewhetheror not^^ail^^no.^ancBls^^ be treatedas deamess payandinthat^^!^|h^i^r^^'^^ "37. The issue in hand needs to be examined from another perspective as well. It must be clearly understood that no employee has a right to draw "deamess allowance" as "deamess pay" till such time as the State Government decides to treat "deamess allowance" as "deamess pay". And therefore, the State Government has the right to choose whether or not "deamess allowance" should be treated as "deamess pay". As such, it is open to the State Government not to treat any part of "deamess -V allowance" as "deamess pay". In case of financial constraints, this would be the most appropriate course to be adopted. Likewise, the State Government has the right to choose how much of "deamess allowance" should be treated as "deamess pay". As such, it is open to the State Government to treat a fraction, or even the whole of "deamess allowance" as "deamess pay". Based on Rule 30 of the Pension Rules, it is clear that the component of "deamess pay" would be added to emoluments of an employee for calculating pension. In a situation where the State Government has chosen, that a particular component of "deamess allowance" would be treated as "deamess pay", it cannot discriminate between one set of pensioners and another, while calculating the pension •WP(C)184/2007 & Connected matters Page 47 of90 payable to them (for the reasons expressed in the precedingparagraphs).Of course, a valid classification may justify such an action. In this case, the State Government has not come out with any justification/basis for the classificationwhereby one set of pensioners has beendistinguishedfrom othersfor differentialtreatment."

¶53This bringsus to the decisionofthe SupremeCourtin UnionofIndia& Anr. Vs. S.P.S. Vains & Ors. (2008)9 SCC 125. Facts of this case are ratherpeculiar,for upon the implementationofthe 4* Pay Commission Recommendation,Brigadi^dnsthe^^high^tbracketwere gettinghigher salarythan the startin|'sala^4in(^;he{p^^ ofMajorGeneral. Resultantly,the|Brigadiers^ than the Major Generalswe|#^^vingh^^^^^^^p^family''^^i^.Noticingthat thepostof^rig^ierwas/is'^^^^tt:forpromofeial^^mkofMajor General, tfee Government'^^^^^^Ipommendationof|the 5^ Pay Commissionhad correctedJh|riuhikien^ anomaly. correct this •\\ ... aberration,specialinstructiins-^efeis'suidthat-^theinitialpay at the rank Ik. ^ of Major General would be fixed at the stage next above the pay notionally arrived at by increasing his pay, including rank pay of Brigadier,by one incrementin^the revised scale at the relevantstage, withoutretrospectiveeffect.In this contextreferencewas made to D.S. Nakara (supra) and the argumentof the retired employees,i.e. retired MajorGeneralswas accepted. We are in agreementwiththe counselof the Corporationthatthe ratio and mandateofthis decisionisconfinedto the peculiarfactualmatrixofthe said case. This decisiondoes referto D.S. Nakara (supra)and statesthat there were severalotherjudgments, in which the principleexpoundedwas followed.The judgmenthas not quotedand referredto these decisions,whichinthe said factualcontext WP(C)184/2007&Connectedmatters Page48 of90 were not required to be quoted. We do not think the aforesaid decision propounds or exposits a ratio contrary to the ratio of the Constitutional Bench in Krishena Kumar (supra) and Indian Ex-ServicesLeague (supra) or the decision in K.L. Rathi (supra) and the State of West Bengal (supra)

¶54In A.N. Sachdeva (Dead) by Legal Representatives and Ors. Vs. Maharishi Dayanand University,Rohtak and Anr., (2015) 10 SCC 117, the issueinvolvedwas,dtffer^t^heretiredemployeeswere being denied the bene||?i-^^^cAupjiyga^^^ke in Kurukshetra University/Punja#Univlrsity &fas?.Gomputing5qualMyingservice for purposeofpe^sio^after^8ft^]^|af||r4edand-becaffieemployeesof the Mahariiii,^^anandfe^^^pDhtak.In ^;liitext,several ere referred to alnlrmwiss^ was decided irilfavourof the decisions v retired em ^1. loyees. This Will-1 is d^@sionl|^\^( iwould not be of iany help and assistance |o the ^^^e^ xeftltpj^eisii^sopiatioiisin! the present controversy.\ '

¶55Ourattentionwas Ors. Vs. Stateof Andhra Pradesh and Ora.; l-985jsSup^""SCC432. This again was a peculiarcase relatingto the StateofAndhraPradeshwhere firstthe age of retirementwas reducedto 55 years from 58yearsandthenrestoredto 58 years in spite of the fact that the Supreme Court had in an earlier decision upheld the reductionof retirementage to 55 years. In this context, D.S. Nakara's case (supra) was referred to observe and hold that different treatment could not be accorded to those who had retked beforeand after a specifieddate as the choiceof date was arbitrary,for WP(C)184/2007 & Connected matters Page 49 of90 classificationwasbaseduponfortuitouscircumstancerelatingto the date of retirement. Reference was made to the principle of reasonablenessof classification and its nexus with the object of the legislation. The argumentpertainingto the administrativechaos was rejectedobserving that the person who had stirred-up the hornet's nest, i.e. the State government,cannotcomplainof beingstung.

¶56Dhan Raj and Ors. Vs. State ofJ &K and Ors., (1998)4 SCC 30 was a case of Drivers of the State Government, who were seeking pensionary benefitsin terms of governmentorder dated 3'^'' October, 1986, though they had retiredpriorto 9^^ June, 1981. The SupremeCourthad noticed T .. • that the Government h^^o^Ulat^^nthe '^^stira of grant of pensionarybenefits.Therewas also a changein the status, as at one time m.- i. the State undertaking was a departmentof the State Government.On the S Vi ,1 « !? interpretationof the relevant orders, it was held that all retirees in the

¶1-I said case includingthose who had retiredprior to 9 June, 1981,would be entitledto pensionarybenefits. Recordingthe said finding,the stand of the State Government was rejected. In this context, reference was made to the ratio in D.S. Nakara (supra) to hold that the restrictive interpretationplaced by the State Governmentfor its own employees was not correct.

¶57Reliancewas placedon the decisionin State ofRajasthan and Anr. Vs. Prem Raj, (1997) 10 SCC 317, which refers to D.S. Nakara, (supra) KrishenaKumar (supra)and Indian Ex-ServicesLeague(supra)and it was observedthat for decidingthe controversyin questionin the said case it was not necessaryfor the SupremeCourtto furtherdelveinto the WP(C)184/2007&Connectedmatters SOof90 •i I V . question as to the extent to which the D.S. Nakara (supra) has been followed or explained. Eluding to the decision in State ofRajasthan Vs. Sevanivatra Karamchari Hitkari Samiti, (1995) 2 SCC 117, the Court observed the D.S. Nakara (supra) has not been given a complete go by.

¶58D.S. Nakara's case (supra) dealt with a situation where all Central Government pensioners, regardless of the date of retirement, were held to be entitled to computation of pension under the liberalized pension formulawitheffectfrom 1®^ April,3;l~97,9,j^

¶59The factual positi0tf^atp|||ti&ei Nakara (supra) was pronouncedshJitirdJbe'fecalliedSlfe.Central'-Govei^ent had earlier extendedbenfe'fitVfminimxifii^(Bii4®^®^sting |fensi8|[ers,whichwas mm" mere Rs.25j(- a's'on 1 Stood enhaMedftoRs.l60/- as on 1®' April 1983. However|^fflMjs ofthe basis adojltedfor fixing iilatlif;Ewhr ^ mmimum pension are avail recommend^merger^^ofdearae'ss^^iilllncerwiththe-aiksic pay from time totime. '1fee^s^^^;;twio^ffli"i^gei^^^blam^s allowancewith -j' basic pay effectiv'e^ffbm30:.>&^pteifi]ie%||972?tindexaverage 272) and 31®^ January, 1982 (index-'ia^^J^JOj-beforethe pronouncementin D.S. Nakara (supra). This merger of deamess allowance was not carried out with effect from the date when the particular index average was reached, but from a subsequent date and was only made applicable to those who retired after that date. The Supreme Court was certainly conscious and aware that employees retiring from broadly comparable posts at different times were receiving different amounts of pension. These differences were due to the difference in emoluments drawn by WP(C)I84/2007 & Connected matters iie First Pay Commission had tm. .J • '--p. • : .-J.- - the retirees at the time of retirement and also on account of merger of deamess allowance with basic pay or due to interim relief granted from time to time. This was not struck down in the case of D.S. Nakara (supra). In fact, it was never made the subject matter of challenge.

¶60The aforestated decisions are not contradictory or laying down different ratios. The principle enunciated in D.S. Nakara (supra) holds that formula for payment or computation of pension when liberalised has to be uniformly applied to all classes of pensioners except when classification made is-switli,reiferjenee to.;th^ut-off date that can be justified on a rational or a-reas6nablebasiS'^ah&doelnotlead to violation ofArticleH.JEqjalli^ydoeti basic pensi©n%i@f the reli 14 are not^Y|ol^t®<^whenthe iWees is imfe^elhanced when emoluments of the in serviceNemPloy^eesllirerevised. D.S.vNakara's case !i I rail I (supra) does not direct paymeri|\oflequal amount of pension pensioners regardless of In (supra), the "49. ...In our opinion, it would make a marginal difference in the case of past pensioners the emoluments are not revised. The last revision of emoluments was as per the recommendation of the Third Pay Commission (Raghubar Dayal Commission). If the emoluments remain the same, the computation of average emoluments under amended Rule 34 may raise the average emoluments, the period for averaging being reduced from last 36 months to last 10 months. The slab will provide slightly higher pension and if someone reaches the maximum the old lower ceiling will not deny him what is otherwise justly due on computation." (emphasis supplied) WP(C)184/2007& Connected matters to all i&akara's case Thus, D.S. Nakara's case (supra) had held that the formula computingpensionby taking averageof last ten months' emoluments would be applied universally. It did not lay down that quantum of emolumentsdrawn duringthe last ten months for each employeemust be taken as uniform. The emoluments have to be calculated according tothe payscalesapplicableatthetime ofretirement. In Indian Ex-Services League (supra) it was held: '"'"lA. ... Nakara decision {{\9%y) \ SCC 305 : 1983 see (L&S) 145] (is) one of limited applicationand there is no scopefor enlargingthe ambitofthat decision to cover all claims made by the pension retirees or a demand for an identical amount of pension to every retiree from the same rank irrespective of the date of retirement, even though the reckonableemolumentsfor the purpose of computation of their pension be different." " ^ The Pensi^,Rul^sG^n^p^i^^||iL^ payouts for retiredemploy(§e#4p^^^ag|jevision^^^€'.^^^ib^|Rules to offsetthe adverseimpactofinfl^o^^^fdef®r^^mj^iiliefbasedupon price index. This cannotbe faurtM^and'-stfucrtownas violatingArticle 14. Thus, courts have recognizedthat amount of pensionfor retireesfrom the same post can be different.

¶61The Fourth Pay CommissionReport in paragraph 10.10 (Part-II)had observed that any attempt to equalize pension with reference to the revisedscalesofpay would,infact, amountsto retrospectiveapplication of these scales of pay and had referredto the decisionof the Supreme Court in SLP 14179-80/1985, State Government Pensioners WP(C)184/2007&Connectedmatters ^"8^53 of90 Association and Ors. Vs. State ofAndhra Pradesh while dealingwith the revision of death-cum-retirementgratuity already receivedby past retirees irithe,following words:- "Improvements in pay scales by the very nature of things can be made prospectivelyso as to apply to only those who are in the employmenton the date of upward revision. Those who were in employment say in 1950, 1960 or 1970, lived, spent and save, on the basis of the then prevailing cost of living structure and pay-scale structure, cannot invoke Article 14 in order to claim the The higher pay scakjibrgught^mtB^fQr in 1980. If upward pa^^fevi|i0i|j^i^bQnade%»|ospectivelyon account it. 1, pi^aps no such revision would ever belmade^' suggestio^fortreatihMtheJiSifdearnessall6warfce/reliefdrawn f from time;Ho time as emolume'nlslMasrejected by the Fourth Pay Commissionon the principlelthatl' pension,noir"'- wiouldresultin unex|namountsof onlyatdiffere||^^^^^venemployee^^wingsame basic pay, referred to the Fourth . /m©0mniissi:oii report toj= expressed and noflb^eel^t^^Sl^l^^^JJ^valencebetween the Sfpt;iHe divergent view Central GovernmentpensioiS^^'d^lfeXorporation pensioners.There are marked and important differences, which we have highlighted subsequently.

¶62In the present case, challenge, to the expression/date "on or after the day of August, 1997" in paragraph 3(A) of Appendix IV of the Pension Rules is fiitile and pointless. Deletion or striking out of the expression "on or after the 1st day of August, 1997" would not result in the outcome sought by the retired employees/associations. The prayer is for WP(C)184/2007& Connected matters • 'ij-c^( revalorization of basic pension by merging deamess relief paid upto index of 1740 points into basic pension or by notional increase in emoluments. The prayer would require re-writing the Pension Rules including the definition of "avei-age emoluments" and Rule 35, 37 and 38 relating to computati on of the amount of pension, deamess relief, and re-calculation of average emoluments for the period of 10 months. In case we accept the contention of the retired employees/associations, whenever there is a revision in pay after a period of every 5 years, all retiredemployeeswould,fce'ehlitleOp^ ofbasicpensionon the basis of enhancedpay scales,notwifhstandingthe fact thatthey have retired prior to'enliancement ,of. pay scales. For" reasons stated, this challenge and submission predicated on Article 14 is to be rejected.

¶63The next question relates to the adequacy of pension and violation of Article 21.,|The question of adequacy;of pension is rather difficult to decide by aljudicial verdict unless the amount or figure s shown as grossly inadeqjiate,unconscionaBlcor an ajjparentcase of arbitrariness and irrationality resulting in violation of Article 14 can be deciphered -- - ' and is made oUt. As in the case of pay fixation, these are matters in the executive doinain and relate to policy. While deciding the question of quantum of pension, multiple factors such as the age of retirement, the length of service of the employee, financial condition of the employer, concept of "living wage" etc. have to be taken into consideration. Pay at the time of retirement has been the factor under the pension rules for the Central Government, State Governments as well as the Corporation. Pension, more often, is calculated on the last pay drawn over the fVP(C)184/2007 & Connected matters . prescribed period, (see paragraph 2.35 of the Fourth Central Pay Commission's Report, Part-II relating to pension).

¶64Article 39 (a) of the Constitution under the Directive Principles stipulates that the State shall secure that the citizens have the right to adequate means of livelihood. The Directive Principles though not conferring a legal right require and remind the State of its duty and obligation to provide means of adequate pension and other terminal benefits. Article 43 of the^^nstitojip^refersto "living wage". The approximate^e standard of living concept of "Universal'^S£sicfifcome^" affdiits.WGOgnitionas a legal right is under debate and cpnsi^lerationtir<^\

¶65The questio]!|l)f?'a|;equacy(5fe)f®mfSi|?pension%foufealsotake into accountthat a prudentpers|M|?pi®xm^kesome personal savmgs for socialsecultyas well as old|g|.|lQiilhouldtake into coilsiderationthe savings, wfach an social security^etc.so as to either self-employedor thd§g®empl6yed®inthe private sector, have to provide for themselves and their families. They rely on savings for old age and social security. We cannot ignore these facets and aspects when the question and clamour for grant of additional or new pensionary benefits is raised by the fortunate miniscule minority on the precept of violation of the Right to Life under Article 21. It is not uncommon when such claims are made, not to account for the assets, savings, and capital WP(C)184/2007 & Connected matters m ' 32^ created from the earnings/salary. These assets are excluded and not adverted to, as they are meant for inheritance by the next generation.

¶66Traditionally, pensions were non-alterable because the value of the money was stable. However, in the Indian context, pensions normally are revised or increased in line with the rise in the cost of living or inflation. To what extent there would be adjustment would again depend upon a number of factors. We do not think that a fixed criteria or formula, which is applicab^^^a^^Sj-Ae^oardor universally,can be adoptedandapplied.^^'^'^^M^ Y

¶67Duringthe cour|^p£^tl}b&eapng^a^^ wr^n^siij^issions,counsel for the retir^'^^loyee^l following Period of Retirement Post of Retirement Executive Director

01.04.1993 3M7.1,9§:

01.08.19 ^3|s?07}20.Q2i i dra^^bu^^ention to the

01.08.2007 20920 "3%38 ^=€6f4CSd«* *48308 Zonal Manager Deputy Zonal Manager Divisional Manager 19704 18623 17723 28690 25713 23209 WF(C)184/2007 & Connected matters 32873 43373 29622 38721 26851 34609 (li.08.2012 '31.01.2013 55618 49918 44548 39803 Assistant Divisional Manager 17723 21991 25504 32615 37503 Admin Officer 16390 19942 22812 28628 32903 Assistant Admin Officer 15976 18968 21652 27116 31158 Higher Grade Assistant 14513 '£f 15152^^,-20323^ . 21840 25070. Assistant 3k .-<£• . ^20040 " ... An illustrationofaZonari^^^a|(0t^||iringon 30.06.19^^and another retiringoi31.08.2016is gi^mlie Cadre Dated|^ Retiremenf^'fePensron>, ^D#Paid r-Basic Pension + DR as in September 2016 %abS-5isa;fof' 31/8/2016 Zonal Manager 30/6/1997 6325 1278

15.0325 19212 25537 Zonal Manager 31/8/2016 49918

49.918 19368 69286 WP(C)I84/2007& Connected matters It was accordingly submitted with reference to the first table that an employee who had retired ,from ajiigher post of Executive Director between 1993 to 1997 would be gettingpension, which is almostequal to the pension payable to an Assistant, who had retired between 1®^ August,2012to 31®^January,2013. It isalso highlightedthatthereisa huge difference between the pension payable to an Assistant, who had retiredbetween 1®^ April, 1993 to 31®^ July, 1997 and August,2012 to 31^ January,2013. This variation,it was urged, violatesArticle 14 as well as Article 21 ofcthf-IEonstitutioifr

¶68Violation of 4^icle, :^Ms notmMei Out with^efer^lce to the aforesaid violateA^icl^lso as to life.&In^t|ieabsenceof cogentdJa and figures, holdthatthe peifsionspayable Rs.2rf!|^0ikimonth do not are grossil|inadequateso rightto life. Tffe challengeis not that tHe,;amount-b.eini^aif'€s.|)^ri'sionisv^^ dnd piteous, but that the pen&n^&lK^afe^^#i^an%Ha^i^a0 to others. The WP(C)184/2007 & Connected matters argument woulllMf# t£5g^$ested*"^der^Fticle' 14 and not under Article 21 of the CtfnltilftiTonv^olMpnso^^^ 14 would not be made out for the reasons set out above, as was decided by the Constitution Bench in Indian Ex-Services League and Am. (supra) , and K.L. Rathi (supra) and The State of West Bengal (supra). We are bound by the said decisions, which interpret D.S, Nakara (supra) and elucidate the ratio. The second table again would not carry the case for the same reason. The table does not take into account the fact that a Zonal Managerwho retiredon 31®^ June, 1997 or 31®^ August,2016 is Page 59 of90 2^ entitled to fixation of pension on the basis of "emoluments" as defined in the Pension Rules.

¶69There is another reason which weakens the retired employees' case, though we accept this would not be a ground to decisivelyreject the challengerelying on Article 14 of the Constitution.Employees,who had retiredbefore 1®^ November,1993 hadtoexerciseoptioninwriting to be coveredunderthe PensionRuleswithinthe period stipulatedand were also required to deposit the Corporation's contribution to the Contributoiy Provident Fund with simple interest @ 6% per annum. For employees who had retired on or after 1®^ November, 1993 or beforethe notifieddate, i.e. 28"^ June, 1995,the optionwas requiredto be exercised and Corporation's contribution to the Provident Fund was M'- to be refunded along with interest @ 12% per annum. The employees miituj. !S- -.a already in service were also to exercise the option and authorize the •1' . . - s: Trust of the Provident Fund to transfer the entire contribution of the Corporation in their Provident Fund along with interest accrued to the credit of the Fund constituted under the Pension Scheme.

¶70The Pension Scheme was not compulsory but was optional, for the retirees, who have made the present challenge.

¶71The petitioners/unions were conscious and had the knowledge that every 5 years there would be a revision of pay-scales and as per the Pension Rules, the employees, who had retired prior to the revision, would not get the benefit of the said upgradedor revised scales. The pensionwouldbe computedwith referenceto the pay drawn or average emoluments during the last 10 months. In order to off-set the WP(C)184/2007& Connectedmatters Page 60of90

¶72inflationaryaffect and fall in the value of money, the PensionRules had postulateddeamessreliefstipulatedas per the scale or formulain Appendix-IV. The purposeand objectofRule 37 readwithAppendix-IV is to grantdeamessreliefon accountofinflationand rise in prices. Deamess relief neutralizedthe inflationaiyeffect to ensure that the pension is adequate and fair. We nowproceedto examinethe differenceinneutralizationby grantof deamess relief and whe^ynss^ds^^ntextAppendix IV violates Article14 andinffinfijSgBtBlqual^J'hePensionRulesnotified on 28 June, 1995 in Appendix-IVnotedthe differencein the pension payableto prior and post 1''November,1993 retirees.This is the date on which the Pension Rules were deemed to have come into force. The AICPI-IWindex on 1®^ November, 1993 was 1148. This index fl. _ number became the basis for computing deamess relief in paragraph 2 • a of Appendix-IV. Paragraph 1 of Appendix-IV was applicable to employees,who had retired beforethe day of November, 1993 (and after 1® January, 1986) in whose case the AICPI-IW Index of 600 points was applicable and made the basis for calculation of deamess relief. Deamessreliefpayableunderparagraph1in AppendixIV is as under:- Basic Pension Rate of Deamess Relief First 1250

0.67% of Basic Pension WP(C)184/2007 & Connected matters Page 61 of90 next 1251 to 2000

0.55% of Basic Pension next 2001 to 2130

0.33%) of Basic Pension Above 2130

0.17%) of Basic Pension Deamess Relief payable under paragraph2 in Appendix IV is as under;-

73.

¶74Basic Pensien^^ Dearness Relief First^p'O^ f

i)Sli^^%ftBasicPension r'Q^9%^^^^^i'e^ension fnep3851to ^fl7%iofBa^P^sion Above 4100 p.09%ofBasicPension Paragraph 1997. The same is payable fo^^-e^^^M^oinjjgjsefe^bVer1740 points in the quarterlyAICPI-IW@ 0.23 percentof the basicpension. As per paragraph 1 of Appendix-IV, the neutralization formula with referenceto pensionersbetween 1®^ January, 1986 and November, 1993 for basic pension for first Rs. 1250 per month is 0.67%, for pensionin excessof Rs.1250 upto Rs. 2000 is 0.55% and for pension in excessof Rs.2000till Rs, 2130 is 0.33%. Thereafterit gets reduced to 0.17% for the basicpensionin excessof Rs.2130.For amountsupto »• WP(C)184/2007 & Connected matters Page 62 of90 oA Rs.2130 the neutralization in paragraph 1 is higher than @ 0.23% stipulated in paragraph 3(A). However, neutralization benefit of 0.17% for payments in excess of Rs.2130 is lower than 0.23% in paragraph 3(A).

¶75Similarly, the equalization of 0.23% of the basic pension for employees,who had retiredor diedonorafter 1®^ August, 1997till 31®^ July, 2002 for every 4 points over 1740 in the quarterly average of the AICPI-IW is higher than the neutralization provided in paragraph 2 for pension amount between Rs.3851 to Rs.4100 and above Rs.4100. Equalizatior^in^sean:wiu^^^^t\veen0.17^

¶76This,in ouro^ion,woiili^fyi^^^lam violate^'r^ioin the D.S. -f :s Nakara's case(supra).Pensionerspriorto 31®^July, 1997 face a greater '§ • VMi imi\- I or harsher impact of inflation as their basic pension is lower. -n-Neutralization of rate of deamess relief in their cases cannot be lower than that of the retirees post 31st July,1997. This unequal treatment in /"' cf computation to the detriment of pre 31 July, 1997 retirees results in discrimination and thus violates Article 14 of the Constitution. Thus, grant of higher equalization @ 0.23% of basic pension in paragraph 3(A), without extending this benefit to those in paragraphs 1 and 2 is unreasonable and discriminatory violating Article

¶14Retired employees covered under paragraphs 1 and are entitled to neutralization at ratio/scale as applicable and given to employees retiring post 31st July,1997. Equalization under paragraphs 1 and 2 should not be less or lower than the equalization provided in paragraph WP(C)184/2007& Connected matters Page 63 of90 ~y^ 3(A). This findingwould be in consonancewith the reasoningand the ratio in D.S. Nakara (supra) as expoundedand explainedsubsequently in other decisions in Krishena Kumar & Ors., (supra), Indian Ex-S^rvicesLeague, (supra), K.L. Rathi (supra),etc. The equalizationor neutralizationcriteriaspecifiedand fixed in paragraphs1, 2, and 3(A) relates to the matter of computation, and takes care of the effect of fall of the value of money and inflation. This being a matter of computation,it would be wrong and inequitablenot to grant benefit of higherscaleequalizationas stipulatedin paragraph3(A)whereverit is more beneficial.^

¶77The consequence of the difference in equalization ratio is that the retirees prior in point of time are getting the lower benefit of equalization in percentage terms as compared to retirees, who were - * If II# II •| getting a higher basic pension.!# M | % wMi. w . 4A % £«-U4., ®

¶78We are aware that in paragraphs 1 and 2, equalization criteria has been fixed in a descendingscale. There is higher equalization on the initial amountstill Rs.2130Jn^agraph1and Rs.3850in paragraph2. This would not make any difference, for we are concerned with reference to paragraphs 1 and 2 with cases of equalisationabove the said figures, which must correspondand meet the equalisationgiven to pensioners underparagraph3(A),who hadretiredsubsequentlyafterthe 1^ day of August, 1997and are in receipt of a higher basic pension.

¶79For the identical reasons, the pensioners in paragraph 1 should not be givendeamessreliefat a ratelowerthanthe pensionersin paragraph2. The rate of deamess relief on amounts above Rs.2130/- till Rs.3850/- WP(C)184/2007&Connectedmatters Page64of90 fixedinparagraph1at0.17%ofbasicpensionshallbe enhancedtothe rate of 0.29% as specifiedin clause(ii) of paragraph2. However,for pensioninexcessofRs.2130/-,rateof0.23%ofbasicpensionas stated inparagraph3(A)wouldapply,witheffectfromthe applicabledate.

¶80We are aware and conscious of the fact that paragraphs 1 and 2 form part of the Pension Rules as originallyenacted. We have, in our reasons, indicated and referred to the option exercised by the retirees coveredby paragraphs1 we would not for this reasonrefuseto grant^lieftio.®"fenstenSiliiparagraph1in casewe fmd thatthe ordinal --j j--., by context cf the ]prayer fbr^^^i|^^onof pension (|i account of increase m emolumentsofflfeeMej employees or uMform rate of basicpension,albeit^ou|i refieffor apparent violation ofmtiGlt!/1^45PFtnii(iMst • .

¶81Duringthe courseof hearing,we had askedthe Corporationto submita table explainingwhat would be the affect in case benefitof 0.23% is given to the employeescoveredby paragraphs1 and 2. Along with written submissions, the Corporation has filed annexures. As per Aimexure A, an employee, who was entitled to basic pension of Rs.5000 on retirement would be entitledto pension after giving benefit of indexationin paragraph1 of Rs.24,681.88and in casepercentageof

0.23% is computedon pensionabove Rs.2130,the pensionwould be enhancedto Rs.27,634.95. Similarly,in case of an employeecovered ^is^iscriminat^iajid^^ an artificial distinctiont#th#'dkrimQMfeftft'^B^pnglow||^eri^on.Reference to option|ex^isedby pertinent^^d relevantin the WP(C)184/2007 & Connected matters ^3 under paragraph 2, who was given an initial basic pension of Rs.5,000, his pension on indexation under paragraph 2 would be Rs.17,286.17, whereas in case he is given benefit of indexation of 0.23% on the pension amount of Rs.3851 and upwards, he would be entitled to pension of Rs.19,489.50/- Thus, on indexation of 0.23% on the higher amounts, the retirees covered under paragraphs 1 and 2 would get greater/higher benefit. They would be entitled to the said benefit. /

¶82The aforesaid direction would largely benefit the retirees on the upper end i.e. whose basic pension in case of paragraph 1 exceeds Rs.2130 or •ir= - wpt ^ in paragraph 2 when basic pension exceeds Rs.3850. This direction would not help the retirees at the lower end where the basic pension # i., was/is less than Rs.2131 or Rs.3851. We would accept the said position, but this would not deter us from passing the order on the ground that the upper end pensioners covered by paragraphs 1 and 2 are entitled to and would get the said benefit.^c. f :

¶83There is another aspect on which we feel the retired employees/associations should succeed. The retired employees/associations on being asked could not point the lowest pension being paid. Perhaps the retired employees at the lower end are not adequately represented in the associations and do not have the same "access". The Corporation was asked to specify the correct position and state the lowest/minimum amount of pension being paid under paragraphs 1 and 2. For the sake of convenience, we would like to reproduce the chart filed by the Corporation, with reference to the minimum pension prescribed under Rule 36 quoted above:- WP(C)184/2007 & Connected matters c:^ CHARTSHOWINGPENSIONPAYABLEINLOWESTSCALEINTHE CADREOFCLASS-IV Minimum service required to earn pension is years as per Rule 14 V August 2012 IS. August 2007 IS. August 2002 IS. August . 1997 JS. August 1992 IS. August 1987 IS. January 1986 Basic at the 10"" stageinthe lowest scale (sweeper) as per wage 15455 8175 5430 3670 2150 1090 Basic Pension for such a person is proportionately calculated = Avg of last 10 months basic divided by 2 x , 10/33 A l/2x 15455X, ^ P •I239es^ •823[c::::;-;^ s Minimum | • Basic Pensiora as per rule 36 ^ 3010 w 9 1100 720^^ 1 t375 !• Hence Basid; Pension •& Payable 3010 1880|;||':if. 1100 f75 DR as on| 1/8/2016 1 S'- 1168 %619S 1864.5 3221 .'1 ?3555 3211 Total Pension payable if the pensioner has put up 10 years 3941 # 3930 3586 if the person retired after putting in years service as a sweeper his terminal Basic i.e. Maximum of . - sweeper scale 51333^ •^8560;^ 13140 1575 Pension as per Rule 35 Last 10 months avg basic /2 25275/2 12638 6665 4280 2798 1570 DR as on 1/8/2016 4903 8288 7573 7271 7023 7466 6456 Total Pension payable if the pensioner has put up 33 years 17541 14953 11853 10068 8593 8253 7210 WP(C)184/2007& Connected matters The aforesaidtable indicatesthat a employeewho had retiredon 1®^ August, 2012, at the lowest end would get a minimum pension of Rs.4178 on 1®^ August, 2016 if he has put in 10 years of service or Rs.17,541 if he has put in 33 years of service. Oil the same day, an employee retiring on or before 1^^ January, 1986 would be entitled wouldbe entitledto a minimumpensioninclusiveof deamessrelief of Rs.3586if he has put in 10 years of serviceand Rs.7210 inclusiveof deamess relief if he has put in 33 years of service. Minimum basic pension is fixed under Rule 36 ^d has been revised as per the table abovefrom timetotime, fromRs.375to Rs.720on 1®^ August,1992,to Rs.llOO on 1'^ August, 1997, to Rs.l480 on 1®^ August, 2002, to 'WW w: /m Rs.l880on 1®' August,2007 and to Rs.3010on 1®^ August,2012. Rule 36 states that the amount of minimum pension shall be the amounts •-B' . _:i _ specified above. Benefit of enhanced minimum pension on each • -S occasion is with reference to the date of retirement. Prior retirees have ^ 'a-i iff not been extended benefit of the increased minimum pension. We do • •'m not think that benefit of minimum pension can be restricted with reference to the date of retirement. If it is so fixed and computed, it will violate the principle of equality as expounded in D.S. Nakara, Krishena Kumar, Indian Ex-Services League and K.I. Rathi (supra). Minimum pension is a matter pertaining to liberalisation in computationof pension,and not connectedwith emoluments. In D.S. Nakara*scase (supra), one ofthe benefitsgrantedtothe pre 1®^ April, 1979 retirees was the benefit of removal of limit of Rs.1500 per month. Secondly,the methodof computationwithreferenceto 36 monthswas struck down, in favour of the period of 10 months for it was more WP(C)184/2007&Connectedmatters Page68of90 beneficial.On the same analogy and reasoning,we would hold that wheneverminimumpensionisenhanced,the saidbenefitwouldaccrue and shouldbegiventothosewho were drawingpensionlowerthanthe stipulated figure. Minimum pension would, to some extent, have reference to the amount required to be paid in order to simply sustain oneself. Thus, Article 21 of the Constitutionwould be attracted. Effect thereof would be that whenever there is an enhancement of minimum pension,the pensionersdrawinglessthanthe minimumpensionwould J be entitled to the minimum pension so fixed. In other words, an employee, who was drawing and entitled to minimum pension of Rs.375 with effect from 1®^ August, 1986, would be entitled to minimum pension of Rs.720 with effect from 1®' August, 1992, d' 2m minimum pension of Rs.llOO with effect from 1®* August, 1997, minimum pension of Rs.l480 with effect from 1®^ August, 2002, minimumpensionof Rs.1880 with effect from 1®^ August, 2007, and I St minimum pension of Rs.3010 with effect from August, 2012, if the •-a; pension being drawn inclusive of deamess relief on the respective dates was lower. Either/or principle, i.e. whichever is more beneficial, will apply. Enhancement cannot obviously work to the detriment of the post retirees.

¶84With effect from the said dates on grant of the said benefit, the pensioners would be entitled to deamess relief as specified and applicable with effect from 1®^ August, 1992, 1®^ August, 1997, 1®^ August,2002, 1®^ August,2007 and 1'^August,2012,respectively.This would be fair and just and would be in consonance with the judgment WP(C)184/2007& Connectedmatters Page 69of 90 and ratio in D.S. Nakara (supra) as expounded and explained in Krishena Kumar, and Indian Ex-Services League (supra).

¶85The next issue that requires examination is whether there is any intelligible difference between pension payment to the Central Government employees and the retired Corporation employees or they form one class. In order to decide this question we would refer to the Pension Rules relating to creation of the pension fund for disbursement of pension. In D.S. Nakara (supra) in paragraph 45, the Supreme Court had stated that the liberalized scheme applicable to government employees was a non-contributory scheme and that was not a case of .iT' -•ifWlf'Q! s&'.Lr'x.. •'ii pension fund. The pension in the said case was a statutory liability of w ^ the government under the rules. Thus, a distinction was drawn by the '.E- • - i Corporation between the said position, and pension payable under the G I pensionfund inthe presentcase.; h\\%^ fl

¶86There is a basic difference between pension payable to retired Corporation employees and the Central Government employees. Pensionto retired^lntM|G©|^|rnin^eifff^mplqyeeis paid on current disbursement approach i.e:-^pay^as=yoTi"go"and not by the funded plan approach. (The position has changed with effect from 01.01.2004 with the introduction of the National Pension Scheme.) Under the "pay as you go" approach, the retired employee is paid pension as and when it becomes due and the outlay being provided from the current operating sources/income. It is treated as a part of current salary costs. Under the funded approach, the employer estimates the amount of future expenditure for pension and sets aside the necessary funds for it. The WP(C)I84/2007 & Connected matters funds can be contributory or non-contributory i.e. provided for by the employer alone or both by the employer and the employee. In case of a business enterprise, the "Fund" approach is preferred for obvious reasons. It reflects the correct liability obligation existing on the said date. It prevents overstatement of operational profits.

¶87Noticing the adverse effect of the ballooning pension bill, the Central Government has introduced the contributory National Pension Scheme with effect jfrom 01.01.2004. Notwithstanding this change, the contributory National^Pensionj^'Sche^^W^sonly introduced for employees jq^^iiag I^^^C^t^orgioniti ;^;0.^^Equating Central '

¶88In the present case, with reference to the Pension Rules in question, it .Q. -J is noticeable that there is a pension fund which is created and has to be ••1-. ff maintained in terms of Rule 5. The composition of the Fund as per •m. Rule 7 consists of the contribution made by the Corporation @ 10% per month of the pay of the employee. The expression "pay" has been defined. Investment in annuities or securities purchased out of money of the Fund, along with interest earned thereupon, is added to corpus of the Fimd. Under Clause (f) of Rule 7, the Corporation is mandated to provide an additional annual contribution in accordance with the provisions contained in Rule

¶11Rule 11 stipulates that the Corporation shall cause an investigation to be made by an actuary into the financial conditionof the Fund every year as on 31®^ March of every year. Thereupon, the additional annual contribution shall be made to the Fund to secure payment of the benefits under these Rules. WP(C)184/20O7 & Connected matters Page 71 of90 Govemmei^^p&ners singleclass wouldhav|4i&pleunf^^^^^te^ukfceptable^&^uences.

89.

¶90^<r Rule 13 dealing with payments out of the Fund, has been quoted in paragraph 20 above. As per Rule 13, the Trust has to purchase annuities from the Corporation in respect of each employee or his familyat the time he or his familybecomeseligiblefor pensionunder the Pension Rules i.e. at the time of retirement or death of an employee. Clause(b) of Rule 13 statesthatthe Trust shall, subjectto availabilityof additionarsums in the Fund to be provided by the Corporation, purchase additional annuities as and when it becomes necessary to revise upwards the benefits payable in accordance with the Rules. As per clause(c), in the eventof the benefitspayableunder these Rules being revised downwards,the annuities purchased under these Rules wouldbe depositedin the Fund. Thus, the Corporationhas an obligationand liabilityto providefor corpusand contributetowards any shortfall. As per th^Corporation,^ ^ contributio^nd§r^^^f(tela) |a^|»|4n providingad.ditionalannual 'Pv' WfM -M :^iiowingextent:- Financial Year i Contnl^on^ - under Rule 7(a) (10% of the pay of the employer) (Crores)

(A) ^^JilffiSitional Annual Contribution under Rule 7(f) r.w. Rule 11 (Crores) Total Contribution (Crores) (A) + (B) 2013-14

272.77 4769.21* 5041.98 2014-15

340.37 4037.43** 4377.80 2015-16 1004.18# (1002.34) 3589.25*** 4593.43# (4591.59) * As per actuarialvaluationreportas on 31.03.2014. WP(C)184/2007&Connectedmatters page72 of90

91.

¶92a? ** As per actuarialvaluationreportas on 31.03.2015. *** Asper actuarialvaluationreportas on 31.03.2016." The PensionRules, for a good reason, do not follow the principleof "pay as you go". It providesfor additionalfundingon actuarialbasis every year. As per the Pension Rules annuitiesare purchasedat the time of retirement or death of an employee. These annuities have a reference to the total amount, which would be payable to the retiree or his family in future. JhLef€fih®i^Hfe^subj^^ to actuarialevaluation under Rule 11. be deposited in the Fund on th^^^^f^cgKi^^^iatkml^^p^'^ervicepension optee empl0ye"^?These^^ftS have ^s^^e'^frovidedby the Corporati^'h^PtheTrust,"^^f^^atentionofthe C<|rporationthat in case prayermade by th^|^p'|;j|f^es/associationsis t^| be accepted and the (Spurt directs -pensionwheneverthere is a revisionoj^pay-sqirl|tvYi&uASi-:®nt^^^^ .^jliuationby the Corporationw#li^b,e^rgauiredis corr^^rA^MoW would not be restrictedto pureh^ey5feanimiii^Si^(® alone, and would accountfor in serviceei^lo^eJSatitlM^ pensionand would take into considerationperiodic increasein pay every five years. This may and would lead to substantial financial obligation/liability and necessaryconsequences. This would certainlyhave an adverseaffect onthe profitandlossaccountandbalancesheetof the Corporation. Thus, while we accept the contention of the retired employees/associationsthat the Corporationis to provide for funds in case there is a shortfall and the Corporation cannot shy away from the WP(C)184/2007 & Connected matters •J

93.

¶94said liability,we would acceptthe contentionof the Corporationand the Union of India that revalorization of pension beyond the statutory or constitutional mandate has to be commercially viable. In other words, no employer can be expected to pay more than his capacity unless there is a statutory obligation or constitutional rights are violated. In the jDresentcontext, in the absence of any statutory right, we would observe that in case there is invidious discrimination that violates Article 14, the Corporation would be liable. The challenge predicatedon Article^^^ftl^J^s^ttetdQ^orreasons statedabove and thereafter has^een-li^^ted oiily i#6i We have ak^a|^g|aotice^|a| Sect^6^the Act which states tha^h^CorporatSfe^^^^^on life^^!^^ij^cebusiness. c^ .^ shall, once at deast in every Section 26 mandates that 1 I two year|^cause an inves^^fej|^ n^^de by acti^riesinto the financialcfilnditionof theM^nsu^af le|business, includibga valuation of the liabiMesaMfsubmEMMIgp^l^^o^^ to the Central Government.t. T?te^altiatit)n-wouldincMe tlfeinsion liability.This is also stipulated in ofthe Rules. Actuarial valuations in the lif^msurance business are the comer stone and edifice for a viable commercial venture. In the life insurance business accounts cannot be maintained on current basis. As noticed below, the law mandates and requires that accounts be maintained on actuarial basis, keeping in mind and accounting for future projections. The principles of actuarial valuation help determine and estimate the financial liabilities on the basis of certain assumption with regard to mortality rates, investment, trends, work force profile etc. WP(C)184/2007 & Connected matters Page 74 cf90 -J. yir" Ml

¶95InA.K, Bindal &Am. Vs. Union ofIndia & Ors., (2003)5 SCC 163, on the question of economicviability and the differencebetweenthe Central Government and a commercial enterprise, which is also a State, it was held as under:- "18. We are unable to accept the contention of Shri Venkataramanithatonaccountofnon-revisionofpay scales of the petitioners in the year 1992, there has been any violation of their fundamental rights guaranteed under Article 21 of the Constitution.Article 21 providesthat no personshallbedeprivedofhis lifeorpersonallibertyexcept accordingto procedureestablishedby law. The scope and content of this article has been expanded by judicial decisions. Right to life enshrined in this article means something more than survival or animal existence. It would includethe right to live with human dignity.Paymentof a very small subsistence allowance to an employee under suspension which would be wholly insufficient to sustain his living, was held to be violative of Article 21 of the Constitution in State of Maharashtra v. Chandrabhan Tale [(1983)3 SCC 387 : 1983 SCC (L&S) 391 : 1983 SCC

(Cri) 667 : AIR 1983 SC 803] . Similarly,unfairconditions of labourinPeople'sUnionfor DemocraticRightsv. Union ofIndia[{\m) 3 SCC 235 : 1982 SCC (L&S) 275 : AIR 1982 SC 1473] . It has been held to embrace within its field the right to livelihood by means which are not illegal, immoral or opposed to public policy in Olga TellisV.Bombay Municipal Corpn\{\9^5) 3 SCC 545 : AIR 1986 SC 180] But to hold that mere non-revision of pay scale would also amount to a violation of the fundamental right guaranteed under Article 21 would be stretching it too far and cannot be countenanced. Even under the industriallaw, the viewisthatthe workmenshouldget a minimumwage or a fair wage but notthattheirwagesmust be revised and enhanced periodically.It is true that on accountof inflationthere has been a generalprice rise but by that fact alone it is not possibleto draw an inferencethat fVP(C)184/2007&Connectedmatters Page 75of90 the salarycurrentlybeingpaidto them is whollyinadequate to leada life withhumandignity.What shouldbe the salary structureto lead a "life with human dignity" is a difficult exercise and cannot be measured in absolute terms. It will depend upon the nature of duty and responsibilityof the post, the requisite qualificationand experience, working conditionand a hostof otherfactors.The salarystructureof similarly placed persons working in other public sector undertakingsmay also be relevant.The petitionershave not placedany materialon recordto showthat the salarywhich is currentlybeing paid to them is so low that they are not / abletomaintaintheirlivinghavingregardtothe postwhich they are holding. The observationsmade in paras 276 and mDelhi Transport Corpn.v.D.TC. Mazdoor Congress[1991 Supp (1) SCC 600 : 1991 SCC (L&S) 1213 : 1990 Supp (1) SCR 142] stronglyreliedupon by learned counsel for the petitioners, should not be read out of its context. In the said case the Court was called upon to considerthe constitutionalvalidityof Regulation9 of the Delhi Road Transport Authority (Conditions of Appointmentand Service) Regulations,1952, which gave powerto terminatethe servicesofan employeeaftergiving one month's notice or pay in lieu thereof. The termination of servicesofsome ofthe employeeson the groundthat they ^ V were inefficientin theirwork by givingone month'snotice was set asideby the High Courtas in its opinionRegulation 9{b) gave absolute, unbridledand arbitrarypowers to the managementto terminatethe servicesof any permanentor temporary employee and, therefore, the same was violative of Article 14 of the Constitution.It was in this contextthat the aforesaidobservationswere made by one Hon'bleJudge in his separate opinion. The issue involved was not of revision of pay scale but that of termination of services whichhas an altogetherdifferentimpacton an employee.

¶19The contentionthat economicviabilityof the industrial unit or the financial capacity of the employer cannot be taken into considerationin the matter of revision of pay scalesofthe employees,does not appealto us. The question WP(C)184/2007 & Connected matters of revision of wages of workmen was examined by a ConstitutionBenchmExpressNewspaper(P) Ltd. v. Union ofIndia[AIR 1958 SC 578] havingregardto the provisions ofthe IndustrialDisputesAct and the MinimumWages Act and the followingprinciplesfor fixationof rates of wages were laid down; (AIR p. 605, para 73) '\1) that in the fixationof rates of wages which include within its compassthe fixationof scales of wages also,the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistenceor minimumwage where the employer is boundto paythe sameirrespectiveof suchcapacity;

(2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis after taking a fair cross-section of the industry; and

(5) that the proper measure for gaugingthe capacityof the industrytopay shouldtake into accountthe elasticityof demandfor the product,the possibilityof tighteningup the organisation so that the industry could pay higher wages without difficulty the possibility of increase in the efficiencyof the lowest-paidworkersresultingin increasein productionconsideredin conjunctionwith the elasticityof demand for the product — no doubt against the ultimate backgroundthat the burdenofthe increasedrate shouldnot be such as to drive the employer out ofbusiness. (emphasis supplied)

¶20The same question was again examined m Hindustan Times Ltd. v. Workmen{AiR.1963 SC 1332] and the Court recorded its conclusion in the following words in para 7 of the Report: (AIR p. 1336) "7. While industrial adjudicationwill be happy to fix a wage structure which would give the workmen generallya livingwage, economicconsiderationsmake that only dream for the future. That is why the Industrial Tribunals in this couiitry generally confine their horizon to the target of fixing a fair wage. But there again,the economicfactors have to be carefully WP(C)184/20p7&Connectedmatters Page77of90 considered. For these reasons, this Court has repeatedly emphasised the need of considering the problemonanindustry-cum-regionbasis,andofgiving careful considerationto the ability of the industryto payr (emphasis supplied)

¶21It may be noticed that in these cases the Court was considering the question of wage structure for workmen who belongto an economicallypoor sectionof societyand providingthem even a livingwage was held to be a distant dream on account of economic considerations and also the capacity of the industry to pay.". We would, theiefor4jfej'ectth%.argun:i^iit#1pYa|Le^^ by the retired employees di* soi^e of tHMasso^iiatwjQSA eccin^mifeviability would notbe the:|eleyantcriteria-l;^®^™'^^ fj:' I i

¶96On the qii3stionoffmancial|im|^t|Meretiredemployees/associations have raised multifarious.^yiimenllSw are to sonie extent even contradictc^. Th^^ro^?atfe^|^i|^i^t^ an upgraded equalpensio%mfoMs%^itwas submittedfi|x^^c^nstitutionalrightand, therefore, it wouMijnpt^^matteriffWhethtotfeCorporatio^ incurs losses or requiresfundingfrom t^^'Ce^Sl&Se^Sient.Othershave suggested that in-service officers or retirees post 1997 getting higher pension should forego their rights to ensure uniformity of pension. These arguments would not justify issue of Court direction. The first submissionmust be rejectedas insubstantialand fallacious,for reasons set out above and subsequently.The employees, both serving and retired, would not agree with the suggestion given by some of the retired employees/associations. These pensioners or in-service WP(C)184/2007 & Connected matters employees are well entitled to claim their entitlement to pension under the PensionRules,whichwouldgivethema statutoryright.

¶97Differencemustbealso drawnbetweena legalrightand corresponding duty, and a moral obligation; This distinction is referred to in Krishena Kumar (supra) in the followingwords:- "31. The argument of Mr. Shanti Bhushan is that the State's obligation towards pension retirees is the same as that towards PF retirees.That may be morally so. But that was not the ratiodecidendiofNakara. [(1983)1 SCC 305 : 1983 see (L&S) 145 : (1983) 2 SCR 165] Legislationhas not said so. To say so legally would amount to legislationby enlargingthe circumferenceofthe obligationand converting a moral obligation into a legal obligation. It reminds us of the distinctionbetweenlaw and moralityand limits which separatemorals from legislation.Benthamin his Theoryof Legislation,ChapterXII, page 60 said: men of goo% : object. the same eftSnt#?All actions, whether jurisdictionof morals.It is aguid?^M©]^^§J^tEe'"iMividual,as it were, by the hand through all the details of his life, all his relationswithhis fellows.Legislationcannotdo this; and, if it could, it ought not to exercise a continual interference and dictationoverthe conductof men. Moralitycommandseach individualto do all that is advantageousto the community, his own personal advantageincluded.But there are many acts usefulto the communitywhich legislationoughtnot to command. There are also many injurious actions which it ought not to forbid, althoughmorality does so. In a word legislation has the same centre with morals, but it has not the same circumference." same these two arts, tsc.ifiices, have WP(C)184/2007&Connectedmatters Page79of90

¶98On the question of financial implication,the Corporationsubmits that on actuarial basis if the stand of the retired employees/associations is accepted, the financial implication would be to the extent of Rs.32000 Crores. The Corporation filed to affidavit and an additional affidavit to explain and affirm their stand and position. The aforesaid figure consists of actuarial evaluation of the present obligation, i.e. present pensioners as well as in service pension optees. The Pension Scheme, itself, as well as Section 26 of the Act mandates actuarial valuation for the PensionScher^^j^Mt^^^^Se^tsiti^^wecannotignorethe financial impactsand the Corporation will have to.Jrovide imr actuarial cSlcifMionwil Hojieijenih-s'^wice|^mployees.The ffi^e'thefiitii|pawises.Indeed, ifwe acc^f)tSSI contentio^^pfi^|||Mrfedemployees/associations,they alongwitiiother retireesand||i:^^g^eofficerswouldyeentitledto increased'fevalorizationofivtHeM^^ after e#ry five years when the pjay comp^^x and intricate calculations.-^h^f^itentignofthe enipJoy^/^ssQciadonsthat out of Rs.32000Crores,1^f23,58BlS%|es^i^l^p©stj,|o'r'upgradation offuture pensioners and hence is hot anaimimediiteliability and will become due and payable at successive intervals and about Rs.8000 Crores is the present liability, has to be rejected as in view of the nature of the Corporation's business and the mandate in law that its accounts must be maintained on actuarial basis. The retired employees/associations have submitted that the entire cost of arrears towards the pensioners from 1997 to 2017 would be about Rs.3163 Crores, which would be one-fifth of the annual expenditure on salaries and other benefits for WP(C)184/2007 & Connected matters

¶99••-• • ^; . 'jiiT . the FinancialYear2015-16. Costoffutureupgradationfor the present pensionersis Rs.5135 Crores. The figures fail to accountfor similar benefitor equaltreatmentto whichthe in-servicepensionopteeswould be entitled.Thesehave to be factoredand accounted.Ifwe proceedon the saidbasisand acceptthe saidsubmission,the financialimplication for the Corporationwill be much more for the present in-service employees,who retire in future. They too would be entitled,on the basis ofparityand equality,to the same benefitand advantageon pay increaseseveryfive ye.ar#ifffiiEur^ The retired e^^loye^kssbciatio^shad^u|)Mft||^that the Pension Fund as per''lhe^5e|)ortf about Rs.#0® Crores interest on the i ^pq^^^earii^-l^adacorpusof temnd^ also — mvestmen ^ . present a^d the future not for any olher purpose. Refemngto sul^ittedth^kindthenhad a Corpus income of Rs.2440Cror^s^^^tife^a^^J^H^dl^fe^^^f^nsion outgowas merely Rs.839 differencebetweenpurchasf^ifrMliateannuityon the retirementof jopt 9% annual • ' li-' i%Mtke|^ThisFund can b| used for the ^Sin fails to notice the an employeeor his death, whichhas been treatedas an expenditureor outgo. The depositor increasein the fund cannotbe computedon the outgoingstowards purchase of annuity. This is the reason why the Corporation has been depositing substantial amounts towards additionalannual contributionin accordancewith Rule 7(f) read with Rule 11 of the PensionRules. This contributionis based on actuarial valuation to secure payment of the pensionary benefits under the WP(C)184/2007 & Connected matters V :^'it t Pension Rules for both the in-service pension optees and retired employees. As per the Corporation,the cost of Rs.23583 Crores is recognisedas a known liabilityand has to be funded immediatelyas per ProjectedUnit Cost Method prescribedin AccountingStandard AS-15. To highlightthe aforesaidposition,the Corporationhas stated as under:- LIC Employees Pension Fund (in Crs) Fund at Beginning of year Investment Income Employers;|' Contributions in lieu of under m Additional Contributions under Rule 7(f) r.w. Rule Benefits paid Fund as at end of year 31/03/2013 ^,31/03/2,014 16,^4 21,Q7.3, ^3,654.>^^ 21,073 27,039 32,578 31/03/16 32,578 ,2,728 I 38,925 It is pointedoutthatthe additionalcontributionunderRule 7 (f) for the year ending 31®^ March, 2016 had come down for the contribution underRule 7(a) in the said year had increasedsubstantiallyto Rs.l004 Crores firom Rs.340 Crores. The additional annual contributions will WP(C)184/2007 & Connected matters go up substantially in case the prayer of the retired employees/associationsisaccepted.

¶100The retired employees/associationshad submitted that the present pensionoutgo expensesconstitutea negligibleor small percentageof the total premiumincome,i.e., it is withinthe range of 0.23 to 0.37% for the years 2004-05 to 2015-16. Pension outgo was a small proportionofthe salaryoutgoand between3.19to 6.21% for the same period. Similarly,the pension5.0.utga>,i:atioin relation to management expenseswas bei^e€n-l^^^i^:i|l'^^J^^^e6h'_FinancialYears2004-05 and 2015-^^^Tfeco||!9|^^con^^ submissionand submitsth^^^^exp^^^^^^idingpe^ionarybenefitsis aboutnV^o^Gtotalexp^^^^fiund30%of%e'^ensesunder the Head^alaryandBenefi|3^||]^TOyees.Theyhav^ubmittedthe following details: - ''>w' 1 p. V A / -'v -V ' H - Expenses in Rs. Crores i-' A > 2014-15 2014-16 Commission to . Agents (1) 14768 16681.29 15092.1 15477.17 Salary and other Benefits (including Pension contribution by corporation (2) 11894.9 14705.11 14523.44 14659.34 Other expenses(3) .. 4812.75 9060.79 7869.25 8033.42 Total Expenses(4)=(l+2+3) 31475.6 40447.19 37484.79 38169.93 Contribution to Pension Fund (5) 3923 5042 4378 4593 WP(C)184/2007 & Connected matters % of Pension Exp to Total Expenses item no. (5)/iteni no. (4)%

12.46

12.47

11.67

12.03 % of Pension Exp to Employees Remuneration

32.98

34.29

29.67

31.35

¶101The error made by the retired employees/associations is they have not computed or taken the figure of the pension outgo from the Corporation to the Fund and have treated the annuities purchased as the 2015-16, the ^06^)o|;§ti faMaci'dus.r In the Financial Year ;4&93 Crores to the PensionFurif.rfSesev^efeSI^^M&erthe Head 'Salaryand Other Benefitstp' tJ|^iSmployeey?^^||^^ to the j^teh|of Rs.14659 Crores.'|ie paymentto t^^^i^^theCorporation-Ippresentsthe Coiporatiln'sliabilityand l|tgS;|l}lp,for the FinancillYear 2015- (iS3' iSu: remuneration ^^ x>,,rproportion or percentage As far as Corporationis concem^4®^ls^^utm^th in form of payment under Rule 7(a) or additional contribution in 7 (f) is a pension outgo. This is the cost of pension to the Corporation.

¶102There is another aspect, which must be referred to and taken into account. Section 40B of the Insurance Act, 1938 read with Rule 17D of the Insurance Rules, 1939 fixes and stipulate statutory limits on management expenditure. The said percentage or figure cannot be breached. For the Financial Year 2014-15, the ratio of actual expenses allowable in terms of Rule 17D was 83.4%. There is very little WP(C)184/2007 & Connected matters Page 84 of90 V 5^ leverageavailableto the Corporationwhichhas to also ensurethat the ratio is not breachednow or in future because of the obligationand liabilities. The ratio ensures fair returns to the policyholdersand restricts management expenses. It balances the two competing objectivesand rights. As per the figures mentionedin the affidavit filed by the Corporationon 4th February,2017, the Corporationhas surplusofRs.36,060Croresinthe FinancialYear2014-15,whichwas allocatedinthe form ofbonus/paymentto policyholdersfor Rs.34,257 Croresand Rs.1803^rprS^^^^C^ip^l^^^emment.Settingaside or contributine |§2pji0-'*drores%calculation would certainlyha^e^i^e|'ativein||a|§L^

¶103The that focus of the % Corporat|nappears to Sonus"payabAothe. policy hold^s^^:^notthe rightso||^^^m^oners.The factthkpaymentof higherpe^ionwould thequantum^ bonus to be paid to best it would , is paid after 10-haveminiscuMtoij^iS©^ 15 years when m Some of the pensioners/associationshad"e#iti'urged'thatpensionarybenefitsshould be left out ofthe managementcost so as to not breachthe stipulations ofRule 17D. Still others had urgedthat arrearspertainto the period 1997 to 2017 and, therefore,need not be accountedfor in one year for the purpose of Rule 17D.

¶104These arguments have to be noted and rejected, as farfetched, unrealistic and unreasonable. The mandate of Rule 17D of the Insurance Rules, 1939 must be adhered to, for breach of statutory WP(C)184/2007 <6 Connected matters Page 85 of90 obligationswouldresultin penaltiesand would also affectand impact the financialviabilityofthe Corporation.Bonus has to be paid to the policyholdersand in most cases is the actualbenefitwhichthe policy holderearnsoverand aboveapremiumpaidby them. The suggestion wouldnot be commerciallyviableor sustainablefor any life insurance company, which does not offer a fixed return and pays bonus. The componentor quantumofbonus is determinedand decidedtoday.The figure, and the amount appropriatedon actuarial basis, takes into accountwhat b^pay^^^^i^^^fcity^^ ^,0'%itii^^the lontigntiori.^ of 'the retired employeestesoBiations^^W^^^schemiis^i^scriminatoiyas the Corpcristiag-is periodi^|^Aalorizationof pensiont|ManagingDire^^^SfrmanunderRulelsB,whoalso receive payment from ^ Pf Rule' 5SB, notwithslmdmganythingib%|lll|^epensionrule#an employee appointed Act, who was in serviceon b^^^^a^ary, 192^^ benefitshallbe calculatedin accorda^^^^^^^giil^^fCentralCivil Service (Pension) Rules, 1972, C^trar"^Sivil Services (Commutation of Pension)Rules, 1981 and in accordancewiththe instructionsissuedby the Central Government thereunder fi-om time to time. The explanation of the Corporation and the Union of India is that appointmentsto the posts of Chairman and Managing Director are made by the CentralGovernmentunder Sections4 and 20 of the Act. These posts require approval of the AppointmentCommitteeof the Cabinetand draw pay as per the scaleofpay applicableto the Central

¶105Lastly, we WP(C)184/2007 & Connected matters Page 86 of90 Government employees. This was the position even prior to introduction of the Pension Rules. Chairman and Managing Director of the Corporation by notification dated 3'^'^ July, 1996, were made eligible for pension, though their salary and deamess relief were calculatedon 608 indexpointswhereaspensionruleshad providedfor calculation of deamess relief at 1148 index points. Thus, there was an anomaly. The CentralGovernmentconsideredthe issue and decided that there shouldbe uniformityof terms and conditionsof appointment approved by the Appioiiit^nt^mmitte^of the Cabinet in the msurance mdust^'mcludjfp-etirenient-paeKage. W" 4'J;-

¶106In viewofthe exj^anation'^'^"' the retirediemt not thiri2jhat\the contention of buid be acceptedssa ground or ^pid by the Central Govermnent J'W' ifl under th| pension mles Central|Government employee!; We have already;!^ireferr^^^to the distinltion between pension ^pj^licableto the Central Govemnientlbmployees,and"'k6tuanai'and' annuity" method applicableto CorporationSnJ^JsffiSnif^ and parityhas not been maintained between the^6ehffarGovemment employees and the Corporation employees.

¶107In view of the aforesaid discussion, it is held as under:-

(i) Employees of the Corporation cannot be equated and claim parity or equivalencein respect of method and "content" of pensionwiththeCentralGovemmentemployees. WP(C)I84/2007 & Connected matters )-r\ - •''...' • f. -X;- , . 0^

(ii) Challenge of the retired employees/associations for revalorization of basic pension or merger of deamess relief with basic pension upon re-fixation of pay scale of in-service employees relying upon Articles 14 and 21 of the Constitution is rejected, except to the extent of entitlement to minimum pension as enhanced/increased under the Pension Rules from time to time; and rate of equalization stipulated in paragraph 1 is lower than the rate in paragraph 2 and'rates in paragraphs 1 and 2 are lowerthanthera$esifi^a§^^3^k^)?^

(iii) In other/ . V • a) Relired|&ployees,!#h6Aar'erin5.receiptof peksion lower than tl^imum ^^^cedfrom •||' time, would be entitledto berifefid6fcth%|minimumpensionIrrespectiveof t fillff the date of retirenieflip I . - i§,tiirection would apply only when it.is beneficialIpJ-prirflefirees. Where such benefit of em^c^^^^^i^i^^ant^y^^"relief would com&ericf^^3^^h«5%uld"beBs!ea^^a^.^''''th^eafteras per the applicable i=iW b) Retirees prior to f "TCugust, 1997 are entitled to deamess relief at a rate not lower than 0.23% of basic pension. Rate of deamess relief for pre 1®^ August, 1997 retirees cannot be lower than the rate stipulated for pensioners who had retired onor after 1®^ August,1997till 31®^ July,2002. WP(C)184/2007 4& Connected matters "ivr-c) Similarly, deamess relief @ 0.17% of basic pension in paragraph 1 shall stand enhanced to 0.29% for amounts between Rs.2130/- to Rs.3850/-, the rate stipulated in paragraph 2.

¶108We would also clarify that payment made in teims of interim directions issued by the Supreme Court would not be refunded or returned to the Corporation. We have issued the said direction as the amount paid is not substantial for the Corporation,, whereas asking the retired 3ione#tOj5i®|L|i®liFaml)un|wl)uldput them in a grave financialdiffiqilty^,

¶109In viewo^h^foresaid^^||l^^^^ allowiri^phiwritPetitions, the Corporatidiiwould the pensionsinlseveralcases. This wouM be a time-c shouldbe compl^^/d3M^fil^%{fi^'tfe||^fe a copyofthisorder IS received. Arrears, if anyfwouldsbe'pai'd from the date when the first Writ Petition was filed, to all retired employees/pensioners who would be entitledto benefit of this judgment. Interestwould not be payable in case, payment is made within a period of one year fi'om the date copy of this order is received. In case there is delay beyond one year interest @ 8% per annum, unless explained and justified in writing to the retiredemployee^,wouldbe payablefi"Om the date of thisjudgment ' >C' till paymentis actuallymade. The retired employee^if aggrievedby WP(C)184/2007 Connected matters ffl¥. f2|Meiseanderrorsor ,a mistakes can be M t 41# made. % will be open^tQ«jii0=^^p.o]pporationto prelcribe suitable 'proeedurej^iiehmaynnvolve;the_r#md4empl0yees/pensioners to submit thlifepel&s^^objectionsor raeifoption! -''The said exercise the writtenorderwouldbe entitledto challengethe order in accordance t I with law.

¶110The writ petitionsare accordinglydisposedof withoutany orderas to costs. }k, APRILa"? ,201# SSNA^KR/NA WP(C)184/2007 & Connected matters (SANJIVKHANNA) JUDGE -if, (CHAlDp^iHEKHAR) JlftcE

I, V * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 9440/2016 % Reservedon : 21®^ February, 2017 Pronouncedon: 27*''April,2017 LIFE INSURANCE CORPORATION OF INDIA Petitioner Tlirough Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. versus KRISHNA MURARILAL ASTHANA & ORS Respondents Through Nemo. W.P.(C) 9442/2016 LIFE INSURANCE CORPORATION OF INDIA &ORS.. Petitioners Through Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. versus KRISHNAMURARILALASTHANA& ANR Respondents Through Nemo. W.P.(C) 9441/2016 KRISHNA MURARI LAL ASTHANA & ORS. Petitioners Through Nemo. versus LIFE INSURANCE CORPORATION OF INDIA & ANR. Respondents Through Mr. Dayan Krishnan, Sr. Advocate with Mi\ Ashok Panigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. W.P.(C) 5903/2016 ALL INDIA RETIRED INSURANCE EMPLOYEES FEDERATION Petitioner Through Mr. Nidesh Gupta, Sr. Advocate with Mr.R.K. Singh, Mr. B.N. Dubey & Ms. Vriti Gujral, Advocates. versus ' Signed By:RAM DATT Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. LIFE INSURANCE CORPORATION OF INDIA & ANR. Respondents Through Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. Mr. Bhagvan Swamp Shukla, CGSC & Mr.Shambhu Chaturvedi, Advocate for UOI. W.P.(C) 5868/2016 ALL INDIA INSURANCE PENSIONERS ASSOCIATION AND ORS. Petitioners Through Mr. Som Dutt Sharma, Advocate. versus UNION OF INDIA AND ORS, Respondents Through Mi*. Dev P. Bhardwaj, CGSC & Mr.Surender Kumar, Advocate for UOI. Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms. Aakashi Lodha, Advocates for Lie. W.P.(C) 4894/2016 RETIRED LIC CLASS I OFFICERS ASSOCIATION HYDERABAD L J Petitioner Through Mr. Nidesh Gupta, Sr. Advocate with Mr.Ashish Tiwari, Mr. Samar Agrawal & Mr. S. Murthy, Advocates. versus LIFE INSURANCE CORPORATION OF INDIA AND ANR. Respondents Through Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi, Mr. Surajit Bhaduri & Ms.Aakashi Lodha, Advocates for LIC. Mr. Vivek Goyal, CGSC & Ms. Vanya Khanna, Advocate for UOI. W.P.(C) 3984/2016 KRISHNA MURARILAL ASTHANA Petitioner Through Mr. Kumar Gaurav & Mr. P. Dayal, Advocates. / • versus UNION OF INDIA AND ORS. Respondents ThroughMr. Ripu Daman Bhardwaj,CGSC, Mr.T.P. Singh&Ms. AbhaMalhotra,Advocatesfor UOL Mr. Dayan Krishnan, Sr. Advocate with Mr. Ashok Panigrahi,Mr. SurajitBhaduri& Ms. AakashiLodha, Advocates for LIC. W.P.(C) 3983/2016 MADAN LAL GANDHI AND ORS. Petitioners Through Mr. Jay Savla & Mr. Bharat Aggarwal, Advocates. versus UNION OF INDIA AND ORS. Respondents Through Mr. Ripu Daman Bhardwaj, CGSC, Mr.T.P. Singh & Ms. Abha Malhotra, Advocates for UOL Mr. Dayan ICrishnan, Sr. Advocate with Mr. Ashok Panigrahi,Mr. SurajitBhaduri & Ms. Aakashi Lodha, Advocates for LIC. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE CHANDER SHEKHAR ]/ . • • W