TMI Blog1990 (7) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... RAWAL, S.C. , JJ. Shanti Bhushan, Mrs. Swaran Mahajan, Ms. Anuradha Mahajan,Mrs. Rekha Pandey, Jayant Bhushan, Badri Das Sharma, C.V. Francis, Ramesh Babu, Ms. Santosh Paul and G. Prakash, Kapil Sibal, Additional Solicitor General, R.B. Datar, for the Petitioner Mukul Mudgal, C.V. Subba Rao, B.D. Sharma, R.B. Mishra, B.K. Prasad and A.M. Khanwilkar for the Respondent N.P. Saxena for the Intervener JUDGMENT K.N. SAIKIA, J. This analogous cluster of five writ petitions and one special leave petition involves a common question of law. The petitioner in Writ Petition No. 352 of 1989 is the President of the All India Retired Railwaymen (P.F. Terms) Association and the petition has been filed in a representative capacity on behalf of all the members of the Association who retired with Provident Fund benefits. Writ Petition No. 361 of 1989 has been filed by three individual retired Railway employees who also retired with Provident Fund benefits. The petitioner in Writ Petition No. 1285 of 1986 retired as Block Inspector of Northern Railway on 7.1.1968, a non-pensionable post. All the petitioners except petitioner No. 5 in W.P. No. 1575 of 1986 retired fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the option. It is the petitioners case that till 1.4.1957 or even sometime thereafter, the pensionary benefits and the alternative Contributory Provident Fund benefits were considered to be more or less equally beneficial, wherefore, employees opted for either of them. That the benefits of the two were evenly balanced was evidenced by the Railway Board circular dated 17.9.1960 which gave an option to the employees covered by the Provident Fund Scheme to switch over to pension scheme and vice versa. Mr. Shanti Bhushan, the learned counsel for the petitioners in Writ Petition Nos. 352 and 361 of 1989, submits that between 1957 and 1987 the pensionary benefits of Railway employees were enhanced on several occasions by different ways such as altering the formula for computing the pension, by including dearness allowance in the pay for computing pension, by removal of the ceiling on pension, and by introducing or liberalising the Family Pension Scheme etc. The Railway, it is urged, had expressed no intention of extending the benefits of this liberalised pension to those employees who had already retired. At the time when the option was given to choose between pension and Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. 18.06.85 31.03.85 12. 08.05.87 01.01.86 It may be noted that in case of each option the cut-off date was anterior to the respective dates of announcement, and as a result, employees who retired after the cut-off date (specified date) and before the notification date were also made eligible for exercising the option despite the fact that they already retired in the meantime. From the above, the main legal point that arises, submits Mr. Shanti Bhushan, is that the Railways issued the above notification giving option to certain P.F. retirees after the respective cut-off dates to opt for the Pension Scheme even after their retirement, but the same options were not given to other similarly situated P.F. retirees beyond the respective cut-off dates. This, it is submitted, is clearly discriminatory and violative of Art. 14 of the Constitution and deserves to be struck down. It is contended by the petitioners that each of the above notifications including the last one, dated 8.5. 1987 had given a fresh option to some of the P.F. retirees while denying that option to other P.F. retire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed Pay) Rules, 1960. Under this notification new pay scales were introduced for Railway Servants. These new pay scales were effective from 1st July, 1959. Fresh option was granted on 17.9.60 to Railway employees who were in service on 1.7.59 to come over to the pension scheme. The last date for exercising the option was 15.12.60. This was extended upto 31.12.60 to enable the concerned employees to come to a considered decision whether to retain the P.F. or opt for the pension scheme. (iii) Pension Option dated 26.10.62 A decision was taken on 26.10.62 to count the officiating pay for the purpose of retirement benefits in case of those who were in service on 1.9.62. Accordingly, a fresh option was given to staff to come over to pension scheme on 26.10.62. This option remained open till 31.3.63. (iv) Pension Option dated 17. 1. 1964 As a result of introduction of Family Pension Scheme 1964, which came into force on 1.1.1964 orders were issued on 17.1.64 to the effect that all Railway employees who were in service could opt for pension scheme within a period of 6 months. This option was extended upto 16.9.64. (v) Pension Option dated 3.3.66 Family Pension Scheme was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also for the pension option. The pension option had therefore to be extended from time to time in this manner. The letters authorising extension of the date of option were not very clearly worded with the result that the pension option during the periods of extension was granted, even to those who had retired before such extension became admissible but who were in service on 1.1.73. The clarification was accordingly issued to all the Railways stating that the subsequent orders extending the date of option were applicable to serving employees only, but the cases already decided otherwise may be treated as closed and need not be opened again. It was subsequently represented by the organised labour that the options actually exercised upto 31.12.78 should be treated valid even though such cases may not have been decided by that date. This was agreed to and orders issued accordingly. (ix) Pension Option dated 23.8. 79 A liberalised formula and slab-system for calculation of pension effective from 31.3.79 was notified by Railway Board on 1.6.79. Accordingly, orders were issued on 23.8.79 allowing pension option to those Railway employees who were in service on 31.3.79. This opt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time limit or whose option was incomplete or conditional or ambiguous shall be deemed to have opted for the pensionary benefits and if any such employee had died by that date or on or after 1.4.57 without exercising option for the pensionary scheme, his dues would be paid on the provident fund system. The period of validity of this option was first extended upto 30.6.58, 31.12.58, 31.3.59 and lastly upto 30.9.59. There could, therefore, be no doubt that those who did not opt for the pension scheme had ample opportunity to choose between the two. The second option was given by the Board s letter No. PC-60/ RB/2/2 dated 17.9.60 to elect the retirement benefits under the Provident Fund Rules or the Pension Rules. All Railway servants who were in non-pensionable service on 15.11.57 prior to the introduction of the pension scheme on the Railways and who were still in service including (IPR) on 1.7.59 were granted this option to have their retirement benefits regulated by the State Railway Provident Fund Rules or the Railway Pension Rules. Every eligible railway servant was given the option to change over from P.F. benefits to pensionary benefits or vice versa. It clearly said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement in pensionary benefits, the date for giving option was further extended by 28.2.1983 only for these employees who were in service on 31.8.1982 and who quitted/retired on or after that date. The date of option was further extended from time to time. Keeping in view the treatment of entire DA upto the price index line of 568 as pay for retirement benefit with effect from 31.3.85, removal of ceiling limit of ₹ 1500 on pension and raising of ceiling of DCRG from ₹ 36,000 to ₹ 50,000 the date of option for employees who were in service on 31.3.85 and onwards and still governed by S.R.P.F. (Contributory) Rules, was further extended upto 17.12.1985 provided the amount of death-cum-retirement gratuity and the excess, if any, of special contribution over the D .C.R.G., was refunded. The 12th option was as under. Government of India/Bharat Sarkar Ministry of Railways/Rail Mantralaya (Railway Board) Machine No. PC-IV/87/13/881 No. PC-IV/87/Imp. PW 1 The General Managers, RBBIS. No. 116/87 All Indian Railways, New Delhi, dated 8th May, 1987 Production Units etc. as per mailing list. Subject:- Change over of Railway employees from the SRPF (Contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with para 3.3. or 3.4 above, as the case may be. Options in such cases will be exercised, latest by 30.9.87, by the widow/widower and, in the absence of widow/widower, by the eldest surviving member of the family, who would have otherwise been eligible to family pension under the Family Pension Scheme, if such Scheme were applicable. 3.6. The option, once exercised, shall be final. 3.7.......................... 4.1............................. 4 . 2 In the case of employees referred to above who come over or are deemed to have come over to the Pension Scheme, the Government s contribution to the CPF together with the interest thereon, credited to the CPF Account of the employee, will be resumed by the Government. Special contribution to Provident Fund if already paid in these cases, will be adjusted against the death/ retirement Gratuity, payable under these orders. The employee s contribution, together with the interest thereon at his credit in the CPF account, will be transferred to the CRPF (Non-Contributory) Account, to be allotted to him, on his coming over to the Pension Scheme. 4.3............................................ 5 A proposal to grant ex-grat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made applicable to all the retired pensioners. The same principle, it is urged, has to be extended to the provident fund retires also otherwise there would be discrimination. It is stated that though at the time of choosing between provident fund and pension scheme both the alternative appeared to be more or less equal and the retired provident funders took their lump sum yet subsequently stage by stage the pensioners benefits were increased in such ways and to such extent that it became more and more discriminatory against the provident funders old and new. It was because of this discrimination that auccessive options were given by the Railway Board for the provident funders to become pensioners. Hence the submission that this limitation must go, and all the provident funders must be deemed to have become pensioners subject to the condition that the Government contribution received by them along with interest thereon is refunded or adjusted. Obviously this gives no importance to the condition in the notifications that option once exercised shall be final and binding and to the fact that in each option a cut-off date was there related to the purpose of giving that option: Admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case which gives rise to the decision. The ratio decidendi has to be ascertained by an analysis of the facts of the case and the process of reasoning involving the major premise consisting of a pre-existing rule of law, either statutory or judge-made, and a minor premise consisting of the material facts of the case under immediate consideration. If it is not clear, it is not the duty of the court to spell it out with difficulty in order to be bound by it. In the words of Halsbury, 4th Edn., Vol. 26, para 573: The concrete decision alone is binding between the parties to it but it is the abstract ratio decidendi, as ascertained on a consideration of the judgment in relation to the subject matter of the decision, which alone has the force of law and which when it is clear it is not part of a tribunal s duty to spell out with difficulty a ratio decidendi in order to bound by it, and it is always dangerous to take one or two observations out of a long judgment and treat them as if they gave the ratio decidendi of the case. If more reasons than one are given by a tribunal for its judgment, all are taken as forming the ratio decidendi. The question then is, has the court said in Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice Memorandum No. F-19(3)-EV-79 whereby the formula for computation of pension was liberalised but made it applicable. to Government servants who were in service on March 31, 1979 and retired from service on or after that date. The formula introduced a slab system for computation of pension which was applicable to employees governed by the 1972 rules retiring on or after the specified date. The pension for the service personnel which would include Army, Navy and Air Force staff was governed by the relevant regulations. By the Memorandum of the Ministry of Defence bearing No. B/40725/ AG/PS4-C/1816/AD (Pension)/Services dated September 28, 1979, the liberalised pension formula introduced for the government servants governed by the 1972 rules was extended to the armed forces personnel subject to the limitations set out in the memorandum with a condition that the new rules of pension would be effective from April 1, 1979 and may be applicable to all service officers who become/ became non-effective on or after that date. This liberalised pension formula was to be applicable prospectively to those who retired on or after March 31, 1979 in case of government servants governed by 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e who retired subsequent to that date and why was the pension scheme liberalised. Receiving no satisfactory reply the Court observed: Both the impugned memoranda do not spell out the raison d etre for liberalising the pension formula. In the affidavit in opposition by Shri S.N. Mathut, it has been stated that the liberalisation of pension of retiring Government servants was decided by the Government in view of the persistent demand of the Central Government employees represented in the scheme of Joint Consultative Machinery. This would clearly imply that the pre-liberalised pension scheme did not provide adequate protection in old age and that a further liberalisation was necessary as a measure of economic security. When Government favorably 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 erstwhile government servants who would retire. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le portion would not render the liberalised pension scheme vague, unenforceable or unworkable. The Court in Nakara was not satisfied with the explanation that the legislation had defined the class with clarity and precision and it would not be the function of this Court to enlarge the class. The Court held in paragraph 65 of the report: With the expanding horizons of socio-economic justice, the Socialist Republic and welfare State which we endeavour to set up and largely influenced by the fact that the old men who retired when emoluments were comparatively low and are exposed to vagaries of continuously rising prices, the falling value of the rupee consequent upon inflationary inputs, we are satisfied that by introducing an arbitrary eligibility criterion: 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 classification being not based on any discernible rational principle and having been found wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being thoroughly arbitrary, we are of the view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inction between law and morality and limits which separate morals from legislation. Bentham in his Theory of Legislation, Chapter XII, page 60 said: Morality in general is the art of directing the actions of men in such a way as to produce the greatest possible sum of good. Legislation ought to have precisely the same object. But although these two arts, or rather sciences, have the same end, they differ greatly in extent. All actions, whether public or private, fall under the jurisdiction of morals. It is a guide which leads the individual, as it were, by the hand through all the details of his life, all his relations with his fellows. Legislation cannot do this; and, if it could, it ought not to exercise a continual interference and dictation over the conduct of men. Morality commands each individual to do all that is advantageous to the community, his own personal advantage included. But there are many acts useful to the community which legislation ought not to command. There are also many injurious actions which it ought not to forbid, although morality does so. In a word legislation has the same centre with morals, but it has not the same circumference. In Nakara it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d necessarily decided questions. Apart from Art. 141 of the Constitution of India, the policy of courts is to stand by precedent and not to disturb settled point. When court has once laid down a principle of law as applicable to certain state of facts, it will adhere to that principle, and apply it to all future cases where facts are substantially the same. A deliberate and solemn decision of court made after argument on question of law fairly arising in the case, and necessary to its determination, is an authority, or binding precedent in the same court, or in other courts of equal or lower rank in subsequent cases where the very point is again in controversy unless there are occasions when departure is rendered necessary to vindicate plain, obvious principles of law and remedy continued injustice. It should be invariably applied and should not ordinarily be departed from where decision is of long standing and rights have been acquired under it, unless considerations of public policy demand it. But in Nakara it was never required to be decided that all the retirees formed a class and no further classification was permissible. The next argument of the petitioners is that the opt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flesh option be given to all P.F. retirees subject to refund of the Government contribution to Provident Fund received by adjusting it against their pensionary rights. Similarly, it is submitted, in a Rajasthan case, both the single Judge and the Division Bench have held that all the retirees would have to be given a flesh option as the notifications giving the option only to some retirees are clearly discriminatory. This view has, it is urged, again been upheld by this Hon ble Court by dismissing the Special Leave Petition No. 7192/87 of the Government by order dated 11.8.87. We have perused the judgments. The Central Administrative Tribunal in Transferred Application No. 27/87 was dealing with the case of the petitioners right to revise options during the period from 1.4.69 to 14.7.72 as both the petitioners retired during that period. The tribunal observed that no explanation was given to it nor could it find any such explanation. In State of Rajasthan v. Retired C.P.F. Holder Association, Jodhpur, the erstwhile employees of erstwhile Princely State of Jodhpur who after becoming Government servants opted Contributory Provident Fund wanted to be given option to switch over t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d SRPF schemes were 1.20 lakhs. Under the CPF scheme every employee was required to subscribe a minimum of 8-1/3 per cent of his reckonable emoluments to be credited to the fund. The Government makes a matching contribution. Both the contributions earned interest at a rate specified by the Government from time to time. On retirement, employees governed under the scheme was paid his contribution, the contribution made by the Government and the interest earned on the total amount. In para 9.3 of the Report it was stated: The SRPF scheme in the railways was replaced by the pension scheme as applicable to other Central Government employees, in November, 1957 and those employees who were in service on April 1, 1957 and were governed by the scheme were given an option to come under the pension scheme. Whenever changes occurred in the pension structure for the Central Government employees an option was given to railway employees still covered by the scheme. Such options have been given on eleven occasions in the past and the last such option was valid upto December, 1985. Comparing the advantage and disadvantage of the schemes the Commission said: While pension scheme has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een stated that the objective of both the schemes, viz., pension scheme and the CPF scheme being the same, there should not be differences in the matter of retirement benefits between the pensioners and the beneficiaries of the CPF. It has been urged that the liberalisation in the pension scheme needs to be appropriately extended to the beneficiaries under the CPF scheme. Since the schemes are structurally different, equality of benefits under the two schemes is not feasible. We are, however, of the view that the CPF beneficiaries who have retired on low scales of pay deserve some measure of relief. We according recommend that all the CPF beneficiaries who have retired prior to March 31, 1985 with a basic pay upto ₹ 500 per mensem may be given an ex gratia payment of ₹ 300 per mensem which will be in addition to the benefits already received by them under the CPF scheme. The ex gratia payments and the periodic increases already received by those who retired on pay upto ₹ 500 may be so adjusted that the total ex gratia amount is not less than ₹ 300. We further recommend that ex gratia amount of ₹ 300 per mensem may be reviewed as and when dearness relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the additional liability as far as the Railway employees are concerned, would be ₹ 50 crores a year. This is based on the assumption that there are 79,000 surviving P.F. retirees. Apart from the fact that this number of 79,000 was based on calculations made in 1988, and would be greatly reduced by this time, the petitioners submit that the actual number of survivors would only be about 38,000. Thus, the actual burden would be less than half. Further, even assuming that the figure of 79,000 put forth by the Government is correct, the average annual expenditure per retiree for pension calculated by the Government is incorrect as the calculation includes the non-recurring arrear payments for the year 1987-88. Taking the correct figures of total pension outlay and total number of beneficiaries the per capita pension expenditure per annum works out to ₹ 4521. Multiplying this by 79,000 (assuming the figures of the Railways to be correct) the annual expenditure comes to ₹ 35.71 crores. This compared to the current budget of pensions of ₹ 900 crores, is quite insignificant and can be easily awarded by this Court as was done in Nakara, it is urged. It is submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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