Gujarat High Court
Kantilal Uttamram Upadhyay vs State Of Gujarat Through on 28 June, 2012
Author: K.M.Thaker
Bench: K.M.Thaker
KANTILAL UTTAMRAM UPADHYAY....Petitioner(s)V/SSTATE OF GUJARAT THROUGH SECRETARY....Respondent(s) C/SCA/12207/2012 CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 12207 of 2012 FOR APPROVAL & SIGNATURE:
HON'BLE MR.JUSTICE K.M.THAKER ============================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?2
To be referred to the Reporter or not ?3
Whether their Lordships wish to see the fair copy of the judgment ?4
Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?5
Whether it is to be circulated to the civil judge ?
============================================= KANTILAL UTTAMRAM UPADHYAY....Petitioner(s) Versus STATE OF GUJARAT THROUGH SECRETARY....Respondent(s) ============================================= Appearance:
MR DIPEN DESAI, ADVOCATE for the Petitioner(s) No. 1 MR HS SONI AGP for the Respondent(s) No. 1 ============================================= CORAM:
HONOURABLE MR.JUSTICE K.M.THAKER Date : 01/07/2013 CAV JUDGMENT Rule.
Mr. Soni, learned AGP, waives services of notice of Rule for the respondent State.
1.1 The petitioner has approached this Court by invoking Article 226 & Article 14 of the Constitution of India upon feeling aggrieved by order dated 28.6.2012 and also by the inaction of the respondents in not finalizing his claim and entitlement for 1/3rd commuted pension.
2. So as to justify his claim and request, the petitioner has mentioned following facts.
2.1 According to the details mentioned in the petition, it emerges that the petitioner was initially appointed in December 1967 as Assistant Technical Inspector (Class-III) under Director, Food & Supplies Department.
Subsequently, when an independent corporation in name and style of Gujarat State Civil Supplies Corporation was formed in 1980, the employees of abovementioned Directorate were placed under deputation with the corporation. Orders placing the employees, including the petitioner, on deputation were passed in October 1980.
2.2 Subsequently, the Government decided, and for that purpose resolved, to call for options from the said deputationist as to whether they would prefer to be absorbed and continue with the corporation or would prefer to be reverted to the parent department or any other department with the Government.
2.3 The petitioner has claimed that within prescribed time limit (for submitting the options), he had submitted his option for being absorbed in service with the corporation.
2.4 One of the conditions which was prescribed in the resolution inviting options was to the effect that the employees who opt to continue with the corporation shall not resign from their service with the corporation for a period of 2 years without permission from State Government otherwise they would not be entitled for pentionery benefits.
2.5 After considering the options exercised by the deputationists, the Government passed further resolution dated 5.12.1988 absorbing the petitioner and other employees in the corporation. A consequential order dated 13.12.1988 was passed by the corporation absorbing the petitioner and other employees with the corporation.
2.6 Similarly, the Government also passed a resolution dated 16.11.1989 resolving that those employees who are absorbed in the corporation vide order dated 5.12.1988 shall be deemed to have retired from Government service w.e.f. 4.12.1988.
2.7 As a consequence of the said orders and resolutions, the petitioner was granted and paid all benefits (in 1991) which accrued to him on account of the resolution dated 16.11.1989 whereby the employees absorbed in the corporation were deemed to have retired from Government service.
2.8 About three years thereafter, i.e. on or around 7.12.1994, the petitioner, for his personal reasons, resigned from service of the corporation. His resignation became effective from 16.1.1995.
2.9 After about 7 years, since his retirement, the petitioner submitted an application in December-2011 claiming 1/3rd commuted pension. The petitioner has claimed that his said request has been rejected by the State Government vide order dated 28.6.2012 wherein, the State Government has cited resolution dated 1.4.1989 and informed the petitioner that since he resigned from the service of the corporation after having been absorbed, he is not entitled to benefit of 1/3 commuted pension.
The petitioner is aggrieved by the said refusal and order. Hence, present petition.
3. The respondents have opposed the petition and one Mr. Modi, Dy. Secretary, Food Civil Supplies & Consumer Affairs Department, has filed reply affidavit opposing the petition, wherein it is averred that:
7. I say and submit that State Government has made the provisions for the Government employees who choose to be absorbed in an autonomous body/public sector undertakings vide GR dated 1st April, 1989 no. SMV 3786-GOI-71-P. The provision (3) of the GR is clear.
Thereafter provision for revision of pension is made vide circular dated 20th July, 2002 no. NVT/1196/GOI-10-D-261/P.
8. The contention of the petitioner is that the words The cases of Government employees who elect to be absorbed in an autonomous body/PSU will be regulated as under. Thus, the petitioner wants to establish that the provisions of GR is applicable to those employees who are to be absorbed subsequent to the said resolution and not to the employees who have already been absorbed prior to the said resolution. The para (3) of this GR shows as under.
In case the Government employee, absorbed in PSU/Autonomous Bodies, resigns after receiving pensionery benefits, the resignation will be treated as resignation from Government service and as a consequence of resignation, pensionery benefits received under these orders will be forfeited.
I further say that while issuance of GR dtd. 1-4-1989, reference of two GR dtd. 17-2-1974 and 15-7-1975 issued by Finance Department were considered and both GR were issued regarding the pensionery benefits of government servants who absorbed in the public sector undertaking. The copies of these GRS are Annexed as Annexure-I & Annexure-II. The GR dtd. 1-4-1989 also provides terms and conditions for pensionery benefits of government servants who absorbed in the public sector undertaking / autonomous bodies of State Government. Moreover it is pertinent to say that the petitioner was absorbed prior to this GR, but his resignation is after the date of this GR. So, it is very clear that on his resignation date the GR was in existence.
9. It is submitted that finance department circular no. NVT/1196/GOI-10-D-261/P dtd. 20-07-2002 and its Annexure-II specifies guidelines to be followed by H.O.D. Point 7 of Annexure-II of this circular says that No temporary additional payment will be made to the officer / employee absorbed in P.S.U. / Board / Corporation till he continues to work in P.S.U. / Board / Corporation. If officer/employee retires by way of superannuation or retires by other reasons and after that if he is not re-employed / employed then temporary additional payment can be paid as per existing government rules. Point 7 of Annexure-II of this circular does not include the word resignation. So it is clear that benefits given under point 7 are not extended to the employee who has resigned from corporation.
4. Mr. Desai, learned advocate, has appeared for the petitioner and has submitted that the impugned order and refusal by the State Government to grant benefit of 1/3 commuted pension is unjustified and arbitrary. It is claimed that the said order and refusal are based on unreasonable and arbitrary construction of the resolutions dated 1.4.1989, 20.2.1986 and order dated 5.12.1988. It is also claimed that the respondents have not taken into account the modification in the resolutions dated 17.2.1974 and 15.7.1975. The learned counsel for the petitioner submitted that the restriction imposed by virtue of the resolution dated 1.4.1989 could be made applicable only if the petitioner had resigned without permission of the State Government and within 2 years after absorption. He further submitted that in view of the decision by Hon ble Apex Court, even said restriction could not have been applied in petitioner s case. Learned counsel for the petitioner relied on the decision by Hon ble Apex Court in the case between Welfare Association of Absorbed Central Government Employees in Public Enterprises & Ors. v. Union of India & Anr. [AIR 1996 SC 1201] and submitted that the action of the respondents is contrary to the said decision.
5. Mr. Soni, learned AGP, has vehemently opposed the petition and submitted, inter alia, that Clause 3 of the resolution dated 1.4.1989 provides, inter alia, that in case Government employee absorbed in PSU Autonomous Bodies resigned after receiving pentionery benefits, the resignation will be treated as resignation from Government service and as a consequence of resignation, pensionery benefits received under these orders will be forfeited. Learned AGP also relied on circular No. NVT/1196/GOI-10-D-261-P dated 20.7.2002 read with point No.7 of the circular issued by HOD which provides, inter alia, no temporary additional payment will be made to the officer / employee absorbed in PSU Board Corporation till he continues to work in PSU Board Corporation. If the officer / employee retires by way of superannuation or retires by other reasons and after that if he is not reemployed employed then temporary additional payment can be made as per existing Government rules. Learned AGP contended that the relevant circulars and / or resolutions do not include the word resignation and that therefore, the petitioner who has resigned from the service of the corporation is not entitled for the benefit claimed by him.
6. I have heard learned counsel for the petitioner and the respondents and also examined the material available on record of present petition.
7. So far as the relevant dates, events and factual aspects are concerned, there is no dispute between the parties contesting the petition.
7.1 There is no dispute as to the fact that the petitioner was originally an employee with the Directorate and in response to the order passed by the Government, he was deputed with the corporation and upon exercise of the option granted by the State Government, he came to be absorbed as employee of the corporation and consequently, he was deemed to have retired from Government service and on such deemed retirement, all benefits including benefit of pension were paid to the petitioner.
7.2 The solitary and singular dispute is with regard to petitioner s entitlement for commuted pension to the extent of 1/3rd which is available to all pensioners as per prevailing policy. According to the petitioner, after the decision by the Hon ble Apex Court in the decisions in cases between Welfare Association Of Absorbed Central Government Employees In Public Enterprises v. Union of India [AIR 1996 SC 1201] and Common Cause v. Union of India [1987 (1) SCR 497], any doubt with regard to the said benefit does not survive. It is claimed that in the said decision, Hon ble Apex Court considered pari materia provisions and observed that there is a clear cut distinction between 1/3rd portion of pension which can be commuted without any condition and 2/3rd of pension to be received as terminal benefits with conditions attached to it.
7.3 Per contra, the respondent heavily relied on Clause 3 of the resolution dated 1.4.1989 and would contend that if an employee, after being absorbed in a PSU tenders resignation from service, then, such resignation is to be treated as resignation from Government service which entails consequence of forfeiture of pension. Learned AGP also submitted that the action in question is in accordance with applicable rules and resolutions / policy and may not be disturbed.
7.4 So as to consider and appreciate rival contentions, it is necessary to consider various terms of the relevant resolutions, office orders or circulars, including the resolutions dated 22.2.1986, 5.12.1988, 1.4.1989, 16.11.1989 and order dated 5.12.1988 passed by the Government as well as the order dated 13.12.1988 passed by the corporation.
7.5 So far as the resolution dated 20.2.1986 is concerned, the relevant provisions are under Clause No.6, which, alongwith the preamble of the said resolution, read thus:-
Preamble:
The Gujarat State Civil Supply Corporation was formed from 2/10/1980. At that time, the functioning of the head of the offices of the departments under this department and the functioning of offices of mamlatdar and collectors at district/taluka level and some of the posts connected with it and the functioning connected with it, were transferred to Civil Supply Corporation, out of them, officers/employees of some of those offices are performing duty on deputation in Gujarat State Civil Supply Corporation at present. The aforesaid and the officers/employees on the posts which may be transferred hereinafter and the employees/officers of the offices under control of this department, were under consideration of the Government for formulating rules to absorb in Civil Supply Corporation subject to the provisions of the aforesaid resolution of Finance Department.(1)
to (5) xxx xxx (6) The employees/officers of civil supply who will be given an option to be absorbed permanently in the corporation, will be given the following benefits as per the provision mentioned in resolution no.NVN/1074, O/352/J dated 17-2-74 and the resolution no.NVN/1075/1768/P dated 15-7-75 of Finance Department, Govt. of Gujarat.
(A) The employees/officers will be entitled to get pension gratuity as per the Govt. rules from the date of their absorption in the corporation.
(B) In addition to the salary, they will be entitled to get benefits mentioned in the para-6(a).
(C) If they accept any other private service by voluntarily resigning from the corporation within two years from the date of absorption in the corporation and from the time of retirement of employees/officers from the Govt. service, such employees/officers will have to get permission of the Govt. They will have to give such assurance before getting gratuity/pension.
(D) There will be no any responsibility of the Govt. for family pension of the employees/officers who will be absorbed permanently in the corporation.
(E) Within 6 months from the date of absorption in the corporation, every employee/officer will have to give any one option from the following.
(1) To receive monthly pension and gratuity as per the rules and regulations of the government.
(2) Or to receive lump-sum amount as per rules of computation and as per calculation of tables mentioned therein instead of pension from the date when he/she becomes eligible to receive pension.
(F) After getting permanently absorbed in the Corporation, if the government makes liberal changes in the rules of pension, then said changes will not be applicable to the absorbed employee but if the employee is in service on the date when the recommendations of pension of Third Pay Commission accepted, then he/she will get benefit otherwise he/she will not get. If the orders passed before the date of absorption is beneficiary to the employee, then such benefits can also be given but if the effect is given after the date of absorption, then he/she will not be entitled to get such the benefit.
(G) If on the day of absorption in the corporation, the employee has put in less then ten years of service, then he will not be entitled to get pension but considering his/her years in service, he/she will be entitled to get service gratuity instead of pension.
(H) In case of the Government employees/ officers on deputation when they are given an option to be absorbed in corporation, at the time of leaving the government job, it shall be the responsibility of the corporation regarding government salary, earned leave and balance in hand. In return, while absorbing in corporation on permanent basis, the government will pay the government salary/as compensation of earned leave and equivalent higher amount to the corporation. At the time of issuing the final order to absorb the employees/officers who have been given an option to be permanently absorbed in corporation by the department/ the head of department, they have to mention the aforesaid amount that is to be deposited in the corporation. Thus, there shall not be any responsibility of the state government after the government has fulfilled such responsibility once regarding the balance of the earned leave of the employees/officers absorbed in the corporation.
(free translation from Gujarati) 7.6 On conjoint reading of the said provisions, it becomes clear that there is nothing in the said resolution which deprives the petitioner from claiming benefit of pension including benefit of commuted pension at 1/3rd rate. The said resolution declares that the absorbed employee would be entitled to all benefits including pension and gratuity as per Government rules.
The only rider or condition, according to the said resolution which could deprive the absorbed employee from claiming benefit of pension is in Clause No. 6(C) which prescribes, inter alia, that if the absorbed employee resigns from the service of corporation (i) within 2 years from the date of deemed retirement from Government service; and (ii) if such resignation is tendered without permission of Government. The said provision would mean that the said benefit will be lost or stand forfeited only if both conditions simultaneously occurred.
7.7 So far as the petitioner is concerned, it is not in dispute that the said provision is not attracted in case of the petitioner and the petitioner cannot be said to have committed breach of the said condition, inasmuch as the petitioner came to be absorbed in the service of corporation w.e.f. 5.12.1988 vide order dated 13.12.1988 passed by the corporation and he came to be treated as retired upon Government service w.e.f. 4.12.1988. Thus, if the petitioner had resigned from the service of the corporation within 2 years after 5.12.1988 and if such resignation had been tendered without permission or consent from the Government, then only, his right to pension including 1/3rd commuted pension would be lost or would stand forfeited.
However, the petitioner resigned after 6 years of service with the corporation, inasmuch as he tendered resignation dated 7.12.1994 with came to be accepted on 7.12.1994 and was made effective from 16.1.1995. Thus, the petitioner s case is not hit by the relevant terms and conditions in the resolution dated 20.2.1986.
In light of this fact, the other resolution which requires consideration in light of the contention and defence raised by the respondent is the resolution dated 1.4.1989.
7.8 The relevant provisions under the said GR dated 1.4.1989 (and on which heavy reliance is placed by the respondents) are the Preamble and Clause Nos.1, 2, 3, 8, 10, 11(i) & , (iii), read thus:-
Preamble :
At present the cases of Government employees, on deputation to Public Sector Undertaking of the State Government; who are absorbed in the PSUs in public interest permanently, are regulated as per the provisions contained in the G.Rs.F.D. Referred to in the preamble. The question of establishing parity in the matter of pensionary benefit to such State Government employees, with the provision in course in Government of India has been under careful consideration, Government After careful consideration, Government has decided that in partial modification to the provisions contained in the GRs. referred to in the preamble, the cases of the Government employees who elect to be absorbed in an Autonomous Body/Public Sector undertaking will be regulated as under:-
(1) A Government employee on absorption to Public Sector Undertaking / Autonomous Body is eligible for pro-rata pension and DCRG based on the land of his qualifying services till the date of his absorption in the PSU/Autonomous Body. The pension will be calculated on the basis of the emoluments immediately before absorption.
(2) Within 6 months of absorption, every such of Government employee, absorbed in PSUs/ Autonomous Bodies will exercise option for either of the two alternatives indicated below:-
(a) Receiving monthly pension and DCRG as per the rules cr
(b) Receiving DCRG and a lumpsum amount in lieu of pension worked out with reference to the commutation table. Where no option is exercised, the absorbed employee will automatically be governed under the option (b) above. The option once exercised will be final. The person who chooses the alternative in para-1 and 2(b) above, 1/3 of the lumpsum amount will be treated as commutation of pension and 2/3 of the amount will be treated as retirement benefits.
(3) In case the Government employee, absorbed in PSU/ Autonomous Body, resigns after receiving pensionery benefits, the resignation will be treated as resignation from Government service and as a consequence of resignation, pensionary benefits received under those orders will be forfeited.
(8) A permanent Government employee who has been appointed in an Autonomous Body/PSU wholly or substantially financed by Government, on his own application in response to press advertisement etc., on his permanent absorption in such organization will be entitled to get benefits of these orders except carry forward of leave.
(10) The pay of the Government employee absorbed in PSUs/Autonomous Bodies will be regulated as per the provisions of G.R.F.D. No.NVT-3286-GOI-95-P dated 17-8-1988 as amended from time to time.
(11) (i) The benefit of family pension will be admissible to those who are in receipt of pension after absorption in PSUs.
(iii) The family pension will also be admissible to those Government servants absorbed in PSUs who died before receiving pensionary benefits admissible under this orders, subject to the fulfillment of conditions mentioned in para 1(11)(ii) above.
7.9 The respondent has placed substantial emphasis on the provision under Clause 3 of the said resolution dated 1.4.1989. In that context, it is necessary and important to note the fact that the respondent has not forfeited petitioner s pension paid in accordance with the resolution absorbing the petitioner in corporation s service and conferring / continuing benefit of pension while absorbing the petitioner and other employees in corporation. It is not in dispute that the petitioner is granted the benefit of pension so as to establish this aspect, the petitioner has relied on certificate dated 15.12.2011 (Page 46).
Thus, for all these years from January-1995, i.e. for last about 15 years, the petitioner s pension is not forfeited and any order forfeiting pension granted in accordance with the resolutions absorbing the petitioner in corporation has not been passed by the respondent. In such background, the question which would arise is whether the petitioner can claim, and should be granted 1/3rd commuted pension or not.
7.10 According to the petitioner, reply to the said issue is to be found in the decision by the Hon ble Apex Court in the case of Welfare Association of Absorbed Central Government Employees in Public Enterprises (supra) wherein the Hon ble Apex Court, after considering the earlier decision in case between Common Cause v. Union of India (supra) and after considering the provision under Rule 37 and Rule 37(A) of CCS Pension Rules 1972 observed, inter alia, thus:-
8. From the above extracts, it will be seen that a clear-cut distinction is made in Rule 37-A itself between one-third portion of pension to be commuted without any condition attached and two-third portion of pension to be received as terminal benefits with condition attached with it. It follows that so far as commutation of one-third of the pension is concerned, the petitioners herein as well as petitioners in 'Common Cause' case stand on similar footing with no difference. So far as the balance of two-third pension is concerned, the petitioners herein have received the commuted value (terminal benefits) on condition of their surrendering of their right of drawing two-thirds of their pension. This was not the case with the petitioners in 'Common Cause' case. That being the position the denial of benefit given to 'Common Cause' petitioners to the present petitioners violates Article 14 & 16 of the Constitution. The reasoning for restoring one-third commuted pension in the case of 'Common Cause' petitioners equally applies to the restoration of one-third commuted pension in the case of these petitioners as well.
9. No doubt the Government while declining to consider the case of petitioners favorably took into account a decision of this court in Welfare Association of Absorbed Central Government Employees in Public Enterprises vs. Union of India reported in 1991 (2) SCC 265, holding that the petitioners in 'Common Cause'case stand on a different footing then that of the petitioners in the present case. In that judgment Rule 37-A was not brought to the notice of the Court. Another reason given by the Government was that the petitioners on commuting their pension in full cease to be Central Government pensioners. This is too broad a contention to be accepted as no statute or rule is quoted in support of this contention. This stand taken by the Government does not appear to be correct in view of their own counter-affidavit filed in this case. In of the counter-affidavit it has been stated as follows :-
"It would be seen from (b) above that the two-third terminal benefits received by the absorbees who have opted for lump sum payment have not only commuted one-third of their pension but also the remaining portion of two-third pension which is termed as "terminal benefits". The absorbees have in fact commuted the entire pension and not one-third of pension."
10. It would be seen from (b) above, two-third terminal benefits received by the absorbees is nothing but pension. Further as per the condition imposed in the absorption order, the family pension when not provided in the public undertakings in which the retired Government servants were absorbed, the payment of family pension is continued by the Government. The relevant condition reads as follows :-
"(ii) As regards entitlement to family pension, the condition imposed reads -
"On his permanent absorption in the Company his family will be eligible for family pension subject to the provisions of Rule 54 of CCS (Pension) Rules, 1972 and any other orders issued by the Government of India from time to time provided that he is not covered by any other family pension scheme applicable to the Company Staff."
This was also the condition incorporated in respect of persons who had opted for one-third commutation."
11. This also indicates that the stand of the Government is not correct. Therefore, the denial of restoration of one-third commuted pension is not justified.
12. If after the expiry of 15 years, the pensioners who have opted for one-third commutation, becomes entitled to restoration of pension on the ground that the lump sum amount paid had got adjusted before the said period as held in 'Common Cause' case, there is no good reason for not applying the same to the petitioners who have commuted their one-third portion of the pension under Rule 37-A of the Pension Rules 1972 without any commitment for this portion of commutation. Presumably the respondent realising the fallacy have withdrawn the scheme of permitting commutation of full pension by O.M. No.4/42/91- P&PW (D) dated 31.3.1995. Para 3 of the Office Memorandum reads as follows:-
"3.
The proposal to review the existing terms and conditions of absorption had been under consideration of the Govt. for quite sometime past. The President is now pleased to ........ (sic) that the existing terms and conditions of absorption shall stand partially modified to the extent indicated below :-
(a) The existing facility of receiving capitalisation value equivalent to 100% commutation of pension on absorption shall stand withdrawn;
(b) The existing facility to draw pro-rata monthly pension from the date of absorption (with option to commute 1/3rd pension wherever admissible shall continue to exist."
13. This means this issue will not arise in future.
14. For the foregoing reasons, we hold that the petitioners are entitled to the benefits as given by this Court in 'Common Cause' case so far as it related to restoration of one-third of the commuted pension. Consequently, the impugned para 4 of Office Memorandum dated 5.3.1987 is quashed. The writ petitions are accordingly allowed to the extent indicated above. No costs.
7.11 It is relevant to mention that the directions in the above mentioned decision were not complied for some time and therefore, certain proceedings alleging contempt of Court were initiated wherein the Hon ble Apex Court, after considering the submissions made by Union of India (which recorded in paragraph No.4 of the decision dated 1.5.1998 in the matter between Welfare Association of Absorbed Central Government Employees in Public Enterprises & Anr. v. Arvind Verma & Ors. [AIR 1998 SC 2862], the Hon ble Apex Court observed and clarified that :-
5. It will be noticed that the Central Government pensioners are given revision in the pension, which was not given to the petitioners on the ground that this Court had ordered only restoration of pension.
6. After hearing counsel on both sides, we make it clear that the respondents are liable to restore not only the pension as ordered by this Court in the said judgment, but also all the attendant benefits as given to the Central Government pensioners. We hold that there was some genuine doubt on the part of the respondents in construing and giving effect to the Judgement of this Court and, therefore, there is no contempt. We now direct the respondents to comply with the Judgements of this Court as explained hereinbefore within three months from this date.
7.12 After the above referred decisions, the Government of India had issued Office Memorandum dated 13.1.1998 and 14.7.1998. The respondent State Government, having regard to the Office Memorandum dated 13.1.1998 issued by the Government of India, issued circular dated 20.7.2002 which deal with the issue of 1/3rd commutation of pension. The State Government, by the said circular dated 20.7.2002, has clarified that all cases for 1/3rd commutation of pension are to be resolved and decided in terms of the Office Memorandum dated 13.1.1998 issued by the Government of India since the State Government has, vide resolution dated 23.4.1998 accepted and adopted, verbatim and in totality, the Government of India s Office Memorandum dated 13.1.1998.
7.13 It follows from the foregoing discussion that while the Hon ble Apex Court considered the issue regarding 1/3rd commutation of pension in the above referred decision in case of Welfare Association Of Absorbed Central Government Employees In Public Enterprises v. Union of India, the Hon ble Apex Court examined the provisions under Rule 37 and 37(A) which read thus:-
Rule 37 : Pension or absorption in or under a corporation, company or body:
(1) A Government servant who has been permitted to be absorbed in a service or post in or under a Corporation or Company wholly or substantially owned or controlled by the Central Government or a State Government or in or under a Body controlled or financed by the Central Government or a State Government, shall be deemed to have retired from service from the date of such absorption and subject to sub-rule (3) he shall be eligible to receive retirement benefits which he may be elected, or deemed to have elected, and from such date as may be determined, in accordance with the order of the Central Government applicable to him.
Explanation : Date of absorption shall be :-
i) in a case a Government employee joins a Corporation or a company or body on immediate absorption basis the date on which he actually joins that corporation or company or body;
ii) in case a Government employee initially joins a corporation or company or body or foreign service terms by retaining a lien under the Government the date from which his unqualified resignation is accepted by the Government.
2) The provisions of sub-rule (1) shall also apply to Central Government servants who are permitted to be absorbed in joint sector undertakings, wholly under the joint control of Central Government and State Government / Union Territory Administration or under the joint control of two or more State Governments/ Union Territory Administrations.
Where there is a pension scheme in a body controlled or financed by the Central Government in which a Government servant is absorbed, he shall be entitled to exercise option either to count the service rendered under the Central Government in that body for pension or to receive pro rata retirement benefits for the service rendered under this Central Government in accordance with the orders issued by the Central Government.
Explanation : Body means autonomous body or statutory body.
Rule 37-A. : Payment of lump sum amount to person on absorption in or under a Corporation, company or body.
1) Where a Government servant referred to in Rule 37 elects the alternative of receiving the (retirement gratuity) and a lump sum amount in lieu of pension he shall in addition to the (retirement gratuity) be granted:-
a) on an application made in this behalf, a lump sum amount not exceeding the commuted value of one-third of his pension as may be admissible to him in accordance with the provisions of the Civil Pensions (Commutation) Rules, and
b) terminal benefits equal to the commuted value olf the balance amount of pension left after commuting one-third of pension to be worked out with reference to the commutation tables obtaining on the date from which the commuted value becomes payable subject to the condition that the Government servant surrenders his right of drawing two-thirds of his pension.
7.14 The respondents have relied on the provision under clause 3 of the resolution dated 1.4.1989, however, it appears that the respondents have raised said contention as an afterthought after present petitioner submitted the request for 1/3rd commuted pension.
7.15 It is necessary to recall that the petitioner came to be absorbed in service with corporation w.e.f. 5.12.1988 and is deemed to have retired from Government's service w.e.f. 4.12.1988 whereas the resolution came to be issued on 1.4.1989.
7.16 If the respondents were of the view that the said clause (3) of the resolution dated 1.4.1989 was applicable to the case of the petitioner who was already (i.e. much before the date of resolution) absorbed in service with corporation and was deemed to have retired from Government service even before the date of resolution, then, in that event, the respondents would have, at the relevant time and from initial stage, acted in consonance with the said resolution dated 1.4.1989 and in the first instance, the respondent would not have sanctioned and paid pension to the petitioner.
7.17 In present case, it is not in dispute that the petitioner tendered his resignation dated 7.12.1994 from the service of the corporation and his resignation came to be accepted and was made effective from 16.1.1995.
7.18 Thus, the petitioner resigned from service and his resignation became effective from the date subsequent to the date of said resolution dated 1.4.1989. Differently put, when the petitioner tendered resignation and when it was accepted and when it became effective, the said resolution was in existence.
7.19 Despite this fact, the respondents sanctioned and granted pension in favour of the petitioner and during the entire intervening period, the respondents continued to pay pension to the petitioner, the respondents did not invoke and apply Clause No.3 of the said resolution dated 1.4.1989 either while sanctioning/granting pension in favour of the petitioner.
7.20 The fact that at the relevant time the said resolution was not applied to the case of the petitioner and inspite of the said resolution, pension came to be sanctioned and pension was paid to the petitioner as certified by certificate dated 15.12.2011 and until now the respondents have not forfeited petitioner's pension, is sufficient to establish that the objection raised by the respondents at this stage is an afterthought.
7.21 When the pension is not forfeited, question of denying the request for commuted pension would not arise. It is anomalous that a person (petitioner in present case) is entitled for pension (which is paid to the petitioner as certified by certificate dated 15.12.2011) despite resolution dated 1.4.1989 but he is not entitled for commuted pension. Such contention cannot be accepted.
7.22 Besides this, the said Clause No.(3) of resolution does not (and cannot) wipe out Clause No.(6) of resolution dated 20.2.1986 according to which an employee can be deprived of pension and/or can be denied pension only if he resigned from corporation's service within 2 years after absorption and that too without permission of the Government.
7.23 In present case, the petitioner's case is not hit by said Clause No.(6) of resolution dated 20.2.1986 because the petitioner resigned from service after almost 6 years from the date of absorption.
8. The respondent - State was aware and conscious of the said fact and legal situation and therefore, at the relevant time, the respondents, without any objection, sanctioned and paid pension to the petitioner.
9. When any action to forfeit pension for almost 15 years has not been taken at this belated stage, the respondents are not justified in claiming that the petitioner is not entitled for 1/3rd commuted pension.
9.1 Even otherwise, delay would defeat the action. Moreover, it is undisputed that until now, i.e. even after the petitioner submitted the request for 1/3rd commuted pension, any order forfeiting pension has not been passed by the respondent. Now, after more than 15 years respondents seek to apply provision which even otherwise is not applicable.
9.2 Not only this, the respondents seek to apply Clause (3) of resolution dated 1.4.1989, retrospectively which is neither provided for nor contemplated.
9.3 All these actions cumulatively suggest that until now, even the respondents considered, believed and understood that the employees who were deemed to have retired from Government's service and had been absorbed in service with corporation before the date of resolution i.e. 1.4.1989 will not be governed by the said Clause (3) of the resolution dated 1.4.1989.
10. Further, the resolution dated 1.4.1989 cannot be applied to the employees who were deputed to the service of the corporation in 1980, i.e. almost 9 years before the date of the resolution and who ceased to be Government's employee (and were deemed to have retired from Government's service) w.e.f. 4.12.1988 and whose service came to be absorbed in the corporation w.e.f. 5.12.1988, i.e. much before the date of the resolution.
10.1 On perusal of the resolution, it emerges that the said Clause (3) of the resolution dated 1.4.1989 is not retrospective and it does not and cannot retrospectively wipe out Clause (6) of the resolution dated 20.2.1986 and its effect as well as the promise underlying the said Clause (6) of the resolution dated 20.2.1986, more particularly qua the employees who were already treated as retired from Government's service even before the respondent issued the resolution dated 1.4.1989. On conjoint reading of resolution dated 20.2.1986 and resolution dated 1.4.1989, it becomes clear that the respondent never intended to make said Clause (3) of resolution dated 1.4.1989 retrospective. This aspect becomes clear from the expression (in preamble of resolution dated 1.4.1989) Government employees who elect to be absorbed in an .... signifies and makes it clear that the said Clause (3) of resolution dated 1.4.1989 is not given, and it does not have, retrospective effect and the said Clause does not apply retrospectively to the cases of the employees who are deemed to have retired (and thereby ceased to be Government employees) from Government service and came to be absorbed in service with the Corporation much before the said resolution i.e. before 1.4.1989. Otherwise, the respondents would have expressly mentioned and the employees who have elected...... .
This aspect becomes clear also from the expression if the government makes liberal changes in the rules of pension, then said changes will not be applicable to the absorbed employee but if the employee is in service on the date when the recommendations of pension of Third Pay Commission accepted, then he/she will get benefit otherwise he/she will not get.
in Clause (6)(F) of the resolution dated 20.2.1986.
10.2 Thus, the said Clause (3) of the resolution dated 1.4.1989 was justiciably not invoked and applied in petitioner's case when he tendered resignation from his service with the corporation and pension sanction order was passed as per declared and applicable policy and now, there is no basis or justification to invoke and apply said clause to the case of the petitioner.
11. In such situation, it emerges that (a) any order invoking Clause (3) of the resolution dated 1.4.1989 is not passed and any action under the said provision is not taken, and (b) the petitioner's right to claim commuted pension at 1/3rd rate is not affected in view of the relevant provisions and facts of present case, and (c) at the relevant time, (i.e. when the petitioner was placed on deputation with the corporation and/or when option to be absorbed in service of the corporation was given and when his option to be absorbed in service of the corporation was accepted and/or even when he was treated as retired from Government service, the said resolution dated 1.4.1989 was not passed / issued and was not in existence, and (d) the provision under Clause (3) of the said resolution is not retrospective, and that (e) the said Clause (3) even otherwise can not retrospectively wipe out Clause (6) of resolution dated 20.2.1986 and/or the promise underlying said Clause (6), and that (f) delay would defeat such action, and that (g) either at the time when the petitioner's resignation in corporation's service was accepted or at the time when the orders sanctioning pension in petitioner's favour was passed and pension was paid or during the interregnum of 15 years, the respondents did not invoke and have yet not invoked Clause (3) of the said resolution dated 1.4.1989 and the respondents did not take and have yet not taken any decision or action forfeiting petitioner's pension under Clause (3) of the said resolution dated 1.4.1989 and that therefore, now, the respondents are not justified in denying or rejecting petitioner's request to commute 1/3rd pension.
12. In view of the facts of present case and for the foregoing discussions and reasons, the decision of the respondents and the order dated 28.6.2012 deserve to be and are accordingly set aside with direction to the respondents to take appropriate steps to commute 1/3rd pension and to take consequential actions within 12 weeks.
Rule is made absolute to the aforesaid extent. Orders accordingly.
(K.M.THAKER, J.) kdc Page 24