Nadiad Municipal Pensioners ... vs State Of Gujarat & on 11 February, 2016

[Cites 21, Cited by 1]

Gujarat High Court

Nadiad Municipal Pensioners ... vs State Of Gujarat & on 11 February, 2016

HC-NIC Page 1 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT 1 By this writ application under Article 226 of the Constitution of India, the petitioners have prayed for the following reliefs:

"18(A)Your Lordships may be pleased to issue a writ of mandamus, or any other appropriate writ, order or direction in the nature of mandamus, directing the respondents to implement the Govt. Resolutions dated 13.4.2009 (Annexure E collectively) for the members of petitioner Association, with further directions to calculate and pay the revised pension/family pension to them, forthwith or within such time limit as may be deemed fit by this Hon'ble Court, in the interest of justice.

(B) Your Lordship may be pleased to issue a writ of mandamus, or any other appropriate writ, order or direction in the nature of mandamus, directing the respondents to calculate and pay to the members of petitioner no.1 Association, arrears of pension / family pension on implementation of the Govt. Resolutions dated 13.4.2009 (Annexure E collectively) within such such time limit as may be deemed fit and proper by this Hon'ble Court in the interest of justice.

(C) Pension admission, hearing and till final disposal of this petition, Your Lordship may be pleased to direct the respondents to start paying revised pension / family pensions to the members of petitioner no.1 Association on the basis of the Govt. Resolutions dated 13.4.2009 (Annexure E collectively), subject to such terms and conditions as may be deemed fit, just and proper by this Hon'ble Court in the interest of justice.

(D) This Hon'ble Court be pleased to grant any other relief as may be deemed fit, just and proper in the interest of justice."

         2    The facts of this case may be summarized as under:
         2.1       The petitioner No.1 is an association of persons retired from the

services of the Nadiad Municipality i.e. the respondent No.1 herein.

2.2 It is the case of the petitioners that before the Gujarat Municipalities Act, 1963 was enacted, the Nadiad Municipality was known as the "Nadiad Borough Municipality". On 6th February, 1960, the pension rules were sanctioned vide the Government Resolution No. Municipality3359. Pursuant to the same, the pension rules contained in Page 2 of 34 HC-NIC Page 2 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT the Bombay Civil Services Rules, Chapter XI, established and revised by the Finance Department, Government Resolution No.835133 dated 20th December, 1950, as amended from time to time, were being adopted by the Nadiad Borough Municipality for its full time employees.

2.3 The rules further provided that the employees, who had joined the service with the Municipality after 1st April, 1959, would be governed by the Pension Fund Scheme established by the Nadiad Borough Municipality.

2.4 Under Rule 6 of the said rules, it was provided that the Nadiad Borough Municipality shall establish its own pension fund to meet with the liability of the payment of pension and gratuity of the Nadiad Borough Municipality employees.

2.5 The Rule 7 of the said rules provides that the pension fund shall be under the control and administration of the Nadiad Borough Municipality. The Rule 7 further provides that a separate account for the said fund shall be maintained. It was also provided that the Nadiad Borough Municipality shall, as soon as practicable, invest all the accumulated funds in the government securities as defined under Section 2 of the Indian Securities Act and the securities of the nature specified in Clauses (a), (c) and (d) of Section 20 of the Indian Trusts Act.

2.6 It further provided that the requisite amount if required immediately or within twelve months shall be deposited with any of the Banks approved by the provincial government under Section 67 of the Bombay Municipal Borough Act, 1925.



         2.7       The  Rule  9 of  the  said  rules  further  provided  that  the  Nadiad 


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Borough Municipality shall also pay the temporary hike if any in the pension as sanctioned by the Government in favour of the government servants from time to time.

2.8 It is the case of the petitioners that the State Government, vide its resolution dated 20th January 1998, carried out few modifications in the existing rules / orders regarding the pensionary benefits. Pursuant to the said rules, the revised provisions, according to the said order, were made applicable to the government employees who had retired / died, on or after 1st January, 1996.

2.9 The rules further provided that the benefits of the revised pay scales and fixation of pay in the revised pay scale, according to the scheme laid down in the Gujarat Civil Services (ROP) Rules, 1998, should be shown as a notional hike. In the case of voluntary retirement covered under the Resolution dated 8th October 1970, the notional effect would be taken into account for regulating the pension.

2.10 The rules further provided that the pension / family pension / DCRG commutation of pension already sanctioned on or after 1st January, 1996, would be revised in terms of the order in the cases where the pension had been finally sanctioned on the basis of the prerevised order, and if it was found to be more beneficial, then the pension which would fall due under the said orders, then the pension already sanctioned would not be revised to the disadvantage of the pensioners.

2.11 It is the case of the petitioners that since the respondent No.2, Municipality was not implementing the Government Resolution dated 20th January 1998, the association was compelled to file a writ application before this Court being the Special Civil Application No.6180 of 1999.



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         2.12       The said writ application was disposed of by a learned Single

Judge vide order dated 20th August 1999 in the following terms:

"Heard the learned counsel for the petitioners.

2. Here the President and Secretary of the Nadiad Municipal Pensioners' Association are the petitioners and they are praying for the direction to the respondents to implement the Resolutions annexure `B' and `C' immediately and all pensioners may be given the arrears of revision of pension with increased D.A. and interest.

3. For this relief, the petitioners have to first approach to the State of Gujarat through its Secretary, Urban Development and Urban Housing Department, Gandhinagar.

4. This special civil application is dismissed, at this stage, with direction to the petitioners to first file a detailed representation in respect of their grievances made in this special civil application to the Secretary of the Urban Development and Urban Housing Department, Sachivalaya, Gandhinagar. In case, such a representation is filed then the Secretary concerned shall decide the same after hearing the petitioners, if they pray for personal hearing in the matter, within a period of one month from the date of receipt thereof. In case, the grievances of the petitioners are acceptable then all consequential benefits may be given to the members of the petitionerAssociation but where the same are not acceptable then a reasoned order may be passed and copy of the same may be sent to the petitioners by registered post A.D..

5. Subject to the aforesaid directions, this special civil application is dismissed with liberty to the petitioners for revival of the same in case of difficulty by filing a simple note."

2.13 Pursuant to the order referred to above passed by this Court, the association preferred a representation addressed to the respondent No.1 i.e. the State Government. The State Government accepted that the resolution of 1998 would be applicable to the members of the association.



         2.14    Although the representation filed by the association was accepted 



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positively, yet the respondent No.2 failed to implement the order of the State Government, and therefore, in view of the liberty granted by this Court earlier, the writ application being Special Civil Application No.6180 of 1999 was revived. The learned Single Judge of this Court passed the following order dated 10th May 2000:

The present petition was filed by the Nadiad Municipal Pensioners' Association for the relief that respondents be directed to implement the resolutions at Annexrues 'B' and 'C' and immediately pay all the petitioners the arrears of revision of pension with increased DA and interest. The petition was disposed of by an order dated 20.8.1999 with necessary directions to the respondents. The liberty was reserved to the petitioner to revive the same in case of difficulty by filing a simple note.

2. The representation filed by the petitioner to the State Govt. came to be decided in favour of the petitioner, but the Municipality did not give the benefit of that order and hence the petition was ordered to be revived on 22.3.2000. The grievance of the petitioner is that respondents nos.2 and 3 are not fully complying with the Resolution and hence the petitioner members are not getting pension and other allowances as per 4th and 5th Pay commission's recommendations.

2. The Additional Chief Secretary of Urban Development & Urban Housing Department, ACS, UD & UHD has passed an order dated 22.10.1999, a copy of which is placed on record of this case, by which respondents nos.2 and 3 are directed to make payment in terms of that order. The said order mentions that it is passed in compliance of the directions dated 20.8.1999, given by this Court in the present Special Civil Application.

3. Mr. M.C. Shah, the learned advocate for respondents nos.2 and 3 makes a statement that Mr.Ailerkhi, an Auditor of Nadiad Municipality is present before this Court and on his instructions it is stated that respondents nos.2 and 3 will ensure that the order referred to hereinabove is complied with as early as possible. This is not enough, hence it is directed that respondents nos.2 and 3 shall comply with the said order at the earliest, but not later than 30th November 2000.

4. The petition stands allowed. Rule is made absolute accordingly. No order as to costs."

               

         2.15       Thus, this Court vide order dated 10th  May, 2000 directed the 


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respondent No.2 - Municipality to comply with the earlier order dated 20th August, 1999 on or before the 30th November, 2000.

2.16 It is the case of the petitioners that till this date, the said order has not been complied with.

2.17 According to the petitioners, the Government passed a resolution dated 30th April, 2000 with respect to the Sixth Central Pay Commission, revision of pension of Pre2006 pensioners and family pensioners, etc. On the very same date, the Government also passed another resolution being Resolution No.PGR10095Pay Cell(M)Sixth Central Pay Commission and revision of provisions regulating pension / gratuity / commutation of pension, etc and post 1st January, 2006 pensioners / family pensioners.

2.18 It is the case of the petitioners that so far as the Government Resolution relating to the pensioners / family pensioners of Pre2006 is concerned, the Clause 3.5 thereof provides that the quantum of the pension and family pension available to the old pensioners / family pensioners shall be increased, depending upon the age of the pensioners.

2.19 It is the case of the petitioners that the Municipality vide resolution dated 31st July, 2010 accepted the resolution of the Government to implement the Sixth Central Pay Commission's recommendations and also to give the benefits of the same to the pensioners of the Municipality. It was resolved by the Executive Committee that a proposal in that regard be forwarded to the Government.

2.20 The Municipality, thereafter, passed a resolution No.235 dated 25th March, 2011, wherein it was recorded that as the State Government Page 7 of 34 HC-NIC Page 7 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT had accepted the proposal, the pensioners should be given the benefits of the Sixth Central Pay Commission and the Chief Officer of the Municipality was authorized in that regard to do the needful.

2.21 The Association preferred a representation addressed to the Municipality requesting to pay pension / family pension according to the Sixth Central Pay Commission Report. The petitioners association remained under the impression that as the Municipality had already resolved to implement the Sixth Central Pay Commission for its employees and pensioners, they would start giving effect to the same. However, till this date, nothing has been done in the matter.

2.22 Hence this petition.

3 Mr. Parikh, the learned counsel appearing for the petitioners submitted that till this date, no action is taken by the respondent No.2 - Municipality for implementing the Government Resolution dated 13th April, 2009 for the purpose of revising the pension payable to the members of the association. He submitted that almost five years have passed, but the Municipality has not responded. He, therefore, prays that an appropriate writ or direction in that regard be issued.

4 This writ application has been vehemently opposed by Mr. Mehul Sharad Shah, the learned counsel appearing for the Nagapalika. He submitted that it is not feasible for the Nagarpalika to sanction the benefits of the Sixth Central Pay Commission to the members of the association having regard to the poor financial condition of his client. He placed reliance on the following averments made in the affidavitinreply filed on behalf of the respondent No.2 duly affirmed by the Chief Officer:

"5. At the outset, I say and submit that the petition in the present nature is not maintainable. The petitioner - Association is not a registered Page 8 of 34 HC-NIC Page 8 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT Association. Nadiad Municipal Pensioners' Association is not recognized and not known to Nadiad Nagarpalika. In para 1 of the petition also, there is no reference regarding registration and there is not reference regarding authority being given to the petitioner Nos.1 & 2 by that unregistered and unrecognized Association. I respectfully say and submit that the Nagarpalika is not aware as to who are the members of the said Association. The dates of retirement of the employees alleged to have been members of that Association and for whom the present petition is filed are also not borne out from the entire memo of the petition. Thus, the present petition is vague and is filed without any authority of law and, therefore, it requires to be dismissed at the threshold.

6. I respectfully state and submit that the petition is filed praying to direct the respondents to implement the Government Resolution dated 13.4.2009 for the members of the petitionerAssociation and further to calculate and pay the revised pension / family pension to them forthwith. I say and submit that the Government Resolution dated 13.4.2009 pertains to revision of pension as per the Sixth Central Pay Commission's recommendation. I say and submit that the proposal made by the Chief Officer, Nadiad Nagarpalika through the Collector, Kheda is rejected by the Director of Municipalities because the establishment expenses of the Nagarpalika is moire than 48%. Therefore, when the proposal is rejected by the Director of Municipalities and even the Sixth Central Pay Commission's recommendations are not implemented for the existing employees, then there is no question of giving benefit of revision in pension to the retired employees of the Nagarpalika, as claimed in the petition. AnnexureA/1 is a copy of the proposal made by the Chief Officer to the Collector. AnnexureA/2 is a copy of the recommendation of the Collector dated 18.11.2010 to the Director of Municipalities and AnnexureA/3 is a copy of order passed by the Director of Municipalities dated 1.2.2012, rejecting the proposal made by Nadiad Nagarpalika.

7. With reference to paras 2 to 4 of the petition, I say and submit that it is true that Nadiad Nagarpalika has formed Pension Fund Rules contained in the Bombay Civil Service Rules, Chapter _ XI and they were approved by the Government on 6.2.1960. I say and submit that what is stated in the paragraphs under reply is narration of facts and, therefore, at present I do not offer any comments.

8. With reference to para5 of the petition, I say and submit that what is stated therein is not true and correct and, therefore, are not admitted. I say and submit that the directions given by this Hon'ble High Court in Special Civil Application No.6180/1999 have been fully complied with by the Nagarpalika and all the pensioners have been paid pension as per the Government policy. The differences was also paid to them in installments and the Resolution dated 27.7.1998 relating to pension is also implemented in its true spirit by the Nagarpalika.




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9. With reference to paras 6 & 7 of the petition, I say and submit that they pertain to the Government Resolution dated 13.4.2009 pursuant to the 6th Pay Central Pay Commission resolution and, therefore, I do not offer any comments at this stage.

10. With reference to paras 8 & 9 of the petition, I say and submit that Nadiad Nagarpalika by resolution dated 31.7.2010 decided to adopt the recommendations of the 6th Central Pay Commission and to give the benefits of its employees, and the Chief Officer and the President of the Nagarpalika have been authorized to forward the proposal to the Government. I say and submit hat thereafter in the General Body Meeting dated 25.2.2011, a resolution was passed to give the benefits of 6th Central Pay Commission's recommendations to the employees of the Nagarpalika, subject to approval of the Government.

11. With reference to para 10 of the petition, I say and submit that what is sated therein is not true and correct and therefore, not admitted. I say and submit that even before the representation is received by the Nagarpalika, decision was already taken to make a proposal to the Government to extend the benefits of 6th Central Pay Commission's recommendations to the employees of the Nagarpalika. As stated above, the proposal sent by the Nagarpalika through the Collector is rejected by the Director of Municipalities vide order dated 1.2.2012, as at the time of taking decision by the Director of Municipalities, the establishment expenses was more than 48%. It was also noticed by the Director of Municipalities that if the benefits of 6th Central Pay Commissions' recommendations are extended to the employees of the Nagarpalika, then the establishment expenses would be 52.24%, which would be more than the limit prescribed by the Government resolution. Therefore, it was suggested by the Director of Municipalities that after raising source of income and reducing the establishment expenses below (less than) 48%, proposal may be made by the Nagarpalika in future. I say and submit that this year also the establishment expenses would be such that if the recommendations of the 6th Central Pay Commission are accepted, the establishment expenses will cross the establishment expenses limit of 48%. Even the existing employees have not been given the benefits of 6th Central Pay Commission's recommendation. Therefore, there is no question of giving the benefits of the 6th Central Pay Commission's recommendations to the retired employees by revising their pension when the proposal of the Nagarpalika has been rejected by the Director of Municipalities. I say and submit that though this fact is known to the petitioners, the petition is filed and, therefore, it is required to be rejected at its threshold. I say and submit that as and when the Director of Municipalities sanctions the proposal to give benefits of the recommendations of the 6 th Central Pay Commission to the employees of the Nadiad Nagarpalika, the benefits will be extended to the existing as well as retired employees of the Nagarpalika, Page 10 of 34 HC-NIC Page 10 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT as per the provisions of law. Thus, the petition at this stage is premature and misconceived and, therefore, requires to be dismissed.

12. With reference to paras 11 to 18, I say and submit that what is stated therein is not true and correct and, therefore, not admitted. I say and submit that in view of the aforesaid facts, the Nagarpalika is not at fault for not revising the pension of the retired employees and I strongly deny the contention raised by the petitioners that the Nagarpalika is sitting tight over the matter and is not granting the benefits of 6th Central Pay Commission's recommendation to its retired employees."

5 The association has filed a rejoinder to the reply of the Nagarpalika inter alia stating as under:

"4. I say that the petitioner has annexed copy of the order passed by this Hon'ble Court in Special Civil Application No.6180/1999 filed by the present petitioner Association. The said petition was entertained by this Hon'ble Court and ultimately, final relief was also granted by this Hon'ble Court. The petitioner has annexed copy of the order passed by this Hon'ble Court in the said petition at Annexure 'D' to the present petition. This clearly shows that the petitioners in the said petition is the present petitioner, i.e. Nadiad Municipal Petitioner Association. Thus, the contention raised by the deponent of the affidavit in reply is baseless and is not tenable at law.

5. I further say that it also not correct that the Respondent Nadiad Municipality is not aware as to who are the members of the petitioner Association. I say that it is well known to the Respondent Nadiad Municipality that the members of the petitioner Association are retired employees, i.e. pensioners, of the Municipality. However, I am annexing herewith a list at Annexure 'I' to this rejoinder, showing the names of persons who are members of the petitioner Association. I say that I have annexed the list of members of the petitioner Association, so that if any relief is granted in the present petition, the Respondent Municipality may not come out with a stand that to whom the benefits are to be extended pursuant to the order (s) that may be passed by this Hon'ble Court.

6. I further say that the avermens made in para 6 of the reply affidavit are not correct and not tenable at law. I say that letters relied upon by the deponent of the affidavit in reply are not relevant for adjudication of the issue involved in the present petition, but the same are referred to by the deponent of the reply affidavit only with a view to mislead this Hon'ble Court. I say that the said letters are pertaining to existing employees of the respondent Nadia Municipality. The letters written by the municipality and the replies given by the Director of Page 11 of 34 HC-NIC Page 11 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT Municipalities are pertaining to the benefits of 6th Pay Commission's recommendations, which was extended to the employees of the respondent municipality, and they are not pertaining to pensioners of the Nadiad Municipality, whereas the Govt. Resolution dated 13.04.2009 is pertaining to the pensioners / family pensioners of the municipality.

7. I would like to state that even at earlier point of time, when the State Government passed Resolutions dated 20198 and 27.07.1998 relating to pensioners, the respondent Nadiad Municipality was not implementing the same. Hence, Special Civil Application No.6180/1999 was required to be filed by the present Association before this Hon'bhle Court. In the said petition, while disposing the petition, this Hon'ble Court issued directions to the Government to consider the grievance of the members of the petitioner Association. Pursuant to the directions so issued by this Hon'ble Court, the State Government had clearly ordered that the Nadiad Municipality is duty bound to implement the Govt. Resolutions dated 2011998 and 27.07.1998 relating to pensioners with increased dearness allowance. However, the respondent Nadiad Municipality did not implement the order of the Government and hence the said Special Civil Application No.6180/99 had to be revived, and, this Hon'ble Court in the order dated 10.5.2000, observed that grievance of the petitioner that respondents no.2 and 3 are not fully complying with the resolution and members of the petitioner Association are not paid pension and other allowances as per the 4th and 5th Pay Commissions' recommendations. This Hon'ble Court had directed the respondent municipality to comply with the order of the State Government at the earliest, but not later than 30.11.2000. I say that reliance placed by the deponent of the reply affidavit on the correspondence exchange with the Director of municipalities has no relevance to the facts of the present case.

8. I further say that the deponent of reply affidavit has admitted that the Municipality has framed Pension Fund Rules as contained in the Bombay Civil Services Rules, Chapter 9, and they are approved by the Govt. on 06.02.1960. The said Rules are produced by the petitioner at Annexure A to the petition. Rule 6 of the said rules provides that the Nadiad Municipality shall establish its own pension fund to meet with the liability of payment of pension and gratuity to its employees on retirement and shall contribute to this fund a sum equivalent to 1/9 th of sanctioned salary for such employees and it shall be made monthly on the date on which the pay bills of the employees are cashed. Rule 7 thereof provides that the Pension Fund shall be under the control and administration of the Municipality and a separate account of these funds shall be maintained. Reading these rules, it is clear that the respondent Nadiad Municipality has to pay pension to each and every one of its retired employees as per the said Rules and from the funds so created under the said Rules. I further say that the respondent municipality is duty bound to pay pension and other retirement benefits to its retired employees from the pension fund of Page 12 of 34 HC-NIC Page 12 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT the municipality. I say that the reliance placed by the deponent of the affidavit in reply on the income and establishment expenditure is misconceived and has no relevance to the issue of payment of pension to the members of the petitioner Association as per the orders of the State Government.

9. I further say and though the members of the petitioner Association are not concerned with the income or establishment costs/expenditure of the respondent Nadiad Municipality, I say that the Nadiad Municipality is not correct in calculating the its income and establishment costs/expenditure. While calculating the income, the respondent municipality has to take into consideration all the Heads under which the municipality generates its funds. I further say that the municipality is required to prepare the budget, projecting income under various Heads and making provisions for expenditure under different heads, including the provision for establishment expenses. The municipality is not coming forward with details of actual income under various Heads along with details pertaining to establishment expenses, but is trying to mislead and misguide this Hon'ble Court by unnecessarily referring to such issues which re not relevant for deciding the present petition. This is without prejudice to the contention of the petitioner that the respondent municipality is obliged to pay the pension to the members of the petitioner as contended in the memo of the petition, and it is for the municipality to ensure that the orders/rules issued by the State Government in this regard are complied with in its entirety.

10. I say that members of the petitioner Association also include pensioners who are more than 80 years of age and widows of those unfortunate pensioners who have expired since then. Under the circumstances, even at an interim stage, the respondent Municipality is required to be directed to start paying pension to the members of the petitioner Association by implementing the Govt. Resolution dated 13.04.2009 and arrears may be directed to be paid thereafter, as may be deemed fit by this Hon'ble Court.

I, therefore, say and submit that the affidavit in reply filed on behalf of the respondent Nadiad Municipality is devoid of merits and/or substance and the petition filed by the petitioner Association deserves to be allowed as prayed for, in the interest of justice."

6 There is one additional affidavitinreply filed on behalf of the Nagarpalika inter alia stating as under:

"1. Petitioner No.1 association and others have filed petition on behalf of retired employees inter alia, praying for the revised pension on the basis Page 13 of 34 HC-NIC Page 13 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT of the government resolution dated 13.04.2009. I say and submit that during the pendency of the petition the proposal submitted by the Nagapalika to give the benefit of 6th Pay Commission recommendations to the employees of Nadiad Ngarpalika has been sanctioned by the Director of Municipalities by order dated 07.10.2015. That as per the sanction order, the period between 01.01.2006 and 31.08.2014 shall be considered as notional period and the benefit will be paid with effect from 01.09.2014. That as per further condition, if the establishment expenses has increased to more than 48% then the benefit of 6th pay commission recommendations will crease to operate. Hereto annexed and marked as Annexure R1 is copy of the order dated 07.10.2015.

2. I say and submit that pursuant to the sanction order the process of pay fixation is going on for all, existing as well as retired employees. I say and submit that at present the process of fixation is about to complete qua the existing employees and it will take further four weeks time to complete the process qua other employees including the retired employees and thereafter the question of revised pay and revised pension will be considered in accordance with law as well as the sanction order. I say and submit that there are more than 650 pensioners and it will take further time to carry on the process of pay fixation and to decide the revision of pension. Therefore, I humbly pray that reasonable time may kindly be granted to complete the procedure."

7 Let me now look into the Pension Fund Rules of the Nadiad Municipality. The Rules reads as under:

"PENSION FUND RULES OF THE NADIAD MUNICIPALITY SANCTIONED BY GOVERNMENT UNDER LOCAL SELFGOVERNMENT AND PUBLIC HEALTH DEPARTMENT RESOLUTION NO.MUN3359/A, DATED 6TH FEBRUARY, 1960.

1. These Rules shall be called the Nadiad Municipal Pension Fund Rules.

2. The Pension rules contained in Bombay Civil Services Chapter XI as modified and revised by G.R. Finance Deptt., No.8315/33 dated 2012 1950 as amended from time to time shall be adopted by the Nadiad Municipality for its permanent full time employees.

3. These rules shall be deemed to have come in force as from 1 st April, 1959 and permanent full time employees who are in the service on the aforesaid date shall exercise the option to join the Pension Scheme within 3 months from the receipt of Govt. sanction to these rules or earlier. Option once exercised shall be final. It will be open to the employees to join Page 14 of 34 HC-NIC Page 14 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT the Pension Fund with retrospective effect from the date of they joined the Provident Fund of the Municipality.

Employees joining the Municipal service after 141959 shall be governed by the above said Pension Fund Scheme established by the Nadiad Municipality.

4. No employees of the Nadiad Municipality who is a subscriber to the contributory Provident Fund Scheme of the Municipality shall be allowed to join the Pension Fund unless he ceases to be such a subscriber and selects to join the Pension Fund under Rule 3. However, a Municipal employee may continue to contribute his own share only to provident fund which shall be governed under the relevant Provident Fund Rules in force.

5. In case of those Municipal employees who are under the present Provident Fund Scheme and who exercise their option to join the Pension Fund of the Municipality, the adjustment of their Provident Fund accumulations will be made in the following manner:

(a) The Municipal contribution together with interest accrued thereon will be credited to Municipal Pension Fund established under these rules.

(b) Municipal employees' own contribution with interest accrued thereon shall be refunded to them or to their nominee or nominees on their ceasing to be the Municipality's servants due to any cause subject to prior settlement of Municipality's claim as per Rule 21 of the Provident Fund Rules of the Nadiad Municipality.

(c) In case of those Municipal employees who exercised their option to join Nadiad Municipal Pension Fund Rule 3 and in respect of who the Pension contribution has already been paid to Government under financial Rule 367 in respect of their services rendered before the establishment of the Nadiad Municipal Provident Fund Scheme, the liability of Pension to such employees will be proportionately borne by the Government and Nadiad Municipality on their retirement from Municipal service. The proportionate share of Pension payable by Government and Nadiad Municipality shall be determined by the Accountant General, Bombay, in accordance with the method indicated in Rule 279 (b) of the Bombay Civil Services Rules, Vol. I.

6. The Nadiad Municipality, Nadiad, shall establish its own Pension Fund to meet with the liability of payment Pension and Gratuity to Nadiad employees and shall contribute to this fund a sum equal to 1/9 of the sanctioned salaries of such employees and it shall be made monthly on the date on which the pay bills of the employees are cashed.

7. The Pension Fund shall be under the control and administration of Page 15 of 34 HC-NIC Page 15 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT the Nadiad Municipality, Nadiad. A separate account of this Fund shall be maintained.

8. The Nadiad Municipality, Nadiad, shall as soon as practicable invest all accumulated funds in Government securities within the meaning of Clause (a) of Sec. 2 of the Indian Securities Act, 1920 or in Securities of the nature specified in Clause (a), (c) and (d) of Sec. 20 of the Indian Trust, Act, 1882.

Provided that moneys which are required to be applied immediately or within twelve months may be deposited with any of the Banks approved by the Provincial Government under Sec. 67 of the Bombay Municipal Boroughs Act, 1925.

9. The Nadiad Municipality, Nadiad, shall also pay temporary increase in pension as sanctioned by the Government to Government servants from time to time.

10. When no liability remains on the Fund, it shall be absorbed in the General balance of the Nadiad Municipality, Nadiad.

11. These Rules shall be modified from time to time as the Nadiad Municipality, Nadiad may consider necessary and such modifications shall be deemed to have come in force on receipt of Government sanction thereto."

8 Let me now look into the decision of the State Government dated 22nd October, 1999 in context with the Government Resolution dated 20th January, 1998, which provided for revision of Pension / Commutation of Pension on the basis of the recommendations of the Fifth Central Pay Commission.

9 Almost an identical issue had cropped up earlier in point of time. The reason why I am referring to the decision of the State Government is because the stance of the State Government in the case in hand is that the Government Resolution dated 13th April, 2009, with regard to the Sixth Central Pay Commission / revision of pension of Pre2006 pensioners, is not applicable, as the Municipality has its own separate rules so far as the pension is concerned. The very same rules, I am Page 16 of 34 HC-NIC Page 16 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT referring to, were in force even at the time the decision was taken by the Government in 1999 with respect to the Fifth Central Pay Commission. The order dated 20th October, 1999 is quoted hereinbelow:

"The present matter is in the context of a direction given by the lion. High Court of Gujarat in Special Civil Application No.6180/1999 dated 20.08.1999. The Hon'ble Justice has ordered that if a representation is filed and a hearing, is sought; then it should be disposed off within "one month of the receipt of the representation.

The petitioner filed their representation which was received in the Department on 22/09/1999. The petitioners were given a hearing on

10.10.1999. Mr. J.R. Patel, Mr. H.B. Panchal and other learned present on behalf of the petitioners. The Nadiad Municipality was represented by the Deputy Chief Officer, Nadiad Municipality.

The petitioners urged that they were forced to file the petitioner against the Nadiad Municipality with great sorrow being exemployees of the local body. However, they were forced to do so since the position had reached unbearable proportions. Section 49 of the Municipalities Act, makes the Chief Officer responsible for the same.

The petitioners also represented that during the last few months they have been facing increasing difficulties in getting their pension on time, and the arrears have not yet been paid despite an assurance that it will be paid in 2 installments. Further, the Class IV staff and in particular widows and those who are infirm and disabled find it very difficult to collect the pension as many times they have to return without their dues because the amount runs out.

From the Chief Officer's assessment, it appears that the dues would be over about Rs.33 lacks. The analysis of the number of pensioners indicates that 60% of the pensioners are class IV, 30% are class III and only about 10% are class II and Class I. The budget of the municipality has also increased from Rs.19 crores in 1997 to Rs.24 crores currently. The monthly income in respect of the octroi is around 1.5 crores. Taking this whole background into account in respect of Para 15, the following are the directions.

(a) It is true that the Nadiad Municipality is bound to implement the Government Resolutions No.PGR/1098/M/6/20.1.1998 and 27.7.1998 relating to pension with increase dearness allowance.

In order to implement this the Chief Officer is made responsible for Page 17 of 34 HC-NIC Page 17 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT disbursement of all salaries pensionary benefits and dues. He is authorized to make withdrawals form the General Account of the Nadiad Municipality for the purpose of disbursement of salaries, pensioners and legitimate dues. This is being done so that regular disbursement can be made.

(b) It is true that all documents to pensioners including pension papers pension pass book, copy of the service book and calculation, retirement benefits are to be given. The Chief Officer of the Municipality is directed to complete the documents to the pensioners in one month's time. Collector, Kheda is requested to monitor this through his SDM or any suitable Deputy Collector.

(c) The pensioners have agreed that they have no objection to the fixation of different days for the payment of pension. The following days should be feed for payment of pension:

(1) In case of Class IV pensioners, 7th of each month, if 7th is a holiday, then the pension should be paid on the previous day since they belong to a ground which requires financial support.

(2) In case of class III pensioners 8th of each month. If 8th is a holiday then it may be done on the next working day.

(3) As the class II and class I employees have indicated their willingness to wait, their pension may be paid on the 10 th of each month or the next working day.

(d) As regards the request of the pensioners to be allowed to opt for medical reimbursement, it was represented that as per the Pension Rules of Nadiad Municipality medical allowance is to be paid as per the Fifth Pay Commission. From a reading of the said rules this is not very evident and hence in view of this, it is not possible to give a direction on this mater.

(e) It is very necessary that the Pension fund must be created by the Municipality to meet with this contingent liability. The account of this fund shall be maintained separately. In view of this, the Chief Officer, Nadiad Municipality is directed to maintain a separate Pension Fund. This fund will need to be replenished from the General Fund. Chief Officer, Nadiad may send monthly statement of accounts of the Pension Fund to both Collector, Kheda as well as Director of Municipalities.

The crucial question is regarding the implementation of Government Resolution and to pay the arrears of the pensioners with the increased dearness allowance. Since the amount comes to several lakhs it is felt that this amount may be paid four monthly installments. The first installment will start with the payment of the pension for the month of Page 18 of 34 HC-NIC Page 18 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT December, and by this time an adequate fund may be kept ready. The installments will be paid with the normal pension in December, January, February and will end in March.

In order to meet with the contingency liability w.e.f. December, 1999, Nadiad Municipality shall keep aside onefourth of the arrears to meet with this expenditure by 1.12.1999. The Chief Officer shall place this amount in a separate account and he shall be authorized to operate the same. This amount shall be used for liquidating the dues of the pensioners in December, and the second installment shall be deposited by 1.1.2000 and shall be used for liquidating the dues of the pensioners in January and similarly in February and March. On the 4th of every month, of this direction failing which the Collector may ask the Director of Municipalities or Gujarat Municipal Finance Board to make suitable adjustments from any amount due to the municipality.

No.SCA 1099 4746R. Dtd.22/10/99.

Sd/ illegible.

Manjula Subramaniam, ACS, JD & UHD."

10 Thus, the picture that emerges considering the materials on record is that the Nadiad Municipality has framed rules read as "the Nadiad Municipal Pension Fund Rules". The rules came into force from 1st April, 1959, and the permanent employees were given an option to join the pension scheme. The rules further provide that the employees joining the municipal service after 1st April, 1959 would be governed by the Pension Fund Scheme established by the Nadiad Municipality. Even an employee of the Municipality, who had subscribed to the Contributory Fund Scheme of the Municipality, would also be allowed to join the Pension Fund Scheme after ceasing to be the subscriber of the C.P.F.S. 11 What is important is the Clause 9 of the said rules which provides that the Municipality shall also pay temporary increase in the pension that would be sanctioned by the Government so far as the government servants are concerned.




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         12      The State Government, while taking the decision referred to above

dated 22nd October, 1999 pursuant to the directions issued by this Court in the writ application, also directed that the Government Resolution relating to pension with increase in the dearness allowance would be applicable in the case of the retired employees of the Nagarpalika.

13 As usual, the Nadiad Nagarpalika has putforward a very lame and untenable plea to wriggleout of its liability to revise the pension in accordance with the Sixth Central Pay Commission on the ground that the establishment expenses are more than 48%. The Nagarpalika has thrown the entire blame on the Director of the Municipalities who seems to have rejected the proposal forwarded by the Nagarpalika for grant of the benefits of revision of pension in accordance with the Sixth Central Pay Commission. Which Corporation or Municipality in the State of Gujarat has said so far before the Court of law that they are doing fine and their financial condition is also sound. The Courts have so far heard only the cribbing of the Corporations and Nagarpalikas that their financial condition is very poor, and obviously, how could their financial condition improve when there is more of politics and less of good governance and administration.

14 In D.S. Nakara and others v. Union of India [AIR 1983 SC 130], a Constitution Bench of the Supreme Court has explained in details why pension is paid. I may quote the observations made in paras 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33 and 37 as under:

"19. What is a pension ? What are the goals of pension ? What public interest or purpose, if any, it seeks to serve ? If it does seek to serve some public purpose, is it thwarted by such artificial division of retirement pre and post a certain date? We need seek answers to these and incidental questions so as to render just justice between parties to this petition.





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20. The antiquated notion of pension being a bounty, a gratuitous payment depending upon the sweet will or grace of the employer not claimable as a right and, therefore, no right to pension can be enforced through Court has been swept under the carpet by the decision of the Constitution Bench in Deoki Nandan Prasad v. State of Bihar, 1971 (Supp) SCR 634 : (AIR 1971 SC 1409) wherein this Court authoritatively ruled that pension is a right and the payment of it does not depend upon the discretion of the Government but is governed by the rules and a Government servant coming within those rules is entitled to claim pension.

It was further held that the grant of pension does not depend upon anyone's discretion. It is only for the purpose of quantifying the amount having regard to service and other allied matters that it may be necessary for the authority to pass an order to that effect but the right to receive pension flows to the officer not because of any such order but by virtue of the rules. This view was reaffirmed in State of Punjab v. lqbal Singh, (1976) 3. SCR 360 : (AIR 1976 SC 667).

21. There are various kinds of pensions and there are equally various methods of funding pension programmes. The present enquiry is limited to noncontributory superannuation or retirement pension paid by Government to its erstwhile employee and the purpose and object underlying it. Initially this class of pension appears to have been introduced as a reward for loyal service. Probably the alien rulers who recruited employees in lower echelons of service from the colony and exported higher level employees from the seat of Empire, wanted to ensure in the case of former continued loyalty till death to the alien rulers and in the case of latter, an assured decent living standard in old age ensuring economic security at the cost of the colony.

22. In the course of transformation of society from feudal to welfare and as socialistic thinking acquired respectability, State obligation to provide security in old age, an escape from undeserved want was recognised and as a first step pension was treated not only as a reward for past service but with a view to helping the employee to avoid destitution in old age. The quid pro quo was that when the employee was physically and mentally alert, he rendered unto the master the best, expecting him to look after him in the fall of life. A retirement system therefore exists solely for the purpose of providing benefits. In most of the plans of retirement benefits, everyone who qualifies for normal retirement receives the same amount. (see Retirement Systems for Public Employees by Bleekney, page 33).

23. As the present case is concerned with superannuation pension, a brief history of its initial introduction in early stages and continued existence till today may be illuminating. Superannuation is the most descriptive word of all but has become obsolescent because it seems ponderous. Its genesis can be traced to the first Act of Parliament (in U. K.) to be concerned with the provision of pensions generally in the public offices. It Page 21 of 34 HC-NIC Page 21 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT was passed in 1810. The Act which substantively devoted itself exclusively to the problem of superannuation pension was superannuation Act of 1834. These are landmarks in pension history because they attempted for the first time to establish a comprehensive and uniform scheme for all whom we may now call civil servants. Even before the 19th century, the problem of providing for public servants who are unable, through old age or incapacity, to continue working, has been recognised, but methods of dealing with the problem varied from society to society and even occasionally from department to department.

24. A political society which has a goal of setting up of a welfare State, would introduce and has in fact introduced as a welfare measure wherein the retiral benefit is grounded on considerations of State obligation to its citizens who having rendered service during the useful span of life must not be left to penury in their old age, but the evolving concept of social security is a later day development. And this journey was over a rough terrain. To note only one stage in 1856 a Royal Commission was set up to consider whether any changes were necessary in the system established by the 1834 Act. The Report of the Commission is known as "Northoote Trevelyan Report". The Report was pungent in its criticism when it says that: "in civil services comparable to lightness of work and the certainty of provision in case of retirement owing to bodily incapacity, furnish strong inducements to the parents and friends of sickly youth to endeavour to obtain for them employment in the service of the Government, and the extent to which the public are consequently burdened, first with the salaries of officers who are obliged to absent themselves from their duties on account of ill health, and afterwards with their pensions when they retire on the same plea, would hardly be credited by those who have not had opportunities of observing the operation of the system." (see Gerald Rhedes, Public Sector Pensions, pp. 1819).

25. This approach is utterly unfair because in modern times public services are manned by those who enter at a comparatively very young age, with selection through national competitive examination and ordinarily the best talent gets the opportunity.

26. Let us therefore examine what are the goals that pension scheme seeks to subserve? A pension scheme consistent with available resources must provide that the pensioner would be able to live: (i) free from want, with decency, independence and selfrespect, and (ii) at a standard equivalent at the preretirement level. This approach may merit the criticism that if a developing country like India cannot provide an employee while rendering service a living wage, how can one be assured of it in retirement? This can be aptly illustrated by a small illustration. A man with a broken arm asked his doctor whether he will be able to play the piano after the cast is removed. When assured that he will, the patient replied, 'that is funny, I could not before'. It appears that in determining the minimum amount Page 22 of 34 HC-NIC Page 22 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT required for living decently is difficult, selecting the percentage representing the proper ratio between earnings and the retirement income is harder. But it is imperative to note that as selfsufficiency declines the need for his attendance or institutional care grows. Many are literally surviving, now than the past. We owe it to them and ourselves that they live, not merely exist. That philosophy prevailing in a given society at various stages of its development profoundly influences is social objectives. These objectives are in turn a determinant of a social policy. The law is one of the chief instruments whereby the social policies are implemented and pension is paid according to rules which can be said to provide social security law by which it is meant those legal mechanisms primarily concerned to ensure the provision for the individual of a cash income adequate, when taken along with the benefits in kind provided by other social services (such as free medical aid) to ensure for him a culturally acceptable minimum standard of living when the normal means of doing so failed'. (see Social Security Law by Prof. Harry Calvert, p. 1).

27. Viewed in the light of the present day notions pension is a term applied to periodic money payments to a person who retires at a certain age considered age of disability; payments usually continue for the rest of the natural life of the recipient. The reasons underlying the grant of pension vary from country to country and from scheme to scheme. But broadly stated they are: (i) as compensation to former members of the armed forces or their dependents for old age, disability, or death (usually from service causes), (ii) as old age retirement or disability benefits for civilian employees, and (iii) as social security payments for the aged, disabled, or deceased citizens made in accordance with the rules governing social service programmes of the country. Pensions under the first head are of great antiquity. Under the second head they have been in force in one form or another in some countries for Over a century but those coming under the third head are relatively of recent origin, though they are of the greatest magnitude. There are other views about pensions such as charity, paternalism, deferred pay, rewards for service rendered, or as a means of promoting general welfare (see Encyclopaedia Britannica, Vol. 17, p.

575). But these views have become otiose.

28. Pensions to civil employees of the Government and the defence personnel as administered in India appear to be a compensation for service rendered in the past. However, as held in Dodge v. Board of Education, (1937) 302 US 74: 82 Law Ed 57 a pension is closely akin to wages in that it consists of payment provided by an employer, is paid in consideration of past service and serves the purpose of helping the recipient meet the expenses of living. This appears to be the nearest to our approach to pension with the added qualification that it should ordinarily ensure freedom from undeserved want.

29. Summingup it can be said with confidence that pension is not only Page 23 of 34 HC-NIC Page 23 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socioeconomic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to ageing process and therefore, one is required to fall back on savings. One such saving in kind is when you gave your best in the he day of life to your employer, in days of invalidity, economic security by way of periodical payment is assured. The term has been judicially defined as a stated allowances or stipend made in consideration of past service or a surrender of rights or emoluments to one retired from service. Thus the pension payable to a Government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation for service rendered. In one sentence one can say that the most practical raison d'etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon.

30. The discernible, purpose thus underlying pension scheme or a statute introducing the pension scheme must inform interpretative process and accordingly it should receive a liberal construction and the Courts may not so interpret such statute as to render them inane (see American Jurisprudence 2d. 881).

31. From the discussion three things emerge: (i) that pension is neither a bounty nor a matter of grace depending upon the sweet will of the employer and that it creates a vested right subject to 1972 Rules which are statutory in character because they are enacted in exercise of powers conferred by the proviso to Article 309 and Clause (5) of Article 148 of the Constitution, (ii) that the pension is not an ex gratia payment but it is a payment for the past service rendered; and (iii) it is a social welfare measure rendering socioeconomic justice to those who in the hey day of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch. It must also be noticed that the quantum of pension is a certain percentage correlated to the average emoluments drawn during last three years of service reduced to ten months under liberalised pension scheme. Its payment is dependent upon an additional condition of impeccable behaviour even subsequent to retirement, that is, since the cessation of the contract of service and that it can be reduced or withdrawn as a disciplinary measure.

32. Having succinctly focused our attention on the conspectus of elements and incidents of pension the main question may now be tackled. But, the approach of Court while considering such measure, is of paramount importance. Since the advent of the Constitution, the State action must be directed towards attaining the goals set out in Part IV of the Constitution which, when achieved, would permit us to claim that we have set up a welfare State. Article 38 (1) enjoins the State to strive to promote welfare Page 24 of 34 HC-NIC Page 24 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT of the people by securing and protecting as effective as it may a social order in which justice social, economic and political shall inform all institutions of the national life. In particular the State shall strive to minimise the inequalities in income and endeavour to eliminate inequalities in status, facilities and opportunities. Article 39 (d) enjoins a duty to see that there is equal pay for equal work for both men and women and this directive should be understood and interpreted in the light of the judgment of this Court in Randhir Singh v. Union of India, (1982) 1 SCC 618 : (AIR 1982 SC 879). Revealing the scope and content of this facet of equality, Chinnappa Reddy, J. speaking for the Court observed as under (para 1) :

"Now, thanks to the rising social and political consciousness and the expectations roused as a consequence and the forward looking posture of this Court, the underprivileged also are clamouring for their rights and are seeking the intervention of the Court with touching faith and confidence in the Court. The Judges of the Court have a duty to redeem their constitutional oath and do justice no less to the pavement dweller than to the guest of the Five Star hotel."

Proceeding further, this Court observed that where all relevant considerations are the same, persons holding identical posts may not be treated differently in the matter of their pay merely because they belong to different departments. If that can't be done when they are in service, can that be done during their retirement ? Expanding this principle, one can confidently say that if pensioners form a class, their computation cannot be by different formula affording unequal treatment solely on the ground that some retired earlier and some retired later. Article 39 (e) requires the State to secure that the health and strength of workers, men and women, and children of tender age are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength. Article 41 obligates the state within the limits of its economic capacity and development, to make effective provision for securing the right to work, to education and to provide assistance in cases of unemployment, old age, sickness and disablement,and in other cases of underserved want. Article 43 (3) requires the State to endeavour to secure amongst other things full enjoyment of leisure and social and cultural opportunities.

33. Recall at this stage the Preamble, the floodlight illuminating the path to be pursued by the State to set up a Sovereign Socialist Secular Democratic Republic. Expression 'socialist' was intentionally introduced in the Preamble by the Constitution (FortySecond Amendment) Act, 1976. In the Objects and Reasons for amendment amongst other things, ushering in of socioeconomic revolution was promised. The clarion call may be extracted:

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HC-NIC Page 25 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT "The question of amending the Constitution for removing the difficulties which have arisen in achieving the objective of socio economic revolution, which would end poverty and ignorance and disease and inequality of opportunity, has been engaging the active attention of Government and the public for some time... ... ..

It is, therefore, proposed to amend the Constitution to spell out expressly the high ideals of socialism... .. .. ..to make the directive principles more comprehensive.. ... ... ..."

What does a Socialist Republic imply? Socialism is a much misunderstood word. Values determine contemporary socialism pure and simple. But it is not necessary at this stage to go into all its ramifications. The principal aim of a socialist State is to eliminate inequality in income and status and standards of life. The basic framework of socialism is to provide a decent standard of life to the working people and especially provide security from cradle to grave. This amongst others on economic side envisaged economic equality and equitable distribution of income. This is a blend of Marxism and Gandhism leaning heavily towards Gandhian socialism. During the formative years, socialism aims at providing all opportunities for pursuing the educational activity. For want of wherewithal or financial equipment the opportunity to be fully educated shall not be denied. Ordinarily, therefore, a socialist State provides for free education from primary to Ph. D. but the pursuit must be by those who have the necessary intelligent quotient and not as in our society where a brainy young man coming from a poor family will not be able to prosecute the education for want of wherewithal while the ill equipped son or daughter of a well to do father will enter the portals of higher education and contribute to national wastage. After the education is completed, socialism aims at equality in pursuit of excellence in the chosen avocation without let or hindrance of caste, colour, sex or religion and with full opportunity to reach the top not thwarted by any considerations of status, social or otherwise. But even here the less equipped person shall be assured a decent minimum standard of life and exploitation in any form shall be eschewed. There will be equitable distribution of national cake and the worst off shall be treated in such a manner as to push them up the ladder. Then comes the old age in the life of everyone, be he a monarch or a mahatma, a worker or a pariah. The old age overtakes each one, death being the fulfilment of life providing freedom. from bondage. But here socialism aims at providing an economic security to those who have rendered unto society what they were capable of doing when they were fully equipped with their mental and physical prowess. In the fall of life the State shall ensure to the citizens a reasonably decent standard of life, medical aid, freedom from want, freedom from fear and the enjoyable leisure, relieving the boredom and the humility of dependence in old age. This is what Article 41 aims when it enjoins the State to secure public assistance in old age, sickness and disablement. It was such a socialist State which the Preamble directs the Page 26 of 34 HC-NIC Page 26 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT centres of power Legislative, Executive and Judiciary to strive to set up. From a wholly feudal exploited slave society to a vibrant, throbbing socialist welfare society is a long march but during this journey to the fulfilment of goal every State action (illegible) taken must be directed, and must be so interpreted, as to take the society one step towards the goal."

"37. If such be the goals of pension, if such be the welfare State which we propose to set up, if such be the goals of socialism and conceding that any welfare measure may consistent with economic capacity of the State be progressively augmented with wider width and a longer canvass yet when the economic means permit the augmentation, should some be left out for the sole reason that while in the formative years of the nascent State they contributed their might but when the fruits of their labour led to the flowering of economic development and higher gross national produce bringing in larger revenue and therefore larger cake is available, they would be denied any share of it? Indisputably, viewed from any angle pensioners for payment of pension form a class. Unquestionably pension is linked to length of service and the last pay drawn but the last pay does not imply the pay on the last day of retirement but average emoluments as defined in the scheme. Earlier average emoluments of 36 months' service provided the measure of pension because the pension was related to the average emoluments during 36 months just preceding retirement. By the liberalised scheme it is now reduced to average emoluments of 10 months preceding the date. Any one in government service would appreciate at a glance that with an average of 10 months it would be on the higher side on account of the two fortuitous circumstances that the payscales, if one has not reached the maximum, permit annual increments and there are promotions in the last one or two years. With a view to giving higher average the scheme was liberalised to provide for average emoluments with reference to last 10 months' service. Coupled with it, a slab system for computation is introduced and the ceiling is raised. This is liberalisation. Now, if the pensioners who retired prior to the specified date and had to earn pension on the average emoluments of 36 months' salary just preceding the date of retirement, naturally the average would be lower and they will be doubly hit because the slab system as now introduced was not available and the ceiling was at a lower level. Thus they suffer triple jeopardy, viz., lower average emoluments, absence of slab system and lower ceiling."

15 It is very difficult for me to appreciate the argument canvassed on behalf of the Municipality that the right of the pensioners to receive pension with the corresponding revision is dependent on the financial condition of the Municipality, more particularly, when the Nadiad Municipality has its own Pension Fund Scheme under the rules referred Page 27 of 34 HC-NIC Page 27 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT to above.

16 Pension is not a bounty payable on the sweet will and pleasure of the Government or an instrumentality of the State or a local civic body, as the case may be. On the contrary, the right to pension is a valuable right vesting in a government servant. The right to receive pension with the corresponding revision, according to the recommendations of the Pay Commission, is property under Article 31(1) of the Constitution and the same cannot be withheld on the plea of weak financial condition. Similarly, the said claim is also property under Article 19(1)(f) of the Constitution and it is not saved by subclause (5) of Article 19.

17 After a long drawn litigation, it appears that while sanctioning the recommendations or to put it in other words, the revision in pension, the period between 1st January, 2006 and 31st August, 2014 has been considered as notional and the benefits would be paid with effect from 1st September, 2014. Again this is a mockery on the part of the authorities and that too with a rider that if the Municipality continues to incur expenses more than 48% of its income, then the benefits would cease to operate.

18 The authorities seem to be unmindful of the fact that the Seventh Central Pay Commission has come into force. Having regard to the specific rules and the liability imposed for maintaining adequate funds so far as the Pension Scheme is concerned, I am of the view that the policy of the State Government as regards the incurring of the expenses more than 48% of the income should not be the criteria. How would a pensioner survive in the absence of adequate revision in hard times of inflation.




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         19    In order to mitigate the hardship of rising costs and prices, the

Government from time to time revises the pay and the pension which is payable to the existing and former employees. If there was an inflation which necessitated the enhancement of pension, surely then the hardship which was being caused by the rising prices was also being felt by those employees and the families of those employees, who had retired from service. I may quote with profit the decision of the Supreme Court in the case of Kallakkurichi Taluk Retired Official Association v. State of Tamil Nadu [2013 (2) SCC 772], wherein the Supreme Court observed in paras 27, 28, 29, 30 and 31 as under:

"27. At this juncture it is also necessary to examine the concept of valid classification. A valid classification is truly a valid discrimination. Article 16 of the Constitution of India permits a valid classification (see, State of Kerala vs. N.M. Thomas (1976) 2 SCC 310). A valid classification is based on a just objective. The result to be achieved by the just objective presupposes, the choice of some for differential consideration/treatment, over others. A classification to be valid must necessarily satisfy two tests. Firstly, the distinguishing rationale has to be based on a just objective. And secondly, the choice of differentiating one set of persons from another, must have a reasonable nexus to the objective sought to be achieved. Legalistically, the test for a valid classification may be summarized as, a distinction based on a classification founded on an intelligible differentia, which has a rational relationship with the object sought to be achieved. Whenever a cut off date (as in the present controversy) is fixed to categorise one set of pensioners for favourable consideration over others, the twin test for valid classification (or valid discrimination) must necessarily be satisfied. In the context of the instant appeals, it is necessary to understand the overall objective of treating "dearness allowance" (or a part of it) as "dearness pay". There can be no doubt, that 'dearness allowance' is extended to employees to balance the effects of ongoing inflation, so as to ensure that inflation does not interfere with the enjoyment of life, to which an employee is accustomed. Likewise, the objective of 'dearness pay' is to balance the effects of ongoing inflation, so that a pensioner can adequately sustain the means of livelihood to which he is accustomed. Having understood the reason why the Government extends the benefit of 'dearness allowance' and 'dearness pay', to its employees and pensioners respectively, we would venture to search for answers to the twin tests which must be satisfied, for making a valid classification (or a valid discrimination), in the present fact situation.



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             C/SCA/9192/2014                                                       JUDGMENT

28. In the present context, it needs to be kept in mind, that 'dearness allowance' is paid to Government employees keeping in mind the All India Consumer Price Index. Inflation in the market place is sought to be balanced by paying 'dearness allowance' to Government employees. When a State Government chooses to treat 'dearness allowance' as 'dearness pay', the objective remains the same i.e., inflation in the market place is sought to be balanced for retired employees by giving them the benefit of 'dearness pay'. Since the component of inflation similarly affects all employees, and all pensioners (irrespective of the date of their entry into service or retirement), it is not per se possible to accept different levels of 'dearness pay' to remedy the malady of inflation. Just like the date of entry into service (for serving employees) would be wholly irrelevant to determine the 'dearness allowance' to be extended to serving employees, because the same has no relevance to the object sought to be achieved. Likewise, the date of retirement (for pensioners) would be wholly irrelevant to determine the 'dearness pay' to be extended to retired employees. Truthfully, it may be difficult to imagine a valid basis of classification for remedying the malaise of inflation. In the absence of any objective, projected in this case, the question of examining the reasonableness to the object sought to be achieved, simply does not arise. Our straying into this expressed realm of imagination, was occasioned by the fact, that the pleadings filed on behalf of the State Government, do not reveal any reason for the classification, which is subject matter of challenge in the instant appeal. The only position adopted in the pleadings filed before this Court for introducing a cut off date for differential treatment, is expressed in paragraph 4 of the counter affidavit, filed by the State of Tamil Nadu, which is being extracted herewith:. "With reference to the averments made in the Grounds of the Special Leave Petition, I submit that the fifth Pay Commission has revised pay and pension with effect from 1.6.1988. As per the recommendation of the above Pay Commission, the Government had issued orders for the revision of pension and Family Pension with effect from 1.6.1988 in G.O.Ms. No. 810. Finance (PC) Department, dated 9.8.1989. It is submitted that the fourth Tamil Nadu Pay Commission has recommended that at the end of the period of three years, the Dearness Allowance sanctioned upto that period could be treated as Dearness Pay. The Fourth Pay Commission revision was given with effect from 1.10.1984. Based on the above recommendation, the Government has issued orders in G.O.Ms. No.371, Finance, dated 30.4.1986, read with Government letter No.124414/Pension/861, dt. 11.2.1987, that the Dearness Allowance sanctioned upto 30.9.1987 shall be treated as Dearness Pay for the purpose of pensionary benefit in the case of the Govt. Servant retiring on or after 1.10.1987. The orders issued in G.O.Ms. 371, Finance dated 30.4.1985 as amended in Government Page 30 of 34 HC-NIC Page 30 of 34 Created On Sat Jun 11 02:37:30 IST 2016 C/SCA/9192/2014 JUDGMENT letter No.70707A/Pension /861, dated 8.7. 1986 read as follows: "The Fourth Tamil Nadu Pay Commission have among other things recommended that at the end of a period of three years the Dearness Allowance sanctioned upto the period could be treated as Dearness Pay in order to ensure a reasonable pension level. The Government accept the recommendation of the Commission and direct that in the case of Government servant, who will be retiring on or after 1.10.1987, the Dearness Allowance sanctioned upto 1.10.1987 shall be reckoned as Dearness Pay for purpose of pension in the case of death of a Government servant occurring on or after 1.10.1987 while in service the Dearness Allowance sanctioned upto 1.10.1987 shall be treated as Dearness Pay for the purpose of computing Family Pension."

It is therefore, evident, that the State Government has not disclosed any object which is desired to achieve by the cut off date. Most importantly, the financial constraints of the State Government, were not described as the basis/reason for the classification made in the imputgned Government order dated 9.8.1989.

29. The issue in hand needs to examine from another perspective as well. It must be clearly understood, that no employee has a right to draw 'dearness allowance' as 'dearness pay' till such time as the State Government decides to treat 'dearness allowance' as 'dearness pay'. And therefore, the State Government has the right to choose whether or not 'dearness allowance' should be treated as 'dearness pay'. As such, it is open to the State Government not to treat any part of 'dearness allowance' as 'dearness pay'. In case of financial constraints, this would be the most appropriate course to be adopted. Likewise, the State Government has the right to choose how much of 'dearness allowance' should be treated as 'dearness pay'. As such, it is open to the State Government to treat a fraction, or even the whole of 'dearness allowance' as 'dearness pay'. Based on Rule 30 of the Pension Rules, it is clear that the component of 'dearness pay' would be added to emoluments of an employee for calculating pension. In a situation where the State Government has chosen, that a particular component of 'dearness allowance' would be treated as 'dearness pay', it cannot discriminate between one set of pensioners and another, while calculating the pension payable to them (for the reasons expressed in the preceding paragraph). Of course, a valid classification may justify such an action. In this case, the State Government has not come out with any justification/basis for the classification whereby one set of pensioners has been distinguished from others for differential treatment.





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HC-NIC                                     Page 31 of 34      Created On Sat Jun 11 02:37:30 IST 2016
                    C/SCA/9192/2014                                                       JUDGMENT

30. The instant controversy should not be misunderstood as a determination of the total carry home pension of an employee. All the Government orders referred to above, deal with the quantum of 'dearness allowance' to be treated as 'dearness pay' for the calculation of pension. 'Dearness pay' is one of the many components, which go into the eventual determination of pension. Therefore, the focus in the adjudication of the present controversy must be on 'dearness pay', rather than on the eventual carry home pension. The relevance and purpose of treating 'dearness allowance' as 'dearness pay', has been brought out in the foregoing paragraphs. Therefore, clearly, the object sought to be achieved by adding 'dearness pay' to the wage of a retiree, while determining pension payable to him, is to remedy the adverse effects of inflation. The aforesaid object has to be necessarily kept in mind, while examining the present controversy. Any classification without reference to the object sought to be achieved, would be arbitrary and violative of the protection afforded under Article 14 of the Constitution of India, it would also be discriminatory and violative of the protection afforded under Article 16 of the Constitution of India.

31. Having given our thoughtful consideration to the controversy in hand, it is not possible for us to find a valid justification for the State Government to have classified pensioners similarly situated as the appellants herein (who had retired after 1.6.1988), from those who had retired prior thereto. Inflation, in case of all such pensioners, whether retired prior to 1.6.1988 or thereafter, would have had the same effect on all of them. The purpose of adding the component of 'dearness pay' to wages for calculating pension is to offset the effect of inflation. In our considered view, therefore, the instant classification made by the State Government in the impugned Government order dated 9.8.1989 placing employees who had retired after 1.6.1988 at a disadvantage, visàvis the employees who retired prior thereto, by allowing them a lower component of 'dearness pay', is clearly arbitrary and discriminatory, and as such, is liable to be set aside, as violative of Articles 14 and 16 of the Constitution of India."

20 According to the Nagarpalika, the Director of the Municipalities has directed that it should raise its income and reduce the establishment expenses below 48%, and after doing so, shall forward a fresh proposal in that regard. The Nagarpalika does not seem to be correct in its assertion as the Director has said only about the employees who are in the service and not the Pensioners.





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                    C/SCA/9192/2014                                                   JUDGMENT



         21     It   appears   from   the   further   affidavit   filed   by   the   Nagarpalika

referred to above that during the pendency of this petition, the proposal submitted by the Nagarpalika to give the benefits of the Sixth Central Pay Commission recommendations to the employees has been sanctioned by the Director of the Municipalities vide order dated 7th October, 2015. According to the sanction order, the period between 1st January, 2006 and 31st August, 2014, would be considered as notional, and the benefits would be paid with effect from 1st September, 2014. It appears that while sanctioning the recommendations, again it has been made clear that if the establishment expenses are more than 48% of its income, then the benefits of the Sixth Central Pay Commission recommendations would cease to operate.

22 I am of the view that the decision of the Director of the Municipalities to accord sanction to the proposal of the Municipality to revise the pension from 1st September, 2014 and treat the period between 1st January, 2006 and 31st August, 2014 as notional and again subject to the percentage of establishment expenses is unconstitutional being violative of Article 14 of the Constitution of India.

23 In the result, this application is disposed of with the following directions:

(1) The Director of the Municipalities, State of Gujarat is directed to once again look into the matter at the earliest and see to it that the true effect of the Government Resolution dated 13 th April, 2009 at Annexure : 'E' to this petition (page - 49) is given and appropriate directions be issued in that regard to the Nadiad Nagarpalika.



                (2)     The Director of the Municipalities is directed to consider the 


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HC-NIC                                        Page 33 of 34     Created On Sat Jun 11 02:37:30 IST 2016
                      C/SCA/9192/2014                                                  JUDGMENT

observations made by this Court and work out a timetable to pay the arrears towards the revision in accordance with the Sixth Pay Commission and see to it that the same is actually paid to the pensioners. The Director shall act in accordance with the earlier directions issued by the State Government dated 22nd October, 1999 at Annexure : 'C' to this petition (page - 43).

(3) The Director shall initiate an appropriate inquiry as regards misuse or misutilization of the pension fund if any. If it is found that the pension fund has been in the past or is being used for any purpose other than pension, then appropriate action shall be initiated against the Nagarpalika in accordance with law.

(4) I expect the State Government to give top priority to this matter since the issue relates to the revision of pension and the grant of benefits to the pensioners.

(5) The Director of the Municipalities as well as the Nadiad Nagarpalika shall report compliance of the directions issued by this Court after a period of six weeks from the date of receipt of the writ of this order.

24 The Registry shall notify this matter after six weeks only for the purpose of reporting compliance.

(J.B.PARDIWALA, J.) chandresh Page 34 of 34 HC-NIC Page 34 of 34 Created On Sat Jun 11 02:37:30 IST 2016

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