Saturday, 12 September 2015

Rumour Mills contradict the Nakara and Vains judgments

Equalisation OROP – Stop irresponsible rumours

Chain emails are doing the rounds spreading avoidable alarm and exposing gross ignorance and irresponsibility that there will be loss in OROP after the 7th CPC recommendations are implemented “because the next equalisation will take place in Mar 2018.”

          Whoever wrote the email appears not to know of, or have read the Hon’ble Supreme Court’s orders in D. S. Nakara vs UoI and UoI vs Maj Gen S. P. S Vains (why else would it be termed gross ignorance).

This is not a legal treatise, so here are a few relevant passages from the judgments. Please read the complete judgments for more so that you may satisfy yourself and not get alarmed or add grist to the rumour mills: -  

D S Nakara Vs UoI by a 5 Judge Constitution Bench

By a Memorandum dated May 25, 1979 (Exhibit P-1) the Government of India liberal the formula for computation of pension in respect of employees governed by the Central Civil Services (Pension) Rules, 1972 and made it applicable to employees retiring on or after March 31, 1979. By another Memorandum issued on September 23, 1979 (Exhibit P-2) it extended the same, subject to certain limitations, to the Armed Forces' personnel retiring on or after April 1, 1979. Petitioners 1 and 2 who had retired in the year 1972 from the Central Civil Service and the Armed Forces' service respectively, and petitioner No. 3, a registered society espousing the cause of pensioners all over the country, challenged the validity of the above two memoranda in so far as the liberalisation in computation of pension had been made applicable only to those retiring on or after the date specified and the benefit of liberalisation had been denied to all those who had retired earlier.

Counsel for petitioners contended that all pensioners entitled to receive pension under the relevant rules form a class irrespective of the dates of their retirement and there cannot be a mini-classification within this class; that the differential treatment accorded to those who had retired prior to the specified date is violative of Art. 14 as the choice of specified date is wholly arbitrary and the classification based on the fortuitous circumstance of retirement before or subsequent to the specified date is invalid; and that the scheme of liberalisation in computation of pension must be uniformly enforced with regard to all pensioners.

Counsel for respondents contended that a classification based on the date of retirement is valid for the purpose of granting pensionary benefits; that the specified date is an integral part of the scheme of liberalisation and the Government would never have enforced the scheme devoid of the date; that the doctrine of severability cannot be invoked to sever the specified date from the scheme as it would have the effect of enlarging the class of pensioners covered by the scheme and when the legislature has expressly defined the class to which the legislation applies it would be outside the judicial function to enlarge the class; that there is not a single case where the court has included some category within the scope of provisions of a law to maintain its constitutionality; that since the scheme of liberalisation has financial implications, the Court cannot make it retroactive; that if more persons divided the available cake the residue falling to the share of each, especially to the share of those who are not before the court would become far less and therefore no relief could be given to the petitioners that pension is always correlated to the date of retirement and the court cannot change the date of retirement and impose fresh commutation benefit which may burden the exchequer to the tune of Rs. 233 crores; and that the third petitioner has no locus standi in the case.

Allowing the petitions,

HELD: Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It is attracted where equals are treated differently without any reasonable basis. The principle underlying the guarantee is that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same. Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation. The classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question. In other words, there ought to be causal connection between the basis of classification and the object of the statute. The doctrine of classification was evolved by the Court for the purpose of sustaining a legislation or State action designed to help weaker sections of the society. Legislative and executive action may accordingly be sustained by the court if the State satisfies the twin tests of reasonable classification and the rational principle correlated to the object sought to be achieved. A discriminatory action is liable to be struck down unless it can be shown by the Government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.

Xxxx          xxxx                     xxxx

(iii) Both the impugned memoranda do not spell out the raison d'etre for liberalising the pension formula. In the affidavit in opposition it is stated that the liberalisation was decided by the government in view of the persistent demand of the employees represented in the scheme of Joint Consultative Machinery. This would clearly imply that the pre-liberalised scheme did not provide adequate protection in old age, and that a further liberalisation was necessary as a measure of economic security. The government also took note of the fact that continuous upward movement of the cost of living index and diminishing purchasing power of rupee necessitated upward revision of pension. When the government favourably responded to the demand it thereby ipso facto conceded that there was a larger available national cake, part of which could be utilised for providing higher security to retiring employees. With this underlying intendment of liberalisation, it cannot be asserted that it was good enough only for those who would retire subsequent to the specified date but not for those who had already retired.

2. If removal of arbitrariness can be brought about by severing the mischievous portion, the discriminatory part ought to be removed retaining the beneficial portion. [198 F]
In the instant case, the petitioners do not challenge, but seek the benefit of the liberalised pension scheme. Their grievance is of the denial to them of the same by arbitrary introduction of words of limitation. There is nothing immutable about the choosing of an event as an eligibility criteria subsequent to a specified date. If the event is certain but its occurrence at a point of time is considered wholly irrelevant and arbitrarily selected having an undesirable effect of dividing a homogeneous class and of introducing discrimination the same can be easily severed and set aside. It is therefore just and proper that the words introducing the arbitrary fortuitous circumstance which are vulnerable as denying equality be severed and struck down. In Exhibit P-1 the words:

"That in respect of the Government servants who were in service on the 31st March, 1979 and retiring from service on or after that date.

And in Exhibit P-2, the words:

"the new rates of pension are effective from 1st April 1979 and will be applicable to all service officers who became/become non-effective on or after that date" are unconstitutional and are struck down with the specification that the date mentioned therein will be relevant as being one from which the liberalised pension scheme becomes operative. Omitting the unconstitutional part it is declared that all pensioners governed by the 1972 Rules and Army Pension Regulations shall be entitled to pension as computed under the liberalised pension scheme from the specified date, irrespective of the date of retirement. Arrears of pension prior to the specified date as per fresh computation is not admissible"……………………………etc

UoI Vs Maj Gen S P S Vains

Xxxx                    xxxx                     xxxx

"24.    The said decision of the Central Government does not address the problem of a disparity having created within the same class so that two officers both retiring as Major Generals, one prior to 1.1.1996 and the other after 1.1.1996, would get two different amounts of pension. While the officers who retired prior to 1.1.1996 would now get the same pension as payable to a Brigadier on account of the stepping up of pension in keeping with the Fundamental Rules, the other set of Major Generals who retired after 1.1.1996 will get a higher amount of pension since they would be entitled to the benefit of the revision of pay scales after 1.1.1996.

25.    In our view, it would be arbitrary to allow such a situation to continue since the same also offends the provisions of Article 14 of the Constitution.

26.    The question regarding creation of different classes within the same cadre on the basis of the doctrine of intelligible differentia having nexus with the object to be achieved, has fallen for consideration at various intervals for the High Courts as well as this Court, over the years. The said question was taken up by a Constitution Bench in the case of D.S. Nakara (supra) where in no uncertain terms throughout the judgment it has been repeatedly observed that the date of retirement of an employee cannot form a valid criterion for classification, for if that is the criterion those who retired by the end of the month will form a class by themselves.

In the context of that case, which is similar to that of the instant case, it was held that Article 14 of the Constitution had been wholly violated, inasmuch as, the Pension Rules being statutory in character, the amended Rules, specifying a cut off date resulted in differential and discriminatory treatment of equals in the matter of commutation of pension. It was further observed that it would have a traumatic effect on those who retired just before that date. The division which classified pensioners into two classes was held to be artificial and arbitrary and not based on any rational principle and whatever principle, if there was any, had not only no nexus to the objects sought to be achieved by amending the Pension Rules, but was counter productive and ran counter to the very object of the pension scheme. It was ultimately held that the classification did not satisfy the test of Article 14 of the Constitution.

27. The Constitution Bench has discussed in detail the objects of granting pension and we need not, therefore, dilate any further on the said subject, but the decision in the aforesaid case has been consistently referred to in various subsequent judgments of this Court, to which we need not refer.

28. In fact, all the relevant judgments delivered on the subject prior to the decision of the Constitution Bench have been considered and dealt with in detail in the aforesaid case.

29. The directions ultimately given by the Constitution Bench in the said case in order to resolve the dispute which had arisen, is of relevance to resolve the dispute in this case also.

30. However, before we give such directions we must also observe that the submissions advanced on behalf of the Union of India cannot be accepted in view of the decision in D.S. Nakara's case (supra). The object sought to be achieved was not to create a class within a class, but to ensure that the benefits of pension were made available to all persons of the same class equally. To hold otherwise would cause violence to the provisions of Article 14 of the Constitution. It could not also have been the intention of the authorities to equate the pension payable to officers of two different ranks by resorting to the step up principle envisaged in the Fundamental Rules in a manner where the other officers belonging to the same cadre would be receiving a higher pension.

31. We, accordingly, dismiss the appeal and modify the order of the High Court by directing that the pay of all pensioners in the rank of Major General and its equivalent rank in the two other Wings of the Defence Services be notionally fixed at the rate given to similar officers of the same rank after the revision of pay scales with effect from 1.1.1996, and, thereafter, to compute their pensionary benefits on such basis with prospective effect from the date of filing of the writ petition and to pay them the difference within three months from date with interest at 10% per annum. The respondents will not be entitled to payment on account of increased pension from prior to the date of filing of the writ petition.

(emphasis supplied)
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  1. Sir, it is not just the chain mails. Even some pronouncements by reps of ESM associations tend to muddy waters, somewhat, when they forth on what "they are asking for". A recent example is totally divorcing OROP from years of service years of service and not clarifying their stand.

  2. Sir, would seriously suggest that since fingers are being pointed at Officers that they are protesting for their personal gains, we Officers, on a volunteering basis opt for the 5 year review. Let it be an yearly review for those over 75, widows and PBOR!
    But, I can promise that i will not give up my gas subsidy till Parliament canteen subsidy is over!

    1. @Ajoy Mahen: "..fingers are being pointed
      What does that have to do with the matter? An annual review is possible and should be done. There can be some adjustment on it being done after 2 years. How can pointing fingers alter definition of OROP?

  3. I really dont understand why every one is talking in terms of number of years for the so called equalization.(Of course i do know the real reason is most of the people are used to manual way of doing things both in their personal & professional life) instead of talking about system based automated solution
    This is the classic example of what a system approach can do to vexing problems confounding veterans.

    Actually CDA itself has started such a system called the Centralized distribution of Defense pension ,which can take case of all our requirements & more.Please see system may be already functional wef 01 Jul 2015(as per the contents)
    Unfortunately i have seen only opposition to this system by most of the officers purely out of ignorance.This is the reason why proper automation has not happened even in ECHS & all critical decisions ate based on manual reports & returns

    High time we give important to system solutions which would stand the test of time & make us better prepared for all unforeseen circumstance specially from the likes of DESW,CDA, e tc
    I would go far to suggest that this system should be under the aegis of the Tri Services hq & no one including Jatley (FM) can object to this since it is a natural corollary of the system approach.(by the way Chidambaram has written a good article on OROP n his web site which is worth a look since he calls OROP as honorable pension & the need to motivate people to join the forces through OROP)
    Hence our focus should be to ask all to join the new centralized system, so that all relevant data is in one place & so called equalization becomes a trivial issue.Asking all to join the new system is the real major challenge

    1. @Venkatesh VT:"..know the real reason is most of the people are used to manual way.."
      Since we are so into a system approach, why not use our know-how to guide the manually oriented towards some idea of what their OROP pensions would be without, as so clearly stated, "talking in terms of of number of years for the so called equalization"?

      Those in the dark would be ever so obliged, I think.

    2. @corona8. While i dont want to get personal ,your response(the intended sarcasm) is the typical response & that is why where we are now
      Any how to clarify, equalization & initial fixation are two different processes.
      Once the initial fixation(presently this a manual process) is done & if all the data is one place with all business rules defined & programmed,equalization will happen every time when a new pensioner's data is added to the data base & no one would require days/months/years.
      How ever as i said the data has to be in one place & the worst part is CDA has already thought of it & sadly not Services.The best part is CDA will not object if we want to make OROP part of this system(unless every one again start becoming sarcastic)
      Finally i can not get in to the shoes of the FM/DM/PM & tell you what i or you will get

  4. Despite, existence of such judgement by a constitutional bench - we have suffered for decades with arbitrary attitude and actions of GOI in several issues and instances.GOI contentions and approaches are glaringly delibirate ,arbitrary,delay and deny.Fair and equality is beyond practice by persons in goi.
    What is true and applicable to Maj gens are also applicable to all other classes /ranks- just a sort of ranking system or practice from 1 to 10 in a group of 10.this is where years of svc and that right interpretation of ranks of capt to col of past and present ( sunlit ) is relevant.
    e mails ,both of right and wrong contentions is way of life ,when RM &PM can go on with fauxpas of VRS at level of GOI.
    Yes,esm mostly headed by lot other than those time scale lot, obviously do not display any concern to anomalies being referred by Sunlit
    Yeah, Chi write up , he was Harward type,int & FM for decades and a lawyer too ,who can argue either way depending upon which party he is arguing for.He has done sweet little on orop as FM. What a hyp ??? yes, an hon man .What Chi has done, now AJ is doing.
    As we were !
    About issues and matters being ref by Sunlit - ultimately these have to be pursued by a gp of effected lot.esms have so many other issues ,

    1. @bala: "..issues and matters being ref by Sunlit.."
      In fact there has been chief concern for me, viz., "discrimination".

      Out of that D word flow other all anomalies, disparities and denial of rightful dues.

      You are so right that issues need to be pursued. Some initiatives were launched as per the RDOA blog. But dissemination of details of outcome, current status and further discourse are, unfortunately, now rather restricted on that blog. We hope and pray for a change in that situation. But what has been done provides a very substantial basis for further action by those who have admired RDOA's work. That should be sufficient motivation for concrete action.

      However I also feel, all veterans have a stake in pursuing these issues as discrimination has wider ramifications affecting everyone, not just those who could be considered as the ones suffering from some anomalous ruling or order of the kind I had put forth some ideas on in this blog post.