Bombay High Court
Gangadhar Yeshwant Paranjape vs The Commissioner, Pune Municipal ... on 22 March, 2004
Equivalent citations: [2004(102)FLR309], 2004(2)MHLJ919, 2004 LAB. I. C. 1924, (2004) 19 ALLINDCAS 926 (BOM), (2004) 106 FJR 60, (2004) 102 FACLR 309, (2004) 3 LAB LN 215, (2004) 2 MAH LJ 919, (2004) 5 SERVLR 665, (2004) 3 ALLMR 38 (BOM), (2004) 19 INDLD 193, (2004) 3 SCT 723, 2004 BOM LR 3 310, (2005) 1 ESC 108, (2004) 2 CURLR 474, (2004) 4 BOM CR 68
Author: C.K. Thakker
Bench: C.K. Thakker, D.K. Deshmukh, S.J. Vazifdar
JUDGMENT C.K. Thakker, C.J.
1. This petition has been placed before us in view of Reference made by a Division Bench of this Court [Coram: B.P. Singh, C.J. (as His Lordship then was) and Hon'ble Smt. V.K. Tahilramani, J.] on 29th June, 2001 in view of certain decisions of the Division Bench of this Court.
2. To appreciate the point involved in the Reference, few relevant facts may now be stated:
3. The petitioner herein was appointed as a teacher. He addressed a letter dated 27th November, 2000 to the Hon'ble the Chief Justice of this Court stating therein that he had resigned from service in July, 1977, after completing 24 years service. According to him, there was no scheme for grant of pension to a teacher at the time when he entered in service as also at the time when he resigned from service. The petitioner was accordingly paid all the dues payable to him in accordance with the existing Rules applicable viz. benefit of Provident Fund, etc. In the year 1988, however, Pension Scheme had been introduced under which teachers seeking voluntary retirement alter completion of 20 years service were granted pensionary benefits. The petitioner has claimed benefit under the said scheme of 1988. Since he was not granted those benefits, he had approached this court.
4. The letter was treated as Suo Motu Writ Petition and was placed on Judicial Side for orders. The petitioner appeared as party in person on 10th April, 2001 and stated that he was prepared to refund the entire Provident Fund amount along with interest provided he would be granted pensionary benefits. Notice was issued by the Court making it returnable on 11th June, 2001. On 29th June, 2001, the petitioner appeared in person. He was heard by a Division Bench. The Division Bench felt that when there was no scheme for payment of pension to teachers who either resigned or took voluntary retirement in 1977, prima facie, the petitioner could not be granted benefit of the Pension Scheme introduced subsequently in 1988 when it was not retrospective. The Division Bench, however, noted that the petitioner, party-in-person, relied upon a decision of the Division Bench of this Court in S.D. Varerkar v. State of Maharashtra and Anr., 1999 II CLR 282 which seemed to take a view favouring the claim of the petitioner. In S.D. Varerkar, a reference was also made to two other decisions of this Court in Writ Petition No. 3854 of 1997, N.S. Waikar and Ors. v. State of Maharashtra and Ors. and Writ Petition No. 2632 of 1985, Retired Employees of Non-Government Colleges Association, Nagpur Vidarbha Region and Ors. v. State of Maharashtra and Ors. In those decisions, reference was made to a judgment of the Supreme Court in D.S. Nakara and Ors. v. Union of India and Ors., . In view of the above decisions, the Division Bench felt that the judgment in S.D. Varerkar may require reconsideration. The Court also noted that in D.S. Nakara, the Apex Court held that there was no rationale basis for selecting a particular date for grant of enhanced pension. The Court, therefore, issued Rule and ordered that the matter be placed before a larger Bench. The papers were, therefore, ordered to be placed before the Hon'ble Chief Justice for appropriate orders.
5. The matter was thereafter placed before us on 12th December, 2003. Since the petitioner was not represented by an Advocate, we requested Mr. P.S. Dani to assist the Court as amicus curiae. The learned Advocate accepted the request. The office was also directed to supply paper book to the learned Advocate. The matter was then adjourned to 6th February, 2004. On 6th February, 2004, the petitioner appeared through Ms. Shobha Gopal, advocate.
6. The learned counsel for the petitioner submitted that it is true that the petitioner resigned in 1977. It is also an admitted fact that at that time, there was no scheme relating to pensionary benefits to teachers like the petitioner. It is conceded that when the petitioner left service, he was paid all retirement dues like Provident Fund, etc. It is also an admitted position that for the first time, Pension Scheme was introduced in 1988 and is not retrospective in character. She, however, submitted that since the "resignation" can be said to be "voluntary retirement" and since the petitioner had completed service of more than 20 years, he is entitled to pensionary benefits under the scheme introduced in 1988. According to her, the ground weighed with the respondent-Corporation that in 1977, there was no scheme for giving pensionary benefits and the scheme would apply only with effect from introduction of the scheme in 1988 is not well-founded. Such a provision has been held to be arbitrary and unreasonable by the Supreme Court in D.S. Nakara. She also submitted that the point is covered by a Division Bench of this Court in more than one case. She, therefore, submitted that the petition deserves to be allowed by directing the respondent-Corporation to grant all pensionary benefits to the petitioner. She stated that the petitioner was and is ready and willing to refund the amount of Provident Fund and other benefits along with the interest which he has earned.
7. The learned counsel for the respondent-Corporation, on the other hand, contended that the petitioner is not entitled to pensionary benefits. The petitioner was appointed as a teacher with the respondent-Corporation and he resigned in 1977. In the circumstances, what was required to be seen was the position of employees in 1977. He also stated that the petitioner did not seek voluntary retirement but resigned from service. But that apart, the fact that the petitioner had rendered 24 years service was considered by the Corporation and he was paid his legal dues in accordance with law then in force such as Provident Fund, etc. It is not even the case of the petitioner that he was not paid his legal dues as per the scheme in force. What is contended is that Pension Scheme which was introduced for the first time in 1988 ought to be made applicable to him. Since the scheme was introduced after more than a decade of resignation by the petitioner and accepted by the respondent-Corporation and as the scheme is not retrospective, the petitioner is not entitled to such pensionary benefits. It was also submitted that the petitioner having accepted all benefits as per the scheme then in force cannot come forward after several years by filing the present petition that he should be granted such pensionary benefits. Regarding D.S. Nakara, the counsel submitted that the ratio laid down by the Supreme Court in the said case would not apply to the case in hand. It is clearly distinguishable and it was distinguished in several other judgments. Regarding the decisions of the Division Bench, the counsel submitted that they are per incurium and in some other decisions, a contrary view was taken by this court. Unfortunately, the attention of the Court was not invited to those decisions. He, therefore, submitted that the petition deserves to be dismissed.
8. Having heard the learned counsel for the parties, in our opinion, the petition deserves to be dismissed.
9. So far as the first question is concerned, it is not necessary for us to decide whether the resignation can be said to be voluntary retirement in view of the fact that even if the action of the petitioner of leaving service in 1977 by a "resignation" is treated as "voluntary retirement", then also, the petitioner would not be entitled to pensionary benefits under the scheme of 1988.
10. It is a common ground between the parties that the Pension Scheme was introduced for the first time by the respondent-Corporation in 1988. A notification was issued to that effect on September 9, 1988. It provides that if an employee has completed 20 years service, he would be entitled to pensionary benefits under the scheme. There is nothing in the scheme which shows that it would apply to persons like the petitioner who had left service in 1977.
11. The contention of the petitioner is that even if nothing is stated in the scheme, the petitioner must be granted pensionary benefits as it was not open to the respondent-Corporation to fix artificial cut off date and such action has been held to be arbitrary, discriminatory and unreasonable by the Supreme Court in D.S. Nakara. A similar view has also been taken by a Division Bench of this Court in other cases and hence he must be granted pensionary benefits.
12. Now, it is no doubt true that in S.D. Varerkar, a Division Bench of this Court was called upon to consider the provisions of Rule 63 of the Maharashtra Civil Services (Pension) Rules. 1982 and a Circular dated November 16, 1996. There, the petitioner was employed as a Librarian in a College recognised by the Government By a Circular of November 16, 1996, the State Government applied Pension Rules to teaching and non-teaching staff of Art Institutions, including respondent-College with effect from 1st April, 1995. The petitioner who retired in 1987, claimed benefits of Pension Rules contending that denial of those benefits only on the ground that he retired prior to 1995 from the College was illegal, arbitrary and unreasonable. The Division Bench upheld the claim of the petitioner and following D.S. Nakara observed that the conclusion was irresistible that the petitioner was entitled to pensionary benefits, even though he retired prior to 1995. Since the pensionary benefits were granted from 1st April, 1995, the petitioner was allowed the benefits with effect from that day.
13. The Court observed;
"In our view if one has regard to the aforesaid decisions, a conclusion is irresistible that members of staff of non- Governmental Art Educational Institutes would be entitled to pensionary benefits even though they may have retired prior to 1st April, 1995. Hence petitioner will also be entitled to pensionary benefits even though she has retired on 7th January, 1987 which is prior to 1st April, 1995. Pensionary benefits, however, will be payable only with effect from 1st April, 1995. In the circumstances we direct the respondents to release the pensionary benefits to the petitioner as also others who are similarly placed as provided in the aforesaid circular dated 16th November, 1996. Rule is accordingly made absolute in the aforestated terms. There will be, however, in the facts and circumstances of the case no order as to costs." (emphasis supplied) In that case, the Court referred to two decisions of this Court in N.S. Waikar and Retired Employees of Non-Government Colleges Association.
14. It is thus true that in S.D. Varerkar, a Division Bench had come across a case similar to the present one. In that case too, the petitioner had left service prior to the Pension Scheme was introduced and applied. It is also true that the Court held relying on earlier decisions and D.S. N akara that the petitioner would be entitled to pensionary benefits. The question, however, is whether S.D. Varerkar lays down correct law on the point.
15. The learned counsel for the respondent-Corporation, in our opinion, rightly submitted that in D.S. Nakara, the Supreme Court was considering a case wherein Pension Scheme was already in existence and operative. It was applied to existing employees and the benefits of the said scheme were made available to those employees. The benefit were accordingly granted to all the employees who retired under the scheme. That scheme was subsequently modified and revised. The persons who had retired by that time under the scheme and who had got benefits of the scheme then in force were not granted benefits of modified scheme on the ground that they had already retired prior to the modification and revision. The said action was challenged by retired employees on the ground that it was arbitrary, discriminatory, irrational and unreasonable. It was their contention that since the Pension Scheme was in force, and they retired under the said scheme and got the benefits of the scheme, it was not open to the State to deny enhanced rate of pensionary benefits to them only on the ground that the employees had retired. To deprive the employees the benefits of such enhanced rate of pension on the basis of artificial cut off date was violative of Article 14 of the Constitution.
16. The Court upheld the contention and observed that the classification of extending "revised pension formula" to pensioners on the basis of date of retirement was arbitrary and violative of Article 14. The Court noted that by such interpretation, the Court was not making the scheme retroactive. The Court stated;
"By our approach, are we making the scheme retroactive? The answer is emphatically in the negative. Take 2 Government servant who retired on April 1, 1979. He would be governed by the liberalised Pension Scheme. By that time he had put in qualifying service of 35 years. His length of service is a relevant factor for computation of pension. Has the Government made it retroactive, 35 years backward compared to the case of a Government servant who retired on 30th March, 1979? Concept of qualifying service takes note of length of service, and pension quantum is correlated to qualifying service. Is it retroactive for 35 years for one and not retroactive for a person who retired two days earlier. It must be remembered that pension is relatable to qualifying service. It has correlation to the average emoluments and the length of service. Any liberalisation would pro tanto be retroactive in the narrow sense of the term. Otherwise it is always prospective. A statute is not properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing (See Craies on Statute Law, 6th Edn., p.387). Assuming the Government had not prescribed the specified date and thereby provided that those retiring pre and post the specified date would all be governed by the liberalised Pension Scheme. Undoubtedly, it would be both prospective and retroactive. Only the pension will have to be recomputed in the light of the formula enacted in the liberalized Pension Scheme and effective from the date the revised scheme comes into force. And beware that it is not a new scheme. It is not a new retiral benefit. It is an upward revision of on existing benefit. If it was a wholly new concept, a new retiral benefit, one could have appreciated an argument that those who had already retired could not expect it. It could have been urged that it is an incentive to attract the fresh recruits. Pension is reward for past service. It is undoubtedly a condition of service but not an incentive to attract new entrants because if it was to be available to new entrants only, it would be prospective at such distance of thirty-five years since its introduction. But it covers all those in service who entered thirty-five years back. Pension is thus not an incentive but a reward for past service. And a revision of an existing benefits stands on a different footing than a new retiral benefit. And even in case of new retiral benefit of gratuity under the Payment of Gratuity Act, 1972 past service was taken into consideration. Recall at this stage the method adopted when pay-scales are revised. Revised pay-scales are introduced from a certain date. All existing employees are brought on to the revised scales by adopting a theory of fitments and increments for past service. In other words, benefit of revised scale is not limited to those who enter service subsequent to the date fixed for introducing revised scales but the benefit is extended to all those in service prior to that date. This is just and fair. Now if pension as we view it, is some kind of retirement wages for past service, can it be denied to those who retired earlier, revised retirement benefits being available to future retirees only. Therefore, there is no substance in the contention that the Court by its approach would he making the scheme retroactive, because it is implicit in theory of wages." (emphasis supplied)
17. In the instant case, to repeat, there was no Pension Scheme in existence in 1977 when the petitioner left service. The scheme was introduced for the first time in 1988. It was altogether a new scheme. In our considered view, therefore, the learned counsel for the respondent-Corporation is right in submitting that the ratio laid down in D.S. Nakara would not apply to the facts of the present case and the petitioner cannot claim benefits under the new scheme.
18. The learned counsel also referred to another decision of the Constitution Bench of the Supreme Court in Krishena Kumar v. Union of India and Ors. . Distinguishing D.S. Nakara, the Apex Court held that if a retiree gets benefit under the scheme in force, his rights are finally crystallised on his retirement and thereafter no continuing obligation remains on the employer.
19. Again, in Slate of West Bengal and Ors. v. Ratan Behari Dey and Ors. , , there was in existence Pension Scheme in force in Calcutta Corporation prior to 1914. The scheme, however, had been given up later on. In 1982, again it was reintroduced by giving cut-off date of April, 1977 since Commission was appointed for consideration of reintroducing Pension Scheme in 1977. The action and cut-off date were held legal, valid and lawful. Distinguishing D.S. Nakara and following Krishena Kumar, the Court said;
"Now, it is open to the State or to the Corporation, as the case may be, to change the conditions of service unilaterally. Terminal benefits as well as pensionary benefits constitute conditions of service. The employer has the undoubted power to revise the salaries and/or the pay scales as also terminal benefits/pensionary benefits. The power to specify a date from which the revision of pay scales or terminal benefits/pensionary benefits, as the case may be, shall take effect is a concomitant of the said power. So long as such dale is specified in a reasonable manner, i.e., without bringing about a discrimination between similarly situated persons, no interference is called for by the court in that behalf".
(emphasis supplied)
20. It is, therefore, clear that a cut-off date can be fixed provided it is not arbitrary, irrational, discriminatory or unreasonable. To hold that in no case a cut-off date can be fixed would mean that "Government can never change the conditions of service relating to retiral benefits with effect from a particular date". No such absolute proposition can be laid down. We, therefore, must negative the contention of the petitioner.
21. It may be appropriate to make mention to a decision of the Division Bench of this Court in Chandrakant D. Chincholikar and Anr. v. Union of India and Ors., (Writ Petition No. 3783 of 1997) dated 9th September, 1998. In that case, petitioner No. 1 retired in April, 1986 and petitioner No. 2 retired in February, 1988. Pension Scheme was made effective from 16th December, 1988. Both the petitioners had already received benefits under the Contributory Provident Fund Scheme which was in force before introduction of the Pension Scheme. After the new scheme was introduced, they claimed benefit under the new scheme, contending that the cut off date for introducing Pension Scheme was arbitrary and discriminatory. Reliance was also placed on D.S. Nakara.
22. The Court repelled the contention and dismissed the petition, observing inter alia, that reliance on D.S. Nakara was ill-founded. As observed by the Supreme Court, in that case, it was not a new scheme but only revision of an existing scheme. The said benefit, therefore, could not be denied to employees who retired before the revision of the scheme. That was not the situation, the Division Bench observed. The Court also noted that D.S. Nakara was subsequently considered and observations therein were clarified in Krishena Kumar. In D.S. Nakara, the Court treated the pension retirees only as a homogeneous class. It was never held that both, Pension retirees and P.F. retirees, formed a homogeneous class and any further classification among them would be violative of Article 14. It was also noted by the Division Bench that again in Ratan Behari Dey, the Court distinguished D.S. Nakara observing that there could be different sets of rules governing different retirees. The Bench also stated that in the case before it, the scheme was a new scheme and not a revision of old scheme Benefit of the new scheme, therefore, could be made applicable only to those employees who would retire on or after 16th December, 1988 and the benefit under the said scheme would not enure to those who had already retired prior to introduction of the scheme. Since the petitioners retired prior to the cut off date and had already received benefits under the old scheme, i.e. Contributory Provident Fund Scheme, they were not entitled to the benefits under the new Pension Scheme.
23. Though s.d. varerkar was decided subsequently i.e. on December 18, 1998, and though one of the members of the Bench in s.d. varerkar was also a member in Chandrakant D. Chincholikar decided at a prior point of time on 9th September, 1998, the attention of the Court was not invited to the said decision. s.d. varerkar was thus per incurium.
24. We may also consider a recent decision of the Apex Court in Reserve Bank of India and Anr. v. Cecil Dennis Solomon and Anr., (2003) 10 SCALE 449 wherein employees were working in various capacities with the Reserve Bank of India. They tendered resignation in 1988. Subsequently, however, Reserve Bank of India Pension Regulations, 1990 came into force and were applied to its employees. The employees who tendered resignation in 1988 claimed benefits of the Pension Regulations, 1990, though admittedly the Regulations were not in force when they submitted the resignation. The High Court held that the employees were entitled to pensionary benefits under 1990 Regulations, and accordingly direction was issued to grant such benefits to the employees who retired in 1988. Aggrieved Reserve Bank approached the Supreme Court.
25. Allowing the appeal and setting aside the order of the High Court, the Apex Court held that the High Court had committed an error in holding that the employer was legally bound to grant pension. The Court indicated that when the Regulations were framed in 1990, the employees who left the service in 1988 could not be held entitled under the said Regulations which were subsequently brought into force. The employees who claimed the benefits under the Pension Regulations got the benefits accrued in their favour under the Contributory Provident Fund and Gratuity Scheme. They, therefore, were not entitled to the benefits under 1990 Regulations and order passed by the High Court was liable to be set aside. Accordingly, the directions issued by the High Court were quashed.
26. From the above discussion, it is clear that in the facts and circumstances of the case, the ratio laid down in D.S. Nakara does not apply. It is not even the case of the petitioner that Pension Scheme was in existence in 1977 when he left service and it was subsequently changed, modified or revised. Indisputably, it was a new scheme which was introduced for the first time in 1988. Therefore, as held by the Supreme Court in D.S. Nakara and reiterated in subsequent cases, an employee cannot claim benefit of a new scheme introduced and applied for the first time, after he leaves service. This is also the view of this Court in Chandrakant D. Chincholikar wherein D.S. Nakara was distinguished by referring to subsequent decisions. Unfortunately, however, in s.d. varerkar which was decided at a later point of time, the attention of the Court was not invited to Chandrakant D. Chincholikar as also to other decisions of the Supreme Court and thus it was per incurium. In our considered opinion, therefore, s.d. varerkar deserves to be over-ruled as it does not lay down correct law.
27. For the foregoing reasons, in our judgment, the petition deserves to be dismissed and is accordingly dismissed. The view taken by the Division Bench of this Court in s.d. varerkar as also the decisions of the Division Bench referred to therein does not lay down correct law on the point and is hereby over-ruled and the view takes by the Division Bench in Chandrakant D. Chincholikar is approved.
28. The petition is accordingly dismissed. Rule is discharged. In the facts and circumstances, however, there shall be no order as to costs.
Certified copy expedited.