Aerial View : Second Part of File Notings leading to issue of OROP letter of 7 Nov 2015

RTI Request No. DEXSW/R/2018/50005

for File Notings and other Information relating to Para 3 of the

MoD letter dated 07 Nov 2015 for One Rank One Pension

* * * * * *

Note: For brevity, information available on other websites is not re-produced here but the name of the website is given in the appropriate places viz. Hon’ble Supreme Court for orders pertaining to Case numbers mentioned. Readers are requested to go to that/those website(s) for necessary information.

* * * * * *

F No. 12 (01)/2014-D (P/P)/Part - II

From pre-page

Sub: Request for legal advice on the proposal of One Rank One Pension (OROP) in view of the Supreme Court Order dated 16.2.2015 in Civil Appeal No. 2966 of 2011 titled Union of India Vs SPS Vains & Others and Order dated 9.9.2008 in CA No. 5566 of 2008 as advised by the Department of Expenditure, Ministry of Finance

The principle of One Rank One Pension (OROP) for the Armed Forces Personnel was announced by the then Finance Minister in his interim budget 2014-15 speech. It has been reiterated in the President’s address to both the houses of Parliament on 9.6.2014 after constitution of the 16^th Lok Sabha and also in the regular budget 2014-15 speech of the honourable Finance Minister on 10.7.2014. One Rank One Pension implies that uniform pension be paid to the Armed Forces personnel retiring in the same rank with same length of service irrespective of their date of retirement and any future enhancement in the rates of pension to be automatically passed on to the past pensioners.

2. In order to finalise the modalities of implementation of OROP, Ministry of Defence constituted a Working Group under the chairmanship of Controller General of Defence Accounts (CGDA) with representatives of 3 services, Department of Ex-Servicemen Welfare, and MoD (Finance). The Working Group met five times and deliberated on OROP. The Working Group considered the following three possibilities:

(i) Providing maximum of the fitment tables (ready reckoner showing pay fixation rank-wise in the 6^th CPC pay bands to commissioned officers as followed in the case of JCOs/ORs.

(ii) Allowing notional increments on minimum of fitment tables for rank last held.

(iii) Calculating pension on the basis of average/mean amount of pension for current retirees.

3. Working Group submitted the report with the above options without any recommendation. Armed Forces gave the fourth option of calculating the pension based on the maximum in the rank with same qualifying service and granting of this identified maximum across three Services with provision to review every year.

4. A series of meetings were held in this Ministry for this purpose. After discussion, the following methodology has been considered as appropriate for implementation of OROP for Armed Forces:

(i) Weighted average of qualifying service for each rank shall be determined with reference to retirees pertaining to year 2013, which shall be taken as the representative qualifying service for that particular rank.

(ii) Taking maximum pension drawn in year 2013 for each rank and group in case of PBORs (Personnel below Officer Rank), on the weighted qualifying service, as the representative pension for all officers and PBORs of that rank and group.

(iii) The maximum pension shall be determined from the pension drawn in rank and group across the three Services. The pensioners drawing pension above the proposed pension, shall continue to draw the same. The protection in pension of post-2006 retiree shall also be allowed.

(iv) Linkage of disability element and family pension shall also be established with the revised pension.

(v) The effective date of implementation of the proposal shall be 1^st April 2014.

(vi) The tentative financial implication has been assessed a Rs 8,298.48 crore per annum (details annexed).

5. With the approval of the Hon’ble Raksha Mantri, the proposal was forwarded to the Ministry of Finance, Deptt of Expenditure through Ministry of Defence (Finance/Pension) for approval.

6. Ministry of Finance, Department of Expenditure, vide their ID Note No. 1(6)/EV/2015 dated 1.4.2015 addressed to Ms Vandana Srivastava, FA (DS) have referred Order passed by the Supreme Court on 16.2.2015 in the Civil Appeal No. 2966/2011 in the case of SPS Vains & Others Vs UoI as under: -

“Ms Pinki Anand, Learned Additional Solicitor General prays for and is granted three months time finally to work out the modalities for the One Rank One Pension principle on which the Tribunal has passed the impugned Judgment. The principle is also, it appears, covered by the decision of this Court in Union of India and Others Vs SPS Vains (retd) and Others (2008)”

7. Comments of the Ministry of Defence have been sought on this point bringing out at the same time, in what respect, if any, the present proposal is in deviation of principle laid down by the order of the Hon’ble Supreme Court and whether such a deviation could be legally construed as compliance with the same without infringement whatsoever. Comments are further sought if the principle of OROP as enunciated by the Hon’ble Supreme Court in the said case may be adopted as the guiding principle for OROP across the ranks at this juncture and if so whether such course of action would lead to higher financial impact than on the present proposal. The financial impact on this count is also sought to be indicated.

8. As the Department of Expenditure, Ministry of Finance has asked for comments on how the present OROP proposal is in deviation of the principle laid down by the Supreme Court in SPS Vains case and whether such a deviation could be legally construed as compliance with the same without infringement, the issue involved in the court cases relating to Major General SPS Vains (retd) is given below.

9. In 2001, Major General SPS Vains, a pre 1996 retiree, along with others filed a petition in High Court of Punjab & Haryana at Chandigarh with a demand to allow higher pension to Major General than that of Brigadier rank. Hon’ble High Court vide its order dated 26.5.2005 in CWP No. 17233/2001 allowed it and directed the respondents i.e. Union of India to fix the minimum pay scale of Major Generals above that of Brigadiers and grant pay above that of Brigadier as has been done in the case of post 1.1.1996 retirees and consequently fix the pension and family pension accordingly.

10. As the steps have been taken to address the anomaly by fixing the minimum pension of Major Generals who retired prior to 1.1.1996 up to Rs 9550, an SLP No. 12357/2006 was filed in the Honourable Supreme Court by UoI. Hon’ble Supreme Court dismissed the SLP No. 12357/2006 (Civil Appeal No. 5566 of 2008) vide its order dated 9.9.2008 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 rank after the revision of pay scales w.e.f 1.1.96, and thereafter, to recomputed 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 3 months from the date with interest at 10% per annum. Review Petition was filed by the Government.

11. In Feb 2009, Contempt Case No. 64/2009 in CA No. 5566 of 2008 was filed by Maj Gen SPS Vains (retd) and others for non-implementation of the Order. As the Review Petition filed by the Government in CA 5566 of 2008 was dismissed by the Hon’ble Supreme Court on 24.2.2009, Government implemented Hon’ble Supreme Court order dated 9.9.2008 vide Government letter dated 15.7.2009 duly prescribing the methodology for re-fixation of their pay on notional basis and corrigendum dated 30.9.2009 and 8.10.2009 were issued. When the Court was informed of the action taken by the Government, the Petitioners raised certain additional issues and the comments were also filed.

12. In the meantime, orders on 6^th CPC were issued. Aggrieved by it, OA No. 100/2010 was filed by Maj Gen SPS Vains and 52 others in AFT, Chandigarh challenging the various instructions issued by the Govt stating that a similar anomaly has occurred in fixation of pay of those officers after the 6^th CPC. Hon’ble AFT, Chandigarh, vide its order dated 4.3.2010 directed the respondents to implement the decision of the Constitution Bench as well as Supreme Court decision rendered in SLP (Civil) No. 12357/2006 (UoI & Another Vs SPS Vains (retd) & others) in letter and spirit in the matter of fixation of pension of the petitioner within three months from the date of the impugned order.

13. Views of the Deptt of Expenditure, Ministry of Finance and Deptt of P & PW were obtained. Deptt of Expenditure vide O.M No. C-47/EV/2010 dated 30.6.2010 has stated that after implementation of 6^th CPC recommendations, some sections of pre-1.1.2006 pensioners, particularly those who retired in the grade/rank of Joint Secretary/Major General and Addl Secretary/Lt Gen have complained that the percentage increase in the case of their revised pension is much lesser than that of Directors/Colonels as well as pensioners who retired in HAG+ grade. Consequently, they demanded that in order to grant them parity vis-à-vis the existing Govt servants in the grade/rank of Joint Secretary/Maj Gen and Addl Secretary/Lt Gen their pensions should be fixed not with reference to the minimum of the pay band, but with reference to a notional stage in PB-IV which could be the stage where the pay of the existing officer of their grade/rank has been fixed. This demand cannot be conceded, as this would have far reaching consequences for pre-1.1.2006 pensioners of all grades/ranks and it would entail huge financial implications.

14. In view of the reservations expressed by Ministry of Finance to implement order dated 4.3.2010 in 100/2010 of AFT, Chandigarh, CA No. 2996 of 2011 titled Union of India and Others Vs SPS Vains and Others was filed by the Government in consultation with LA (Defence) challenging the above order of AFT, Chandigarh on the grounds mentioned in the Annexure. The case (CA No. 2996 of 2011) came up for hearing in 2011 along with Contempt Petition No. 64 of 2009. As directed by the Hon’ble Court, Government filed the rejoinder (along with calculation sheets for computation of the pensions) in the Court. The case came up for hearing in October 2014 and Ms Pinki Anand, Additional Solicitor General has informed the Court that the Government has decided to implement the OROP and the modalities are being worked out. On 16.2.2015, the Contempt Petition No. 64/2009 in Civil Appeal No. 5566/2008 and CA No. D.2966/2011 again came up for hearing and the Hon’ble Supreme Court granted 3 months time to finalise, work out the modalities for implementation of One Rank One Pension (OROP) principle on which the Tribunal has passed the impugned judgment. The principle is also, it appears, covered by the decision of this Court in Union of India & Others Vs SPS Vains (retd) & Others.

15. Comments of the Controller General of Defence Accounts (CGDA) were called for. CGDA vide UO No. 5699/80-P/Vol IV dated 13.4.2015 has given the comments as follows:

“ Ministry may be intimated that the judgment of Honourable Supreme Court dated 9.9.2008 passed in Civil Appeal No. 5566 of 2008 and SLP (Civil) No. 12357 of 2006 in case of UoI Vs SPS Vains and others, was in the matter for removal of anomaly in case of revision of pension of the rank of Major General vis-à-vis Brigadier while implementing the recommendations of Fifth CPC. However, while deciding the matter, the Apex court also considered the disparity in payment of pension to officers of the same rank, who had retired prior to the introduction of the revised pay scales with those who retired thereafter. It was observed by the Apex Court that on applying stepping up of pension under Fundamental Rules for pre-1996 Major Generals with Brigadier, disparity was created within the same class as the officers who retired prior to 1.1.1996 were same pension as payable to a Brigadier and other set of officers who retired after 1.1.1996 were getting higher amount of pension as they were entitled for the benefit of the revision of pay scales after 1.1.1996. Hon’ble Supreme Court, therefore, held the classification invalid under Article 14 of the Constitution and also as per judgment of a Constitution Bench in the case of D S Nakra and directed to notionally fix the pay of all the pensioners in the rank of Major General at the rate given to similar officers of the same rank after revision of pay scales with effect from 1.1.1996 and compute their revised pension accordingly from a prospective date.

In view of above, it is intimated to the Ministry that a principle was evolved by the Hon’ble Supreme Court by their decision in UoI Vs SPS Vains (retd) and others (2008) 9 SSC 125, to bring pre and post 1996 retiree Major General officers on par with a background to remove the anomaly in pension of pre-1996 retiree officers of the rank of Major Generals. It is pertinent to mention that the principle enunciated in the judgment by the Hon’ble Apex Court, was not regarding implementation of One Rank One Pension.

Ministry may be intimated the methodology finalised for implementation of One Rank One Pension for Defence Forces is with reference to determine a standard rate of pension in order to achieve principle of ‘one pension’ for ‘one rank.’ Since methodology pronounced by the Hon’ble Supreme Court in the earlier decision dated i.9.2008 in Civil Appeal No. 5566/2008 was regarding removal of anomaly in pension between the rank of Major General and Brigadier, the same was not considered at the time of formulating principle to implement One Rank One Pension for Defence Forces.

If the principle enunciated in Hon’ble Supreme Court judgment in UoI and others Vs SPS Vains (retd) is adopted, notional pay in every case as on 1.1.2006 has to be fixed before determining revised pension. For this purpose, pay fixation formulae approved by the Government under Revised Pay Rules for implementation of various Pay Commissions or Committees or due to general revision of scale of pay/financial upgradation/Court orders etc allowed from time to time, has to be taken into account. The Record Offices/Pay Accounting Offices will need to carry out notional fixation of pay as on 1.1.2206 based on which corrigendum PPOs would be issued by the Pension Sanctioning Authorities. The exercise would involve review of 18 lakh cases and take lot of time. Further, extraction of pay related data from old records of non-effective personnel pertaining to manual periods by administrative authorities would be a Herculean task as their availability could also not be confirmed due to retention period prescribed for maintenance of these records. Ministry mat also be intimated that since notional pay varies from case to case, the financial implication involved could not be determined at this point of time.”

16. In order to understand the formulation of the proposal suggested for implementation of One Rank One Pension for Defence Forces, following is submitted for consideration:

(a) Weighted average of qualifying service for each rank determined with reference to retirees pertaining to year 2013-14 of Army, which has been taken as the representative qualifying service for that particular rank across three Services. An example for the rank of Major General is attached as Annexure A.

(b) Taking maximum pension drawn in the year 2013 for each rank and group in case of PBOR on the weighted qualifying service, as representative pension for all officers and PBOR of that rank and group.

(c) The maximum pension shall be determined from the pension drawn in rank and group across the three Services. The pensioners drawing pension above the proposed pension, shall continue to draw the same. The protection in pension of post-2006 retirees shall also be allowed.

17. Based on the above formulation, the proposed pension for the rank of Major Generals with weighted qualifying service of 36.5 years comes to Rs 38500/- per month.

18. However, if proposal enunciated in Hon’ble Supreme Court judgment in UoI and others Vs SPS Vains (retd) is adopted, notional pay in every case as on 1.1.2006 has to be fixed before determining revised pension.

19. In the case of 53 respondents of the rank of Major General in OA No. 100/2010 filed by Major General SPS Vains (retd) and others, an attempt has been made by CGDA to fix notional pay of 52 respondents as on 1.1.2006 to determine pension in terms of Hon’ble Supreme Court’s above judgment. It is reported by CGDA that in case of officers who retired on attaining age of superannuation, pay documents, Individual Running Ledger Accounts (IRLAs) are retained for 10 years from the date of final settlement of their accounts. However, based on LPC and other documents, pay accounts offices were able to locate only 52 cases and fix their pay as on 1.1.2006. For this purpose, pay last drawn on the date of retirement of the officers have been taken into account to determine notional pay. The benefit of additional increments in the revised scale of pay as on 1.1.2006 has also been taken for those who have earned stagnation increments in the pre-revised scale of pay. This has been considered in terms of clarification issued vide Ministry of Finance, Department of Expenditure E-III (A) Branch, OM No. F -10/2/2011-E.III (A) dated 4^th July 2014. However, benefit of notional increments after date of retirement up to 1.1.2006 has not been taken into account as prescribed in MoD’s letter dated 15.7.2009, issued in implementation of Hon’ble Apex Court judgment dated 9.9.2008. It could be perused from Annexure B that due to fixation of notional pay as on 1.1.2006, the revised pension as on 1.1.2006 for 52 retired Major General officers and equivalent rank varies from Rs 31720/- to Rs 36490/-. This pension is against the rates of pension applicable to these officers @ Rs 26700/- per month from 1.1.2006 and Rs 30350/- from 24.9.2012.

20. It is further reported by CGDA that the Record Officers/Pay Accounting Offices will need to carry out notional fixation of pay as on 1.1.2006 based on which corrigendum PPOs would be issued by Pension Sanctioning Authorities. For this purpose, pay fixation formulae approved by the Government under Revised Pay Rules for implementation of various pay/financial upgradation/court orders etc allowed from time to time, has to be taken into account. The exercise will involve review of 18 lakh cases and will take a lot of time. Further, extraction of pay related data from old records of non-effective personnel pertaining to manual periods by administrative authorities would be a Herculean task as their availability could also not be confirmed due to retention period prescribed for maintenance of these records.

21. Since notional pay varies from case to case, the financial implication involved in implementation in principle, enunciated by Hon’ble Supreme Court could not be determined by CGDA at this point of time.

22. In view of the CGDA’s response, Ministry of Finance may be intimated since notional pay varies from case to case, the financial implications involved in implementation of the principle enunciated by the Hon’ble Supreme Court could not be determined at this point of time.

23. The methodology enunciated by the Hon’ble Supreme Court, is that pay of all pensioners in the rank of Major General and equivalent rank in the other two wings of the Defence Services be notionally fixed at the rate given to similar officer of the same rank after revision of pay scales with effect from 1.1.1996 and thereafter, to compute their pensionary benefits with prospective effect from the date of filing of the writ petition. The broad principle contained in the OROP proposal of the Ministry of Defence is in consonance with the principle enunciated by the Hon’ble Supreme Court, as evident from the statement of pension calculated in respect of 52 officers covered by the Writ petition in accordance with the orders of the Hon’ble Supreme Court.

24. To sum up, the Hon’ble Supreme Court stated that the broad principle governing the fixation of pension applied for pre-pay commission retirees should be the same as post-pay commission retirees. The OROP proposal of the Ministry of Defence is in conformity with the broad principle relied on by Hon’ble Supreme Court in CA No. 5566 of 2008 (SLP No. 12357 of 2006 in UoI & Anr Vs SPS Vains & Ors.)

25. File is referred for a legal advice on the stand taken by this Ministry as detailed below:

(i) The broad principle governing the methodology proposed by this Ministry in implementation of OROP is in consonance with the principle enunciated by the Hon’ble Supreme Court in Civil Appeal No. 5566 of 2008 vide its order dated 9.9.2008 (SLP No. 12357/2006 titled as Union of India Vs SPS Vains & Others).

(ii) The present proposal of this Ministry is in no respect deviating from the principle laid down in the above mentioned Order of the Supreme Court in SPS Vains case and therefore, the question of deviation, if any, amounts to infringement of Supreme Court order, does not arise.

Sd/-------------

(K Damayanti)

Joint Secretary (ESW)

29.04. 2015

JS & LA (Defence)

Annexure A

Data of Maj Gen 2013 and 2014

Qualifying Service	Total number of retirees	Weighted average of qualifying service (QS x No. of retirees/total retirees in rank
33	1	0.3235
33.5	2	0.6569
34	2	0.6667
34.5	2	0.6765
35	6	2.0588
35.5	8	2.7843
36	20	7.0588
36.5	29	10.3775
37	11	3.9902
37.5	14	5.1471
38	5	1.8627
38.5	1	0.3775
39	I	0.3824
Total	102	36.3629

Weighted QS for Maj Gen = 36.5 years

Annexure B

S No.	Name/Rank of officer	Date of retirement	Qualifying Service	Last Pay drawn	Scales of pay of the last rank held	Scales of pay of the rank effective from 01.01.96	Notional pay as on 1.1.96	Scale of pay of the rank effective from 1.1.06	Notional fixation of pay as on 1.1.06	Revised pension (50% of Col 10)
1	2	3	4	5	6	7	8	9	10	11
1	Maj Gen SPS vains	31.10.95	34 y, 3 m, 20 days	Rs 6700/- Stag incr Rs 200	5900-200-6700	18400-500-22400	Rs 20000	PB-4 Rs 37400- 67000) Grade Pay Rs 10000	Rs 63440	Rs 31720

Annexure C

S No.	Name, Rank	Notional pay as on 1.1.2006 in terms of HSC judgment dated 16.2.2015	Revised pension as on 1.1.2006 with reference to notional pay fixed	Pension under OROP proposal sent to Ministry of Finance
1	Maj Gen SPS Vains	63440	31720	38500

(Aerial View: the table is truncated as including all 52 Maj Gen would have made this post exceed its permissible length).

-13-

Dy No. 1170/XV/LA (Def)

Ministry of Law & Justice

Department of Legal Affairs

O/o Legal Adviser (Defence)

The main question for our consideration is as to whether or not the methodology proposed by Ministry of Defence for implementation of ‘One Rank One Pension’ (OROP) is in consonance with the principle enunciated by the Supreme Court vide its order dated 09.09.2008 in Civil Appeal No. 5566/2008 [SLP (C) No. 12357/2006] titled as Union of India & Anr Vs SPS Vains (retd) & Ors (for short SPS Vains’s case).

2. The judgment of the Supreme Court dated 09.09.2008 has been perused along with the record placed on file. The operative part of the judgment of the Supreme Court given in SPS Vains’s case (supra) reads as follows: -

“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 other two Wings of the Defence Services be notionally fixed at the rates given to similar officers of the same rank after the revision of pay scales with effect from 01.01.1996, 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 of 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. The appeal is accordingly dismissed.”

3. From the language used in the concluding para of the above noted judgment, it becomes clear that no principle was laid down by the Supreme Court in relation to OROP as has been projected. Therefore, we are unable to understand the genesis of the issue that has been raised by the Ministry of Finance.

-14-

4. However, it is worthwhile to mention here that the Apex Court in two separate judgments viz. Indian Ex-Services League & Ors Vs Union of India & Ors – AIR 1991 SC 1182 and K L Rathee Vs Union of India – SLJ 1997 (3) 207 had an occasion to examine the issue of OROP and the consequent effect of the ruling given by the Constitution Bench of the Supreme Court in D S Nakara’s case reported in (1982) 2 SCR 165. In Indian Ex-Services League’s case, the Apex Court after detailed deliberations, held that unless the petitioner’s claim in substance of One Rank, One Pension can be treated as flowing from the relief granted in Nakara, the reliefs claimed in these petitions though differently worded cannot be granted. The Court further observed that there is no scope for enlarging the ambit of that decision (Nakara) 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 pf retirement, even though the reckonable emoluments for the purpose of computation of their pension be different. The same principle has been reiterated by the Supreme Court in K L Rathi’s case (supra).

5. In the light of the above, the administrative Ministry may examine the proposal of OROP independently in consultation with Deptt of Expenditure, Ministry of Finance. The directions given by the Supreme Court in SPS Vains’s case (supra) may be dealt with separately.

Sd/-------------

(M S Tariq)

JS & LA (Defence)

01.05.2015

JS (ESW)

-15-