PENSIONERS' ASSOCIATION v. STATE OF ANDHRA PRADESH

###### ' A STATE GOVERNMENT PENSIONERS' ASSOCIATION & OTHERS _v._ STATE OF ANDHRA PRADESH B •, _--,!_ JULY 25, 1986 ##### t [M.P. THAKKAR AND B.C. RAY, JJ.] ~###### Andhra Pradesh Revised Pension Rules, 1980-Part 11 and G. 0. c ~ _No. 88 dated 26.3.80-Applicabi/ity of-Payment of gratuity at revised_ _rates to pensioners retired prior to_ _1.4. 78-Whether admissible._ The Government Order No. 88 dated 26th March, 1980 provided ~- that retirement gratuity may he 1/3rd of pay drawn at the time of retirement for every 6 monthly service subject to maximum of 20 D months pay limited to Rs .30,000. This order in so far as gratuity is concerned is made effective from 1st April, 1978. The petitioners, erstwhile Government employees who had retired _"before"_ April 1, 1978, filed petition under Article 226in the High Court, contending that gratuity is a part and parcel of the pensionary E J.. benefits and the same cannot be looked separately from the other pensionary reliefs and therefore, they are also entitled to the benefit of gratuity retrospectively at the enhanced rate though they had retired before April 1, 1978 and had been paid gratuity at the then prevailing rate. ~ tended On that behalf gratuity is something different from the other pensionary of the State the petition was contested and it was con- F benefits like pension and family pension, which are continuing ones. t The gratuity that accrued ·to the petitioners prior to 1.4.1978 was calculated on the then existing Rules and paid, and the pensioners who retired prior to 1.4.1978 form themselves into a distinct class for purposes of the payment of benefit of gratuity from the others who G retired after 1.4.1978, the date from which, the revised pension rules are made applicable by the Government. The High Court dismissed the petition holding that the upward revision of gratuity takes effect from the specified date (April I, 1978) #### --\ .. with prospective effect. H ###### " #### --\ .. 383 A B ###### c D E F G H 384 SUPREME COURT REPORTS [1986] 3 S.C.R. Dismissing the Special Leave Petition of the Pensioners' Association this Court, HELD: 1. The upward revi'iion of gratuity takes effect from the specified date (April I, 1978) with 'prospective' effect. The High Court has rightly understood and correctly awlied the principle propounded hy this Court in _Nakara's_ case, wherein it was held that no arrears are required to be paid because to that extent the scheme is prospective. [388B-C] _V.P. Gautama, L4S Retd._ v. _Union of India_ (S.L.J. 1984(1) 120), and _M. P._ _Tandon_ v. _State of UP.,_ [ 1984] Lab. I.C. 677, referred to. _D.S. Nakara_ v. _Union of India,_ (A.I.R. 1983 SC 130), relied upon. 2. There is no illegality or unconstitutionality involved in providing for prospective operation from the specified date. Even if that part of the Notification which provides for enforcement with effect from the specified date is struck down the provision can but have prospective operation-not retrospective operation. In that event it will operate only prospectively with effect from the date of issuance of the notification since it does not retrospectively apply to all those who had already retired before the said date. [388C-E] 3. In order to make the mtification retrospective so that it applies to all those who had retired after the commencement of the Constitution on 26 January, 1950 and before the date of issuance of the notification on 26 March 1980, the Court will have to re-write the Notification and introduce a provision to this effect saying in express terms that it shall operate retrospectively. Merely striking down or effecing the alleged offending portion whereby it is made effective from the specified date will not do. And this, the Court ca1D1ot do. Besides, giving prospective operation to such payments cannot by any stretch of imagination be condemned as offending Article 14. [388D-F] 4. Those who were in employment say in 1950, 1960 or 1970, lived, spent, and saved, on the basi'i.ofthe then prevailing cost of living structure and pay-scale structure, cannot Invoke Article 14 in order to claim the higher pay-scale brought into force say, in 1980. If upward pay revision cannot be made prospectively on account of Article 14, perhaps no such revision would ever be made. Similar is the case with regard to gratuity which has already been paid to the petitioners on the then prevailing basis as it obtained at the time of their respective dates of retirement. And it was already paid to them on that footing. The transaction is completed and closed. [388F-H; 389A] CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) Nos. 14179-80 of 1985 PENSIONERS' ASSOCIATION _v._ STATE [THAKKAR.J.] 385 ' From the Judgment and Order dated 11.7.1985 of the Andhra A Pradesh High Court in Writ Appeal No. 1443 and 1467 of 1984. T.U. Mehta and A. Subba Rao forthe Petitioners. Dr. Y.S. Chitale, T.V.S.N. Chari and Miss Vrinda Grover for the Respondent. The Judgment of the Court was delivered by **THAKKAR,** **J,** Does that part of the provision which provides for payment of a larger amount of gratuity with prospective effect from the specified date offend Article 14 of the Constitution of India? Whether gratuity must be paid on the stepped up basis, to all those who have retired before the date of the upward revision, with retrospective effect, even if the provision provides for prospective operation, in order not to offend Article 14 of the Constitution of India? A Division Bench of the High Court of Andhra Pradesh says 'no'. In our opinion it rightly says so. The petitioners, erstwhile Government employees who had retired _"before"_ April 1, 1978, _inter_ _alia_ claimed and contended before the High Court that they were entitled to the benefit to the Government order No. 88 dated 26 March, 1980 providing that: "(b) Retirement gratuity may be 1/3rd of pay drawn at the time of retirement for every 6 monthly service subject to maximum of 20 months pay limited to Rs.30,000." The said order in so far as gratuity is concerned is made effective from !st April, 1978. Says the High Court: "Therefore, we are now only concerned whether this G.O. Ms. No. 88, dated 26-3-1980, should be made applicable to the pensioners that retired prior to 1-4-1978 by revising their gratuity payable to them. The learned AdvocateGeneral, contends, that gratuity is something different from the other pensionary benefits like the pension and the family pension, which are continuing ones. The Gratuity that accrued to the petitioners prior to 1-4-1978 was calculated on the then existing Rules and paid. In that way, the pensioners retired prior to 1-4-1978 will form themselves into a distinct class for purposes of the pay B c D E F G H A B c D E F G H 386 SUPREME COURT REPORTS [1986] 3 S.C.R. ment of benefit of gratuity from the others that retired after 1-4-1978, from which date, the revised pension rules are made to be applied by the Government. On the other hand, it is the contention of the writ petitioners that gratuity is a part and parcel of the pensionary benefits and the same cannot be looked separately from the other pensionary reliefs. The learned counsel for the Writ Petitioners, no doubt, cited two decisions (1) _V.P._ _Gautama,_ _/AS_ _Retd. v._ _Union of India_ (SU 1984 (1) 120) (2) _M.P. Tandon_ _v._ _StateofU.P._ (1984 LAB. J.C. 677), where their Lordships that decided the above two cases, held, that no distinction can be made in the pensionary benefits including death-cum-retirement gratuity benefit between the pensioners that retired prior to the stipulated date and after the stipulated date. In the decision _D.S._ _Nakara_ v. _Union of India,_ (A.LR. 1983 S.C. 130), their Lordships of the Supreme Court enunciated the principle as follows: "With the expanding horizons of socioeconomic justice, the Socialist Republic and Welfare State which the country endeavours to set up and the fact that the old man who retired when emoluments were comparatively low are exposed to vegaries of continuously rising prices, the falling value of the rupee consequent upon inflationary inputs, by introducing an arbitrary eligibility criteria, 'being in service and retiring subsequent to the specified date' for being eligible for the liberalised pension scheme and thereby dividing a homogeneous class, the classificallon being not based on any discernible rational principle and being wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being throughly arbitrary, the eligibility for liberalised pension scheme of "being in service on the specified date and retiring subsequent to that date" in the memoranda Exs. P-1 and P-2. violated Art. 14 and is unconstitutional and liable to be struck down." After thus enunciating the principle, their Lordships have taken care to observe as follows: "But we make it abundantly clear that arrears are not re A B ###### c D E F G H •• PENSIONERS' ASSOCIATION _v._ STATE ITHAKKAR,J.] 387 quired to be made because to that extent the scheme is prospective." in our opinion, the arrears relating to gratuity benefit computed according to the Revised Pension Rules of 1980 may not be paid to the pensioners that retired prior to 1-4-1978 because at the time of retirement, they are governed by the then existing Rules and their gratuity was calculated on that basis. The same was paid. Since the revised scheme is operative from the date mentioned in the scheme, i.e. 1-41978, the continuing rights of the pensioners to receive pension and family pension must also be revised according to that scheme. But the same cannot be said with regard to gratuity, which was accrued and drawn. The reason why their Lordships of the Supreme Court in _Nakara's_ case refused to grant arrears to the pensioners that retired prior to the stipulated date would _ipso facto_ apply for refusing to grant the revised gratuity, since that would amount to asking the State Government to pay arrears relating to gratuity after revising them according to the new scheme for those that retired prior to 1-4-1978 and that would amount to giving retrospective effect t(') the A.P. Revised Pension Rules, 1980, which came in to 'effect from 29-10-1979 and in the case of Part-II of those· Rules from 1-4-1978. The scheme is prospective and not retrospective. Moreover, we must remember that when the State Government appointed the Pay Revision Commissioner to review the then existing scales of pay under G.O. Ms. No. 745, General Administration (Sp!. A) Department, dated 3-111978, the Pay Revision Commissioner was asked to take into account, while making his recommendation, the economic conditions in the State, the financial implications **of his recommendations, and the impact thereof on the** resources avilable for the plan and other essential non-plan expenditure. Surely, the Pay Revision Commissioner, when he made his recommendations to revise the pensionary benefits, is not contemplating to make his recommendations retrospective. Otherwise, he would have taken financial implications of those recommendations and the impact thereof on the resources available for plan and other essential non-plan expenditure of the State. For this **reason· also, we cannot direct the State Government to re-** A B c _D_ E F G H 388 SUPREME COURT REPORTS [1986] 3 S.C.R. vise the gratuity benefit, which was already paid to these petitioners who retired prior to 1-4-1978. The Supreme Court has clearly stated in _Nakara's_ case that arrears are not required to be paid because to that extent the scheme is prospective. Similar is the case with regard to the case of gratuity that was accrued and paid prior to the stipulated day mentioned ill the G.O. promulgating the Revised Pension Rules of 1980." We fully concur with the view of the High Court. The upward revision of gratuity takes effect from the specified date (April 1, 1978) with prospective effect. The High Court has rightly understood and correctly applied the principle propounded by this Court in _Nakara's_ case, AIR 1983 S.C. 130. There is no illegality or unconstitutionality (from the platform of Article 14 of the Constitution of India) involved in providing for prospective operation from the specified date. Even if that part of the Notification which provides for enforcement with effect from the specified date is struck down the provision can but have prospective operation-not retrospective operation. In that event (if the specified date line is effaced), it will operate only prospectively with effect from the date of issuance of the notification since it does not retrospectively apply to all those who have already retired before the said date. In order to make it retrospective so that it applies to all those who retired after the commencement of the Constitution on 26 January, 1950 and before the date of issuance of the notification on 26 March, 1980, the Court will have to re-write the notification and introduce a provision to this effect saying in express terms that it shall operate retrospectively. Merely striking down (or effacing) the alleged offending portion whereby it is made effective from the specified date will not do. And this, the Court cannot do. Besides, giving prospective operation to such payments cannot by any stretch of imagination be condemned as offending Art 14. An illustration will make it clear. Improvements in pay scales by the very nature of things can be made prospectively so as to apply to only those who are in the employment on the date of the upward revision. Those who were in employment say in 1950, 1960 or 1970, lived, spent, and saved, on the basis of the then prevailing cost of living structure and pay-scale structure, cannot invoke Art. 14 in order to claim the higher pay-scale brought into force say, in 1980. If upward pay revision cannot be made prospectively on account of Article 14, perhaps no such revision would ever be made. Similar is the case with regard to gratuity which has already been paid ti to the petitioners on the then prevailing basis as it obtained at the time -, of their respective dates of retirement. The amount got crystallized on PENSIONERS' ASSOCIATION _v._ STATE ITHAKKAR.J.] 389 ~ the date of retirement on the hasis of the salary drawn by him on the A date of retirement. And it wa; already paid to them on that footing. The transaction is completed and closed. There is no scope for upward or doY<nward revision in the context of upward of downward revision of the formula evolved later on in future unless the provision in this behalf expressly so provides restrospectively (downward reviB sion may not be legally premissible even). It would be futile to contend that no upward revision of gratuity amount can be made in harmony ### + with Article 14 unless it also provides for payment on the revised basis that no upward revision of gratuity amount can be made in harmony with Article 14 unless it also provides for payment on the revised basis to all those who have already retired between the date of commencement of the Constitution in 1950, and the date of upward revision. ## ... There is therefore no escape from the conclusion that the High Court to all those who have already retired between the date of commencement of the Constitution in 1950, and the date of upward revision. There is therefore no escape from the conclusion that the High Court was perfectly right in repelling the petitioners' plea in this behalf. For c the sake of record we may mention that our attention was called to an order of a Division Bench of the High Court of Gujarat LPA 280 of )-- 1983 dated 8.9.83 per P.D. Desai Acting C.J., which does not discuss the issues involved but is based on a concession said to have been made by the Advocate General who appeared for the State. And also to a D decision of the Ailahabad High Court, _(M.P. Tandon_ v. _State_ _of U.P.,_ [1984] Lab. J.C. 677) and (Punjab & Haryana High Court _(VP. Gautama_ v. _Union_ _of lndia,_ A.LR. SLJ [1984] (I) 120:) In none ot these decisions the relevant passage from _D.S. Nakara_ v. _Union_ _of India,_ [1983) SC 130, was considered. Nor was the aspect regarding prospective operation .1. considered on principle. The High Court considered it shocking and E was carried away by the fact that an employee who retired even one day before the enforcement of the upward revision would not get the benefit if the specified date of enforcement was not effaced by striking down the relevant provision. But in all cases of prospective operation ~ it would be so. Just as one who files a suit even one day after the expiry I of limitation would lose his right to sue, one who retires even a day F prior to enforcement of the upward revision would not get the benefit. ¥ This cannot be helped, there is nothing shocking in it unless-one can say legislation can never be made prospective, and nothing turns on it. These are the reasons which impelled us to dismiss the Special Leave ~ Petition on 18 July, 1986. A.P.J. ' # G A.P.J. Petition dismissed. '