INTERNATIONAL JOURNAL OF RESEARCH AND ANALYSIS VOLUME 4 ISSUE 2 ISSN

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1 CRITICAL ANALYSIS OF THE SUPREME COURT S STANCE ON ONE RANK, ONE PENSION: FROM D. S.NAKARA CASE TO NOW *DUSHYANT THAKUR I. INTRODUCTION A. Pension Pension is defined in Oxford Advanced Learners Dictionary as an amount of money paid regularly by a government or a company to somebody who is considered to be too old or too ill/sick to work. 1 The term has been judicially defined as a stated allowance or stipend made in consideration of past service or a surrender of rights or emoluments to one retired from service. Thus the pension payable to a Government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation or for service rendered. 2 B. Raison d'être for Pension Raison d être i.e. reason for giving pension becomes important because if pension is just an ex gratia payment to retirees, then pension payment will be completely on employer s whims and fancies. But if it is seen in a way that an employee earns it while he works for his employer, then employer must pay pension to his employee and it will be an expense for him. Initially the Non-Contributory pension 3 appears to have been introduced as a reward for loyal service. Probably the alien rulers who recruited employees in lower echelons of service from the colony and exported higher level employees from the seat of Empire, wanted to ensure in the case of former continued loyalty till death to the alien rulers and in the case of latter, an 1 Pension, Oxford Advanced Learner s Dictionary 1120 (7th edition 2005). 2 D.S. Nakara & Others v. Union Of India, 1983 AIR Fringe benefits to the employee wherein he is not required to contribute and all related retirement plan costs are borne by the government and/or employer as per Available at last seen on 29/12/

2 assured decent living standard in old age ensuring economic security at the cost of the colony. 4 In the course of transformation of society from feudal to welfare, and as socialistic thinking acquired respectability, State s obligation to provide security in old age was recognized and as a first step pension was treated not only as a reward for past service but also as a way of helping the employee avoid destitution in old age. The quid pro quo was that when the employee was physically and mentally alert, he rendered unto the master the best, expecting him to look after him in the fall of life. A retirement system therefore exists solely for the purpose of providing benefits. In most of the plans of retirement benefits, everyone who qualifies for normal retirement receives the same amount. 5 Therefore, it can be said that pension is not only compensation for loyal service in the past or an amount of money paid ex gratia for the past services, but, compensation earned by rendering long and efficient service, and is thus an expense for the government. In one sentence one can say that the most practical raison d'être for pension is the inability to provide for oneself due to old age. 6 C. One Rank, One Pension From the last few decades it is being contested that just providing pension to retirees is not enough. It should be equal for all people of the same rank, who provided same length of service, irrespective of their date of retirement. This is the idea behind One Rank, One Pension. OROP "implies that uniform pension be paid to the Armed Forces Personnel retiring in the same rank with the 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. The concept includes bridging the gap between the rate of pension of the current pensioners and the past pensioners, and also future enhancements in the rate of pension to be automatically passed on to the past pensioners. This definition of OROP was given by the Koshyari Committee 7 in its report on Grant Of One Rank One Pension in It became the most popular definition as it was accepted by the then UPA Government, endorsed by the Parliament, and by ex-servicemen and ex-servicemen organizations but Defense. 4 Supra 2, at Ibid. 6 Supra 2, at The Parliamentary Committee on Petitions on Grant of OROP, named after its Chairman, Bhagat Singh Koshyari. 122

3 Demand for the use of same formula for calculation of pension (and not the same amount of pension) started from the landmark case of D. S. Nakara and oth. v. Union of India 8, which subsequently formed the base of every such petition. But in Union of India And Anr v. S. P. S. Vains (Retd.) And Ors 9, the Court went far from the ratio of Nakara case and provided for One Rank, One Pension. II. D.S. NAKARA CASE D. S. Nakara and oth. v. Union of India (Nakara Case) came up when formula for calculating pension, in which pension was calculated by taking average of emoluments of last 36 months just preceding the service, was liberalized by a memorandum dated May 25, 1979 and average of 10 months preceding the date was taken for the calculation of pension. Coupled with it, a slab system for computation was introduced and the ceiling was raised. The liberalized pension formula, slab system and raised ceiling was applicable prospectively to those who retired on or after March 31, 1979 in case of government servants covered by 1972 Rules and in respect of defense personnel, those who became/become non-effective on or after April 1, This liberalized formula, slab system and raised ceiling was not made applicable to those who retired prior to the above-mentioned dates. In this way, government servants and defense personnel who retired prior to March 31, 1979 and April 1, 1979, respectively, suffered from triple jeopardy, viz., lower average emoluments, absence of slab system and lower ceiling. The Hon ble Supreme Court held that the liberalized scheme will be made applicable even to those government servants and defense personnel who retired prior to March 31, 1979 and April 1, 1979 respectively. For arriving at this decision, the Court, among many points, considered the following: That the differentia between the class on the basis of date does not have rational nexus to the object sought to be achieved by the memorandum in question and, thus, violate Art. 14 of the Constitution of India Supra 2, at Union of India v. SPS Vains, (2008) 9 SCC Article 14 of the Constitution of India says that, The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. 123

4 The Court directed respondents to apply the new liberalized formula, which was an upward revision of the existing benefit, for calculation of pension of the retirees who retired prior to the specified date. That the liberalized scheme was not a new retiral benefit, but an upward revision of the existing benefit and had it been a new retiral benefit, those who have already retired could not expect it. On observing the Judgment of the Hon ble Supreme Court, one will note that the Court never gave for One Rank, One Pension. Although the Courts in some subsequent decisions did pay careful heed to aforesaid points, but the attention of various High Courts and the Supreme Court, in recent years, has shifted from these points to the concept of One Rank, One Pension. III. CONFIRMATION OF RATIO FROM D.S. NAKARA CASE In the case R. L. Marwaha v. Union of India 11, the Supreme Court confirmed to the observation in Nakara case that the insertion of date to provide benefit just to those who retired after the said date and not to those who retired prior to the date without any reasonable nexus does violate Art.14 of the Constitution of India as it creates two classes of pensioners which is not warranted under the Article The Court laid down thus: it has to be held that the classification of the pensioners who were working in the government/autonomous bodies into two classes merely on the basis of date of retirement as unconstitutional as it bears no nexus to the object to be achieved by the order. 12 The writ appeal was allowed in this case. Violation of Art. 14 due to cut off date was again confirmed in M.C. Dhingra v. Union of India and Others 13, when the Supreme Court held that: The cut off date is arbitrary violating Article 14 of the Constitution of India. Having grouped all the similar circumstanced employees, fixing the cut off date and giving benefit to those who retired thereafter is obviously arbitrary R. L. Marwaha v. Union of India, (1987) 4 SCC Ibid, at M.C. Dhingra v. Union of India and Others, AIR 1996 SC Ibid, at

5 In the case, Indian Ex-Service League and ors. v. Union of India and ors. 15, the Supreme Court dismissed the writ petition of the petitioners and held that: The petitioners' claim that all pre retirees of the Armed Forces are entitled to the same amount of pension as shown in appendices `A' `B' and `C' for each rank is clearly untenable and does not flow from the Nakara decision. 16 This was because the ratio that flows from the Nakara Case is that, if there is an upward revision of an existing benefit, the same will be provided to old retirees. And the Court never held in the Nakara case that the old retirees will be provided with the same amount of pension which is being provided to new retirees, even of the same rank. It can be seen that the Court keeping Nakara Decision in mind denied the petitioner s demand for the One Rank, One Pension The Supreme Court came across a similar situation in the case of, State of Rajasthan and anr. v. Prem Raj 17 and took the same stance as in the case of Indian Ex-Service League and ors. v. Union of India and ors., allowing the appeal and thus dismissing the Writ Petitions filed by the respondents. Yet again, the Supreme Court rejected One Rank, One Pension keeping Nakara Case and Indian Ex-Services League's case in mind. In the case, State of Punjab v. Justice S.S. Dewan (Retired Chief Justice) and others 18, the Supreme Court relied on the same reasoning as in the Nakara Case, that, benefit of upward revision of an existing scheme should also be given to the people who retired before the cut off date but not those benefits which arise of a new retiral benefit. The court also explained what can be regarded as an upward revision of an existing scheme and what can be said to be a new retiral benefit in the following terms: On the basis of same reasoning it may be said that any modification with respect to the other determinative factor, namely, qualifying service made with a view to make it more beneficial in terms of quantum of pension can also be regarded as liberalization or upward revision of the existing pension scheme. If, however, the change is not confined to the period of service but extends or relates to a period anterior to the joining of service then it would assume 15 Indian Ex-Service League and Ors. v. Union of India, AIR 1991 SC Ibid, at State of Rajasthan and anr. v. Prem Raj, AIR 1997 SC State of Punjab v. Justice S.S. Dewan (Retired Chief Justice) and oths, AIR 1997 SC

6 a different character. Then it is not liberalization of the existing scheme but introduction of a new retiral benefit. 19 The Court, considering the new amendment as a new retiral benefit, observed that: What has been done by amending Rule 16 is to make the period of practice at the Bar, which was otherwise irrelevant for determining the qualifying service, also relevant for that purpose. It is a new concept and a new retiral benefit. The object of the amendment does not appear to be to go for liberalization. 20 The Court, in this case, allowed the appeal, setting aside the judgment and order passed by the High Court and dismissed the writ petition filed by the respondents. This was again in line with the reasoning used in the Nakara case. Till this stage we have seen that Supreme Court never ruled for One Rank, One Pension but just followed the ratio of the Nakara Case. The Supreme Court recognized One Rank, One Pension for the first time in Union Of India And Anr v. S. P. S. Vains (Retd.) And Ors. IV. S.P.S. VAINS CASE In Union Of India And Anr v. S.P. S. Vains (Retd.) And Ors 21, the contention was that a Brigadier was drawing more pension than that of a Major General as the rank of Brigadier is a feeder post for the promotional rank of Major General. The Punjab and Haryana High Court allowing the writ petition held that: "For the foregoing reasons, the writ petition is allowed and the respondents are directed to fix minimum pay scale of the Major General above that of the Brigadier and grant pay above that of a Brigadier as has been done in the case of post retirees and consequently fix the pension and family pension accordingly. There shall be no order as to costs. 22 But when an appeal was filed by the Union of India through the Secretary, Ministry of Defense and the Chief of Army Staff through the Adjutant General Army Headquarters, New Delhi, against the judgment and order Adjutant General Army Headquarters, New Delhi, against the judgment and order, the Supreme Court went ahead from the bone of contention to the idea of One Rank, One Pension. The Court observed that: 19 Ibid, at Supra 18, at Union of India v. SPS Vains, (2008) 9 SCC Ibid, at

7 If the government increases pay of Major Generals to a position which is more than that of Brigadier, even than two Major Generals who retired prior and after to cut off date would get two different amount to pensions. 23 Thus, the Supreme Court dismissing the appeal directed that: 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 Defense Services be notionally fixed at the rate given to similar officers of the same rank after the revision of pay scales with effect from This is exactly what One Rank, One Pension means and this case was the point when the idea of One Rank, One Pension cropped up in the Supreme Court. V. AFTER S.P.S. VAINS CASE But after this decision, although the Court gave its observations on S.P.S. Vains case in its latter judgments, but preferred to follow the ratio from the Nakara case. In K.J.S. Buttar v. Union Of India And Anr 25, the Supreme Court held that: In our opinion, the restriction of the benefit to only officers who were invalided out of service after is violative of Article 14 of the Constitution and is hence illegal. 26 In A.N. Sachdeva (dead) by LRs. & Ors. v. Maharshi Dayanand University, Rohtak & Anr. 27, the Supreme Court made the same observation as in D.S. Nakara case that Non- Contributory pension in not an ex gratia payment, but payment for past services. The Court s observation that the scheme was an upward revision of benefit and fixing a cut off is not intelligible and is discriminatory is also based on the ratio of D.S. Nakara case. In the above mentioned cases the Court allowed the appeals, setting aside impugned order and judgment. Although the Court, in both the cases gave serious consideration to S.P.S. Vains case but preferred to follow the ratio of Nakara case. 23 Supra 21, at Supra 21, at K.J.S. Buttar v. Union Of India And Anr, (2011) 11 SCC Ibid, at A.N. Sachdeva (dead) by LRs. & Ors. v. Maharshi Dayanand University, Rohtak & Anr., Civil Appeal Nos of 2008, Judgment dated August 10,

8 On the other hand, Full Bench of Central Administrative Tribunal in All India S-30 Pensioners Association & Others v. Union of India & Others 28 not only preferred to follow the ratio laid down in SPS Vains case but also observed that SPS Vains judgment relies on D.S. Nakara case which can be said to be an incorrect observation because D.S. Nakara case laid down that there can be no disparity in application of pension scheme between the officers who are of same rank and not that there can be no disparity in pension amount given to the officers who are of same rank. This was again confirmed in Shri R.C. Garg & Others v. Union Of India & Others 29 in which the Full Bench of Central Administrative Tribunal did not prefer to interfere with the decision of previous Tribunals of providing Pre 2006 retirees with the amount of pension equal to that of Post 2006 retirees. VI. CONCLUSION AND OBSERVATIONS Therefore, Although the Supreme Court in Judgments later to D. S. Nakara case denied One Rank, One Pension on the basis of ratio given in D. S. Nakara case and even after S.P.S. Vains case, D. S. Nakara case has been weighted more than the S.P.S. Vains case, but the demand for One Rank, One Pension is on the rise (mainly from defense personnels) and very soon Courts (Both High Courts and Supreme Court) will look forward to provide for One Rank, One Pension, as seen in the above mentioned decisions of Full Bench of Central Administrative Tribunal, which can be said as a start in the shift of stance of Courts towards One Rank, One Pension. This can also be confirmed by the recent direction by the Supreme Court to the Centre for implement its six-year-old verdict given in the S.P.S. Vains case to follow the one rank, one pension (OROP) principle for retired armed forces personnel. This direction came while hearing a contempt petition filed by retired Major General SPS Vains after waiting for nearly 6 years All India S-30 Pensioners Association & Others V. Union of India & Others, OA 937/2010 with OA 2101/2010 (Central Administrative Tribunal, 20/11/14). 29 Shri R.C. Garg & Others v. Union Of India & Others, RA No.186/2014 in OA No.2461/2012 (Central Administrative Tribunal, 07/01/15). 30 Bhadra Sinha, SC asks Centre to fulfil one rank, one pension promise, Hindustan Times (Feb 19, 2015), last seen on 20/12/

9 Even the Government, after many protests from Defense personnels, came up with a memorandum dated November 7, 2015, implementing One Rank, One Pension for Defense Forces Personnels with effect from July 1, It also said that pension will be re-fixed on the basis of average of minimum and maximum pension for personnel retired in 2013 in the same rank and with the same length of service and pension will be re-fixed, in future, in every 5 years. The Defense personnel have protested re-fixing of pension every 5 years and they are demanding that re-fixing should be done every 2 years. The Court in Nakara Case observed that liberalization of pension of retiring Government servants was decided by the Government in view of the persistent demand of the Central Government employees because that the pre-liberalized pension scheme did not provide adequate protection in old age and that a further liberalization 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 as a sequel of inflationary inputs and diminishing purchasing power of rupee necessitated upward revision of pension. If this be the underlying intendment of liberalization of pension scheme, can any one be bold enough to assert that it was good enough only for those who would retire subsequent to the specified date but those who had already retired did not suffer the pangs of rising prices and falling purchasing power of the rupee? 32 Considering this observation, if the people who retired prior to a specific date are equally hit by inflation as the people who retired after that specific date, then why just provide old retirees with a new formula for calculating pension (as given in Nakara case) and why not provide them with the same amount of pension as is being provided to the new retirees? This question should be considered seriously by the courts because even if old retirees are provided with a new formula for calculating pension, their pension will still be less than that of the new retirees and therefore they will suffer the pangs of rising prices and falling purchasing power of the rupee even more. 31 Department of Ex-Servicemen Welfare, Ministry of Defence, Government of India, One Rank One Pension (OROP) to Defence Forces Personnel, OROP Letter No. 12(1)/2014/D(Pen/Pol)/Part-II dated November 7, Supra 4, at