Kerala High Court
R.Parasurama Iyer vs State Bank Of Travancore on 26 September, 1996
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE THE CHIEF JUSTICE MR.ASHOK BHUSHAN
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
&
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
THURSDAY, THE 3RD DAY OF MARCH 2016/13TH PHALGUNA, 1937
OP.NO. 3489 OF 1997 (M)
----------------------------------
PETITIONER(S):
-----------------------
1. R.PARASURAMA IYER
S/O RAMALINGA IYER, 'SRENIVAS', KIZHAKKENADA
THIRUVARPPU POST, KOTTAYAM- 686 033.
2. K.A.JOSEPH,
S/O AUGUSTINE, KADIAMKUTTY, S.P.III/1021
CHERUVALLY LANE, GANDHIPURAM, SREEKARIAM POST
THIRUVANANTHAPURAM- 695 017.
3. N.VELAPPAN NAIR, S/O NAMBI,
'INDU', T.C. 26/789, OFFICERS NAGAR
OOTTUKUZHY, THIRUVANNATHAPURAM- 695 001.
4. P.K.THAMPACHAN, S/O KURIAN,
T.C.NO.11/737, CHAVADIYIL, DIVISION
OFFICE ROAD, VIKAS BHAVAN
THIRUVANANTHAPURAM- 695 015.
5. L.T.MATHEW, S/O THOMAS,
"LATHARA", CONVENT ROAD, NALLANCHIRA
THIRUVANANTHAPURAM- 695 015.
6. V.KARUNAKARAN NAIR,
S/O VELU PILLAI, 'SARANGA', SHANKAR ROAD
SASTHAMANGALAM, THIRUVANANTHAPURAM- 695 010.
7. T.C.OOMMEN, S/O CHACKO,
THENOLIL LILLY BHAVAN, T.C. 50/91, KALADY
KARAMANA, THIRUVANANTHAPURAM- 695 002.
OP.NO. 3489 OF 1997 (M)
8. M.K.RAMACHANDRAN NAIR,
MALIAKKAL HOUSE, CHIRAKKADAVU CENTRE POST
(VIA) THEKKATHU KAVALA, PONKUNNAM.
9. K.K.KURIAN, S/O KURIAN, KUNNEL HOUSE,
PATTAPPARA, PONKUNNAM.
10. KURIAN P.MATHEW, S/O MATHEW,
MELADATH HOUSE, PALLAM P.O, KOTTAYAM.
11. G.BHAVANANDAN, S/O GOVINDAN,
THITTAYIL HOUSE, SARKARA, CHIRAYANKKIL
THIRUVANANTHAPURAM.
12. V.PHILIPOSE,
S/O MATHAI ABRAHAM, VELLIYIL HOUSE, PH WARD
ALAPUZHA-7
13. P.K.VARGHESE,
S/O KURIAKOSE, KAVILAVEETTIL, PUTHENPURAYIL
PACHA, CHEKKEDIKADU POST, EDATHUA.
14. E.J.JOSEPH,
S/O JOHN, ERATTUPUZHA, NEAR MANORAMA JUNCTION
CHERTHALA.
15. K.P.DAVID,
S/O PETER, VALAVUCHIRAKAL, PUTHENANGADI
KOTTAYAM- 686 001.
16. ADDL. P16
S.N.MUTHULAKSHMI, AGED 67 YEARS
W/O LATE R.PARASURAMA IYER, 'SREENIVAS'
THIRUVARPPU P.O, KOTTAYAM- 686 033.
(ADDL.P 16 IS IMPLEADED AS PER ORDER DTD. 08/07/11
IN IA 10157/11)
17. ADDL. P17
SARADA NAIR, AGED 65 YEARS
WIFE OF LATE V.KARUNAKARAN NAIR, T.C. 9/1732, SARANGA
SANKAR ROAD, SASTGAMANGALAM
THIRUVANANTHAPURAM- 695 010.
OP.NO. 3489 OF 1997 (M)
18. ADDL. P18 MARIYAMMA JOSEPH,
AGED 69 YEARS, WIFE OF LATE E.J.JOSEPH
ERATTUPUZHA HOUSE, NEAR MANORAMA JUNCTION, CHERTHALA
(ADDL. P16 IS IMPLEADED AS PER ORDER DTD.
08.07.2011 IN IN IA 10157 OF 2011)
RESPECTIVELYIN OP
(ADDL. P17 &P18 ARE IMPLEADED AS PER ORDER DTD.
18.11.11 IN IA 10724/11 AND IA NO.16205/11, RESPECTIVELY
BY ADVS.SRI.H.B.SHENOY
SRI.B.ASHOK SHENOY
SMT.LAKSHMI B.SHENOY
RESPONDENT(S):
--------------------------
STATE BANK OF TRAVANCORE, REPRESENTED BY ITS
MANAGING DIRECTOR, HEAD OFFICE, P.B.NO.34,
THIRUVANANTHAPURAM - 695 001.
BY ADV. SRI.P.RAMAKRISHNAN
THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 17.02.2016
ALONG WITH OP. 20427/1997, THE COURT 03.03.2016 DELIVERED THE
FOLLOWING:
OP.NO. 3489 OF 1997 (M)
APPENDIX
PETITIONER(S)' EXHIBITS:
EXHIBIT P1 TRUE COPY OF REPRESENTATION DATED 26.09.1996 SENT
TO RESPONDENT BANK BY THE 1ST PETITIONER.
EXHIBIT P2 TRUE COPY OF REPLY LETTER DATED 03.1.1996 RECEIVED
BY 1ST PETITIONER FROM RESPONDENT BANK.
EXHIBIT P3 TRUE COPY OF THE RELEVANT EXTRACT OF STATE BANK
OF TRAVANCORE (OFFICERS') SERVICE REGULATION 1979.
EXHIBIT P4 TRUE COPY OF THE STATE BANK OF TRAVANCORE
(PAYMENT OF GRATUITY TO EMPLOYEES) REGULATIONS 1972.
RESPONDENT(S)' EXHIBITS: NIL
TRUE COPY
"C.R."
ASHOK BHUSHAN, C.J.,
A.M. SHAFFIQUE
&
A.K. JAYASANKARAN NAMBIAR, JJ.
======================================
O.P. Nos.3489 & 20427 of 1997
======================================
Dated this the 03rd day of March, 2016
J U D G M E N T
Ashok Bhushan, C.J.
A Division Bench, while hearing the above Original Petitions was faced with conflicting judgments of two Division Benches, i.e., Syndicate Bank v. Celine Thomas (2005 KHC 1841) and State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011). By the referring order dated 08.02.2016, the Division Bench made a reference to a larger Bench for authoritative pronouncement on the whole issue, in consequence of which the matter has been placed before this Full Bench.
2. For answering the reference, it is necessary to note the facts of both the Original Petitions. O.P Nos.3489 & 20427 of 1997 -: 2 :- O.P.No.20427 of 1997
3. Petitioner who was working as an Officer in the Canara Bank retired from service on attaining the age of superannuation on 31.08.1993. Salary revision for Officers of Public Sector Banks was discussed by the Indian Banks' Association (IBA) High Power Committee and representatives of Officers of Organisations of Public Sector Banks. An agreement dated 23.06.1995 was entered between the IBA and All India Bank Officers Confederation wherein various recommendations were made regarding scales of pay, fitment, dearness allowance, house rent allowance, city compensatory allowance, provident fund, advance increment, gratuity and some other benefits. The agreement also fixed different dates for extending various benefits as recommended by the agreement. Clause 15 of the agreement provided that scales of pay and dearness allowance shall be revised from 01.07.1993 whereas for entitlement of gratuity, medical aid, hospitalisation expenses, second stagnation increment in scale III and certain other allowances, O.P Nos.3489 & 20427 of 1997 -: 3 :- the date fixed was 01.11.1994. The petitioner who had retired on 31.08.1993 although was given the benefit of revision of scales of pay and dearness allowance with effect from 01.07.1993, he was not entitled for gratuity which was made effective from 01.11.1994. Petitioner demanded payment of arrears of gratuity due to him on the revised scales of pay effected from 01.07.1993, but the Bank declined to pay the same on the premise that as per the proviso to Regulation 46(2) of the Canara Bank (Officers') Service Regulations, 1979 amended in pursuance of the wage settlement, the gratuity payable to the Officers who retired between 01.07.1993 and 31.10.1994 is to be calculated based on the pre- revised scales. Reply dated 27.08.1997 was sent by the Bank to the petitioner rejecting the request for payment of gratuity based on the revised pay scale. Petitioner alleging discrimination and unfair treatment has filed the Original Petition praying for the following reliefs:
"(a) Call for the records relating to Ext.P4 and O.P Nos.3489 & 20427 of 1997 -: 4 :- declare that part of Ext.P4 amendment which denies gratuity on the basis of revised basic pay effective from 01.07.1993, to the petitioner and officer employees who retired during the period 1.7.1993 to 31.10.1994, as unconstitutional and invalid.
(b) Declare that petitioner is entitled to get gratuity on the basis of his revised Basic Pay effective from 1.7.1993.
(c) Issue a writ in the nature of Mandamus or any other appropriate writ, direction or order directing the respondent to calculate the gratuity payable to petitioner on the basis of his revised basic pay effective from 1.7.1993 and to pay the petitioner arrears of gratuity thereof after deducting the gratuity already paid to him, with interest at 18% per annum from 16.8.1997 till the date of payment.
(d) Issue such other writ, direction or order as this Hon'ble Court may deem fit and proper in the circumstances of the case.
(e) Award the costs of the petitioner in these proceedings."
O.P. No.3489 of 1997
4. Petitioners who are 18 in number were working as Officers of the State Bank of Travancore retired from service on attaining the age of superannuation on various dates between 01.07.1993 and 30.10.1994. O.P Nos.3489 & 20427 of 1997 -: 5 :- Subsequent to the retirement of the petitioners, pay revision with regard to various benefits an agreement was arrived at between the IBA and the Confederation on 23.06.1995 extending various benefits as noted above. Although all the petitioners received the pensionary benefits on the revised scales of pay with effect from 01.07.1993, they were not given any benefit regarding gratuity. Payment of gratuity is governed by the State Bank of Travancore (Officers) Service Regulations, 1979 (hereinafter referred to as 1979 Regulations). Petitioners claimed that they are entitled to be paid gratuity on the basis of revised basic pay drawn by them and pay having been revised with effect from 01.07.1993 and they having been paid arrears of pay, they are entitled to get arrears of gratuity on the revised pay effective from 01.07.1993, hence all the petitioners are entitled to get arrears of gratuity due to them on their revised scales of pay after deducting the gratuity already paid. There is artificial classification between the Officers of the Bank who retired between O.P Nos.3489 & 20427 of 1997 -: 6 :- 01.07.1993 and 31.10.1994 and those who retired on or after 01.11.1994. Both of them formed a unified class, hence non-payment of the benefit on the revised pay scale for computation of gratuity is arbitrary, discriminatory and violative of the principles of equality. Petitioners in the Writ Petition prayed for the following reliefs:
(a) Declare that the petitioners are entitled to get gratuity under Exts.P3 and P4 Regulations calculated on the basis of their revised Basic Pay effective from 1.7.1993.
(b) Issue a writ in the nature of Mandamus or any other appropriate writ, direction or order directing the respondent to calculate the gratuity payable to petitioners under Exts.P3 and P4 Regulations on the basis of their revised basic pay effective from 1.7.1993 and to pay the petitioners arrears of gratuity thereof after deducting the gratuity already paid to them, with interest at 18% per annum from 1.8.1995 till the date of payment.
(c) Issue an interim order directing the respondent to calculate the gratuity payable to petitioners under Exts.P3 and P4 Regulations on the basis of their revised basic pay effective from 1.7.1993 and to pay the petitioners arrears of gratuity thereof after deducting the gratuity already paid to them, pending final disposal of the Original Petition.
O.P Nos.3489 & 20427 of 1997 -: 7 :-
(d) Issue such other writ, direction or order as this Hon'ble Court may deem fit and proper in the circumstances of the case and
(e) Award the costs of the petitioners in these proceedings."
5. Originally, the petitions were heard by a learned Single Judge. Before the learned Single Judge, Division Bench judgment of this Court in Syndicate Bank v. Celine Thomas (supra) decided on 08.08.2005 was cited. The learned Single Judge referring to two judgments of the Apex Court in State of Punjab and others v. Amar Nath Goyal and Others ([2005] 6 SCC 754) and State of Bihar and Others v. Bihar Pensioners Samaj ([2006] 5 SCC 65) took the view that the judgment of the Division Bench in Syndicate Bank v. Celine Thomas (supra) requires a second look in the light of the later judgments of the Apex Court. By Order dated 28.05.2007, the learned Single Judge adjourned the matter to be heard by a Division Bench. The matter was then taken up by the Division Bench which in turn by Reference O.P Nos.3489 & 20427 of 1997 -: 8 :- Order dated 08.02.2016 referred the matter to be placed before a larger Bench in view of the subsequent Division Bench decision of this Court in State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011).
6. We have heard Shri. Ashok B.Shenoy, learned counsel for the petitioners, Shri. P.Ramakrishnan, learned counsel for the State Bank of Travancore and Smt. Shahna Karthikeyan the learned counsel appearing for the Canara Bank.
7. Learned counsel for the petitioners in support of the Writ Petitions contended that benefit of revision of pay scale having been granted with effect from 01.07.1993 and the petitioners having received arrears on the revised pay scale, the said pay scale ought to have been taken into consideration for computation of gratuity. Since the emoluments which is the basis for computing gratuity stood revised, the non-payment of gratuity on the basis of revised pay scale is arbitrary and discriminatory, there is no O.P Nos.3489 & 20427 of 1997 -: 9 :- rationale for extending the benefit of revised gratuity only with effect from 01.11.1994 and when the pay scale has been revised with effect from 01.07.1993, all benefits should have been extended from the aforesaid day. It is submitted that computation of gratuity is based on statutory regulations, namely, the 1979 Regulations which Regulations provided for computation of gratuity, hence by a non-statutory order/instrument, the statutory provisions of Regulations for computation of gratuity cannot be modified. Pay revision which was effected on the basis of an agreement can in no manner affect any statutory Regulation. It is submitted that no material has been placed before the Court to the effect that the State Bank of Travancore has amended the Statutory Regulations in accordance with the agreement arrived at, whereas the agreement contemplated amendment in the Statutory Regulations of different Banks. It is submitted that non-payment of gratuity to those who retired between 01.07.1993 and 31.10.1994 and payment of revised gratuity to those who retired after O.P Nos.3489 & 20427 of 1997 -: 10 :- 01.11.1994 is without any rationale, it is discriminatory, arbitrary and violative of Article 14 of the Constitution of India. Learned counsel for the petitioners in support of the arguments placed reliance on the judgments of the Apex Court in D.S.Nakara v. Union of India ([1983] 1 SCC 305), Chairman, Railway Board and Others v. C.R.Rangadhamaiah ([1997] 6 SCC
623), Syndicate Bank v. Celine Thomas (2005 KHC 1841) and LIC of India v. Retired LIC Officers Association ([2008] 3 SCC 321).
8. Learned counsel appearing for the State Bank of Travancore refuting the submissions of the learned counsel for the petitioners contended that entitlement of gratuity of the petitioners is crystalized on the date of retirement and as per a Statutory Regulation, their gratuity was computed and paid. Subsequent revision of pay scale which was enforced with effect from 01.07.1993 can have no effect on payment of gratuity to the petitioners since the agreement itself fixed a date for extending the benefit of revised O.P Nos.3489 & 20427 of 1997 -: 11 :- gratuity, i.e., with effect from 01.11.1994. When the benefits of revision of pay scale, gratuity and other allowance have been given under a negotiated settlement, it is not open for the petitioners to claim benefit of part of the agreement and negate another part of the agreement. The entire settlement has to be accepted in toto. It is submitted that benefit of the 1979 Regulations for computation of gratuity has already been pressed into service while computing gratuity of petitioners and making payment of gratuity to the petitioners on the basis of the existing pay scale. There is no further right in the petitioners to claim redetermination of the gratuity, even if there is any subsequent enhancement in the pay scale. Learned counsel for the State Bank of Travancore further contended that there was amendment also made in the 1979 Regulations incorporating the terms of settlement. However, even if it is assumed that no amendments were carried out within the time, that shall not make any difference regarding the claim of petitioners for revised gratuity. O.P Nos.3489 & 20427 of 1997 -: 12 :- Learned counsel for the State Bank of Travancore relied on the judgment of the Apex Court in State Government Pensioners' Association and Others v. State of Andhra Pradesh ([1986] 3 SCC 501), State of Punjab v. Amar Nath Goyal ([2005] 6 SCC 754), State of A.P. v. A.P. Pensioners' Association ([2005] 13 SCC 161) and Sudhir Kumar Consul v. Allahabad Bank ([2011] 3 SCC 486) and the Division Bench judgment of this Court in State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011).
9. Learned counsel for the Canara Bank has adopted the submissions made by the learned counsel for the State Bank of Travancore. It is further submitted by the learned counsel for the Canara Bank that in so far as the Canara Bank is concerned, Regulation 1979 was amended incorporating different recommendations made in the settlement. Statutory provisions having been amended petitioners had no claim regarding revision of gratuity. It is further submitted that fixation of date for extending the benefit of revision of pay scale O.P Nos.3489 & 20427 of 1997 -: 13 :- and benefit of revision of gratuity are neither arbitrary nor discriminatory. Petitioners' challenge to the Regulation 46 providing for different dates for implementation of benefit of pay scale and gratuity are to be rejected on the same ground.
10. We have considered the submissions made by the learned counsel for the parties and perused the records.
11. The two Division Bench judgments, i.e., Syndicate Bank v. Celine Thomas (2005 KHC 1841) and State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011) were although cases which were on the same issue, i.e., claim for benefit of revised gratuity on the ground of enforcement of pay revision with effect from 01.07.1993, the Division Bench in Syndicate Bank v. Celine Thomas (supra) has held that non-payment of gratuity is arbitrary and discriminatory and the classification between two classes of retirees, i.e., one those who retired between 01.07.1993 and 31.10.1994 and the other those who retired on or after 01.11.1994 O.P Nos.3489 & 20427 of 1997 -: 14 :- in so far as payment of gratuity is concerned is arbitrary and violative of Article 14 of the Constitution of India. To the contrary, the subsequent Division Bench in State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011) has upheld the non-payment of revised gratuity to those who retired between 01.07.1993 and 31.10.1994 and held that there is no occasion for holding the cut off dates as arbitrary or discriminatory. Thus the issue before us is as to which of the above two Division Bench decisions lays down the correct law since the the issue before the aforesaid Division Bench and these Original Petitions is one and the same.
12. Before proceeding further, it is useful to refer the aforesaid two Division Bench judgments in some detail.
13. In Syndicate Bank v. Celine Thomas (supra) the petitioners retired during the period between 01.07.1993 and 31.10.1994. Payment of gratuity was regulated by the O.P Nos.3489 & 20427 of 1997 -: 15 :- Statutory Regulations applicable to the Syndicate Bank. Clause 46 of the Regulations provided for payment of gratuity. Apart from the Syndicate Bank, cases of employees from the Central Bank were also before the Court. In the Statutory Regulations of the Syndicate Bank amendments were made in the Regulations as noted in paragraph 5 of the judgment which is quoted as follows:
"5. The said statutory regulations provide, Payment of Gratuity, in Clause.46 as follows:
Gratuity:
46.1) Every Officer shall be eligible for gratuity on:
a) Retirement,
b) Death,
c) Disablement rendering him unfit for further service as certified by a Medical Officer approved by the Bank,
d) Resignation after completing ten years of continuous service, or
e) Termination of service in any other way except by way of punishment after completion of 10 years of service.
2) The amount of gratuity payable to an Officer shall be one month's pay for every completed year of service, subject to a maximum of 15 months' pay.
Provided that where an officer has completed more than 30 years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of a month's pay for each completed year of service beyond 30 years. O.P Nos.3489 & 20427 of 1997 -: 16 :- Provided further that pay for the purpose of Gratuity for an Officer who ceased to be in service during the period 1-7- 1993 to 31-10-1994 shall be with regard to scale of pay as specified in Sub-Regulation (1) of Regulation.4."
5. When we come to the case of Central Bank of India, the only difference is that the last proviso is absent. Payment of Gratuity in terms of this provision is a statutory benefit. That cannot be disputed. A person becomes eligible for gratuity; (a) on retirement, b) on death, (c) on disablement, (d) on resignation and (e) on termination of service and the amount payable "shall be one month's pay for every completed year of service, subject to a maximum of 15 months' pay." There is further provision with regard to payment of gratuity in respect of those who completed service of more than 30 years." With regard to the Central Bank the proviso as was added in Regulation 46 of the Regulations was absent. The issue before the Court was noted in paragraph 6 which is to the following effect:
"6. Therefore, gratuity shall have to be computed on the basis of monthly pay eligible for an employee. Whether that is the pay as on the date of retirement actually drawn by him or the pay to which he becomes entitled, in case a revision takes place with retrospective effect is the point to be considered. It is contended based on a clause contained in the Memorandum of Understanding dated 23.6.1995 that O.P Nos.3489 & 20427 of 1997 -: 17 :- in respect of those who retired from service between 1.11.1992 and 30.10.1994, gratuity paid would not be revisable, on account of pay revision ordered with retrospective effect from 1.11.1992, with corresponding monetary benefit on 1.7.1993." The Division Bench had taken the view that the Memorandum of Understanding cannot meddle with the statutory prescriptions. The following was laid down in paragraph 7:
"7. Memorandum of Understanding cannot meddle with the statutory prescriptions. Nobody can agree by way of a settlement at the behest of an organisation taking away the benefit conferred on individuals by way of statutes or statutory rules. There need not have any authority to substantiate this. Statutory prescriptions crystallize the rights in favour of the subjects of that statute. It cannot be varied to their disadvantage unless otherwise by amendment to the statute. Of course, in the case of regulation governing the employees of the Syndicate Bank, the regulation has been amended as provided in the last proviso to Clause.46 quoted above. But, that amendment had been incorporated far later than the date of retirement of the petitioners in O. P. No. 3502 of 2002 and no provision in the parent statute enabling retrospective amendment is brought to our notice. Therefore, such amendment can have only prospective effect affecting those who retried later than such O.P Nos.3489 & 20427 of 1997 -: 18 :- amendment. But going by the words contained in that provision it cannot affect even such persons. So, that amendment will not adversely affect any of the statutory benefit entitled to the petitioners in O. P. No. 3502 of 2000."
The Division Bench accepted the arguments of the petitioners that the classification between those who retired between 01.07.1993 and 31.10.1994 and those who retired on or after 01.11.1994 is arbitrary. The following was observed in paragraphs 10 and 13:
"10. On the other hand, it is submitted by the writ petitioners that going by the statutory regulations, the gratuity has to be quantified based on the pay. Pay means pay entitled as on the date of retirement. When a subsequent pay revision with retrospective effect has come into effect and payment has been accorded in terms of such retrospective pay revision, the pay to be reckoned for the purpose of quantifying gratuity shall be such revised pay which has been actually paid to them by the employer. It is further submitted that even on the date of retirement pay revision was on the anvil by reason of the discussion with the association. Any delay in arriving at an understanding cannot on any account transgress into the statutory entitlement for gratuity. Therefore, whatever clauses contained in the Memorandum of Understanding for revision of pay to restrict the quantum of gratuity only to O.P Nos.3489 & 20427 of 1997 -: 19 :- those retired on or before 1.11.1994 cannot have any binding effect. It is further contended that even though the Memorandum of Understanding was arrived at on 23.6.1995, in respect of those bank employees retired between 1.11.1994 and 23.6.1995, the revised gratuity is paid. So in such circumstances, those who retired between 1.11.1992 and 31.10.1994 should not have been excluded from this benefit. This amounts to mini classification of homogenous class violating the rights enshrined under Art.14 of the Constitution. So, the learned single Judge was perfectly justified in directing payment of gratuity based on revised scale of pay.
13. The mini classification, which is complained of, is a serious one. Even admittedly by the Banks concerned, though they have entered into Memorandum of Understanding only on 23.6.1995, revised gratuity based on the revised pay had been given to those who retired prior to 23.6.1995, but on or later than 1.11.1994. At the same time revision of pay scales takes effect from 1.11.1992. In such circumstances, denial of the very same benefits to those who retired between 1.11.1992 to 1.11.1994 amounts to mini classification offending the mandate of Art.14 of the Constitution of India. No nexus is pointed out for bringing any classification between those who retired between 1.4.1992 and 31.10.1994 and those who retired between 1.11.1994 and 23.6.1995. Both these artificial groups of retirees had retired from service prior to the date of arriving at the Memorandum of Understanding, but after the date of retrospectivity to the MoU. They O.P Nos.3489 & 20427 of 1997 -: 20 :- therefore form themselves into one class as all of them retired later than the giving effect to the pay revision by the Memorandum of Understanding. When persons forming same class are treated differently it violates Art.14 of the Constitution denying them equal protection of law and equality before law. Denial of gratuity to the writ petitioners is therefore discriminatory. Consequently, on that reason atone, we have to sustain the view taken by the learned single Judge."
14. Now coming to the judgment in State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011), the respondent retired from service on 30.06.1993. He claimed commuted value of pension, gratuity and grant of arrears pension, salary etc., on the basis of pay revision from 01.11.1992 with 18% interest. Learned Single Judge allowed the Writ Petition against which the Bank had filed the appeal. The Division Bench has noted certain clauses of the joint note (which evidenced the conclusions of discussion between the Indian Banks' Association and the various Organisations of the Officers of Public Sector Banks). The Division Bench O.P Nos.3489 & 20427 of 1997 -: 21 :- also noted the effective dates given in paragraph 15 of the settlement where although pay revision was prescribed from 01.07.1993, gratuity was made admissible with effect from 01.11.1994. The Division Bench also noticed the earlier Division Bench judgment in Syndicate Bank v. Celine Thomas (supra). But before the Division Bench only short notes of the case were cited. The Division Bench held that the agreement which was entered between the Indian Banks' Association and Officers of the Banks was more or less a settlement. The following was observed in paragraph 10, 11 and 12:
"10. The legal relationship between an employer and an employee is contractual. However under the Constitution, in the context of employment under the State, the legal relationship is described to be one of "status" and normally regulated by law. Even in the context of employment by private employers (non-state), terms and conditions of such employment can always be the subject matter of legislation by a competent legislature. However in the absence of any specific legislation or the existence of any other instrument, which has the force of law regulating the terms of employment, the terms and conditions of the employment are always the subject matter of a contract between the employer and employee. O.P Nos.3489 & 20427 of 1997 -: 22 :- In the context of certain categories of the persons employed in industrial establishments, having regard to the nature and scale of the employment and the need to protect the interest of the employees who generally have an unequal bargaining power compared to the employer, the service conditions are regulated in this country in the manner provided under the Industrial Disputes Act and various other allied enactments governing the field. Officers of the Banks such as the respondent herein do not strictly fall within the definition of "workmen" as defined under the Industrial Disputes Act or other allied enactments. Notwithstanding such legal position, the magnitude of work force in the category of officers employed under various banks in the country gives them a certain amount of collective bargaining power with the employers, that is the Banks. Obviously in a bid to secure a peaceful and congenial environment, the Banks and the Officers' Association thought it fit to have a settlement of the various conditions of service of the officers of the Banks through negotiations. Such negotiations fructified into Ext.P4 joint note. Therefore, the rights and obligations of the parties to the joint note emanate from the said document alone which in substance is akin to a settlement under Section 18 of the Industrial Disputes Act.
11. In adjudicating the claim like the one raised by the respondent herein, in our opinion, the Court is required only to look at the document (Ext.P4 in the instant case) which creates the rights and obligations and reliance upon other documents like the staff circular No.36/95 in our O.P Nos.3489 & 20427 of 1997 -: 23 :- view is not legally permissible. If the rights and obligations of the parties emanate out of Ext.P4 document, the document is to be interpreted to ascertain the rights and obligations flowing out of the said document in the light of the settled principles of interpretation of documents alone. One of the settled principles of interpretation of the documents is that one external evidence is inadmissible with respect to the content of a document. The principle contained in Section 91 of the Evidence Act in our opinion squarely is applicable to the case on hand. Section 91 of the Evidence Act in so far as it is relevant reads as follows:-
91. Evidence of terms of contracts, grants and other dispositions of property reduced to form of documents:-
When the terms of contract, or of a grant, or of any other disposition of property have been reduced to the form of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained.
12. It can be seen from the above where the terms of contract are reduced to the form of a document, no evidence in proof of the terms of such contract is admissible. Irrespective of the fact whether Section 91 is applicable to the document such as Ext.P4, in our opinion, the principle underlying Section 91 of the Evidence Act should govern the situation. The rights emanating from O.P Nos.3489 & 20427 of 1997 -: 24 :- Ext.P4 cannot either be enlarged or curtailed by either of the parties to the settlement evidenced by Ext.P4 unilaterally. Assuming for the sake of argument that the intention of the author of staff circular No.36/95 is that the arrears due to the officers of the appellant Bank are required to be paid with effect from November, 1992. Such an intention in our opinion cannot either bind the Bank which is a body corporate nor create any right in favour of the officers of the Bank."
The Division Bench also observed that the judgment in Syndicate Bank v. Celine Thomas (supra) was based on the doctrine of classification whereas it overlooked the fact that such classification if any is the result of a negotiated settlement of the parties but not made by any statute or statutory instrument which derives its authority from the coercive power of the State. It further held that the invocation of Article 14 in the context of the negotiated settlement in question was uncalled for. The following was observed in paragraph 15:
"15. The subject matter for discussion in the said judgment is the same joint statement which is the subject matter of discussion in the instant judgment. The Division O.P Nos.3489 & 20427 of 1997 -: 25 :- Bench applied the doctrine of classification and found the same offensive of Article 14 overlooking the fact that such classification if any is a result of a negotiated settlement of the parties but not made by any statute or statutory instrument which derives its authority from the coercive power of the State. The invocation of Article 14 in the context of the negotiated settlement in question in our opinion is uncalled for."
15. Facts leading to pay revision and revision of other benefits with regard to Officers of the Public Sector Banks now needs to be noted to appreciate the issues. For salary revision for Officers, the IBA High Power committee held discussion with Officers Organizations. A joint note dated 23.06.1995 was prepared and signed by the IBA High Power Committee as well as different Officers Organizations. Annexure-I of the joint note contained the outcome of the discussions and recommendations. The joint note further stated that recommendation be made to Public Sector Banks to initiate the process of amendment of the Regulations to give effect to what is stated in Annexure-I. The first three paragraphs and the last paragraph of the joint O.P Nos.3489 & 20427 of 1997 -: 26 :- note are as follows:
"The IBA's High power committee for discussions with officers' Organisations held several rounds of discussions with the representatives of the officers' organizations on the salary revision for officers in public sector banks. During these discussions common views have emerged between the two sides. The outcome of such discussions acceptable to both sides in given in the Annexure-I. The representatives of the officers' Organisations state that the outcome of the discussions as given in the Annexure-I was in full satisfaction of their demands raised during the discussions in this regard and the existing service condition be modified to that extent. The residual issues shall be taken up for discussions as early as possible.
The IBA agree that it shall recommend to the public sector banks to initiate the process to amend the Officers' Service regulations, to give effect to what is stated in the Annexure-I. The IBA shall also recommend to the Government of India to approve the amendments and to issue appropriate guidelines necessary for this purpose.
..........
The representatives of Officers' organizations have suggested that pending formal amendments to the officers Service regulations as per procedure laid down under Section 19(!0 of the Banking companion (acquisition and Transfer of undertaking) Act, 1970/1980, the IBA may advise the banks to disburse immediately an O.P Nos.3489 & 20427 of 1997 -: 27 :- and too amount, equivalent to the nest arrears payable for the period November, 1992 to June, 1995 and continue to pay revised salary and allowances on and too basis. The IBA has agreed to make appropriate recommendations t the Government in this regard for its consideration."
Annexure-I to the joint note contained various recommendations. Paragraph 15 of the joint note contained a heading "Date of Effect". Various benefits were recommended to be effected from different dates. It is useful to quote paragraph 15 of the joint note:
"15. Date of Effect For payment of arrears, the benefits under various provisions as above shall be effective from the dates specified hereunder:-
W.E.F.
(i) House Rent Allowance on revised basic pay 1.11.1992
(ii) Scales of Pay and Dearness Allowance 1.07.1993
(iii) City Compensatory Allowance, Provident Fund, Advance Increment and Fixed Personal Allowance 1.11.1993
(iv) Gratuity, Medical Aid, Hospitalisation Expenses, Second Stagnation Increment in Scale III, O.P Nos.3489 & 20427 of 1997 -: 28 :- Professional Qualification Allowance Recovery of House/Furniture Rent 1.11.1994
(v) Categorisation of Branches May, 1995
(vi) Halting Allowance 1.06.1995."
16. Service Conditions of different Public Sector Banks were regulated by various Statutory Regulations framed under different Statutes. With regard to Canara Bank, Canara Bank (Officers') Service Regulations, 1979 were framed in exercise of the power conferred under Section 19(2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970. Regulation 3(e) defined "Emoluments" which meant the aggregate of salary and allowances, if any. Regulation 4 provided for Grade and Scales of pay. Regulation 46 provided for gratuity. In view of the recommendation by the IBA dated 23.06.1995 as noted above, the Regulations were amended to be in tune with the recommendation by settlement dated 23.06.1995. It is useful to refer to Regulation 4 as amended which is as follows:
"Regulation 4(1) Grades and Scales of payment On and from 1.11.1987, the scales of pay specified O.P Nos.3489 & 20427 of 1997 -: 29 :- against each grade shall be under:
(a) Top Executive Grade:
Scale VII - Rs.6400 - 150 - 7000
Scale VI - Rs.5950 - 150 - 6050
(b) ...
(c ) ...
(d) .....
(2) On and from 1.7.1993, the scales of pay
specified against each grade shall be as under:
(a) Top Executive Grade:
Scale VII Rs.12650 - 300 - 13250 - 350 - 13600 -
400 -14000
Scale VI - Rs.11450 - 300 - 12650
(b) ......
(c) .....
(d) ....
Regulation 46(2) which provided for gratuity was also amended and a proviso, viz., second proviso was added which is to the following effect:
"46(2). The amount of gratuity payable to an Officer shall be one month's pay for every completed year of service, subject to a maximum of 15 months' pay.
Provided that where an Officer has completed more than 30 years of service, he shall be eligible by way of gratuity for years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of a month's pay for each completed year of service beyond O.P Nos.3489 & 20427 of 1997 -: 30 :- 30 years.
Provided further that pay for the purposes of Gratuity for an Officer who ceased to be in service during the period 1.7.1993 to 31.10.1994 shall be with regard to scale of pay as specified in sub-regulation (1) of regulation
4. Note:
If the fraction of service beyond completed years of service is 6 months or more, gratuity will be paid prorate for the period."
The second proviso provided that Officers who ceased to be in service during the period from 01.07.1993 to 31.10.1994, for the purpose of gratuity, shall be entitled to scale of pay as specified in Regulation 4 (1) meaning thereby they shall be entitled to the unrevised scale of pay. Statutory Regulation thus incorporated the provision of settlement.
17. State Bank of Travancore (Officers') Service Regulations, 1979 were framed in exercise of the powers conferred under Section 64 of the State Bank of India Subsidiary Banks) Act, 1959. Regulation 3(f) defines "Emoluments" to mean the aggregate of salary and allowances, if any. Regulation 49 defines gratuity O.P Nos.3489 & 20427 of 1997 -: 31 :- which is as follows:
"49. Gratuity.
(1) An Officer shall be eligible for gratuity on:
(a) retirement
(b) death
(c) disablement rendering him unfit for further service as certified by a medical officer approved by the Bank.
(d) resignation after completion of ten years of continuous service.
or
(e) Termination of service in any other way except by way of punishment after completion of 10 years service.
(2) The amount of gratuity payable to an officer shall be one month's pay for every completed year of service, subject to a maximum of 15 months' pay.
Provided that where an officer has completed more than 30 years of service, he shall be eligible by way of gratuity for an additional amount at the rate of one half of a month's pay for each completed year of service beyond 30 years.
NOTE: If the fraction of service beyond completed years of service is six months or more, gratuity will be paid pro-rata for the period."
18. There is an issue between the parties as to whether Regulation 49 was amended after joint note dated O.P Nos.3489 & 20427 of 1997 -: 32 :- 23.06.1995 or not. Learned counsel for the Banks submitted that amendments were carried out which is refuted by the learned counsel for the petitioners.
19. There is another Regulation, viz., State Bank of Travancore (Payment of Gratuity to Employees) Regulations, 1972. Regulation 2(d) contemplated "gratuity fund" which is as follows:
"2. In these Regulations, unless the context otherwise requires:
....
(d) the Gratuity Fund means the gratuity fund as may be defined in the Gratuity Trust Deed that may be executed by the Bank and till such deed is executed such provisions that the Bank may have or hereafter make, for payment of gratuity to its employees."
Regulations 11 and 12 deals with gratuity. Regulation 13 deals with the amount admissible which is as follows:
"(13) Without prejudice to the provisions of regulations No.12, the amount of gratuity admissible to an employee shall be:-
(a) a sum equal to one month's pay for each completed year of service in the Bank subject to a maximum of 15 months' pay and O.P Nos.3489 & 20427 of 1997 -: 33 :-
(b) an additional sum equal to half month's pay in respect of each completed year of service in the Bank in excess of 30 years.
(c) service rendered beyond the completed years of service shall also be reckoned for gratuity purpose if it is 6 months and more but less than one year for the purpose referred to in sub-paragraphs (a) and (b) above.
Provided that if the amount of gratuity payable to an employee in accordance with the provisions of the payment of Gratuity Act, 1972 or any statutory modification thereof for the time being in force is higher than the amount of gratuity admissible to an employee determined in pursuance of clauses (a), (b), and (c) hereinabove, the employee shall be entitled to be paid such higher amount payable to him in accordance with the provisions of the payment of Gratuity Act."
20. As noted above, the issue to be considered in this case is as to whether denial of benefit of gratuity on the basis of revised pay scale with effect from 01.07.1993 to the petitioners is arbitrary, discriminatory and violative of Article 14 of the Constitution of India. Paragraph 15 of Annexure-I to the joint note dated 23.06.1995 provided the date of effect of the extended benefit of gratuity and certain other O.P Nos.3489 & 20427 of 1997 -: 34 :- benefits only with effect from 01.11.1994. The petitioners who retired between 01.07.1993 and 31.10.1994 and were denied benefit of re-computation of gratuity have come up in the Writ Petition complaining the action as discriminatory and arbitrary. Division Bench judgment of this Court in Syndicate Bank v. Celine Thomas (supra), the correctness of which is to be examined has held the denial of gratuity based on the revised pay scale as arbitrary and violative of Article 14 of the Constitution of India. The Division Bench held that the mini classification between those who retired between 01.07.1993 and 31.10.1994 and those who retired on or after 01.11.1994 offends Article 14 of the Constitution. In paragraph 13 of the judgment as quoted above, reasons were given by the Division Bench. Another reason given by the Division Bench is that the memorandum of understanding (23.06.1995) cannot meddle with the statutory prescriptions. The Division Bench in Syndicate Bank v. Celine Thomas (supra) was considering the Regulation framed by the Syndicate Bank, O.P Nos.3489 & 20427 of 1997 -: 35 :- Regulation 46 of the 1979 Regulations regarding payment of gratuity. After the settlement dated 23.06.1995 Regulation 46 was amended by adding second proviso in the Regulation which has been quoted by the Division Bench in paragraph 5 which has already been quoted.
21. The issue of fixing a cut off date for grant of various retiral benefit and whether such fixation violates Articles 14 and 16 of the Constitution have come up for consideration before the Apex Court in large number of cases. The Apex Court has considered the facts and issues in each case and explained the principles to find out as to when the fixation of a cut off date or denial of a particular benefit has to be treated as violative of Articles 14 and 16 of the Constitution of India. Cases arising out of similar facts also came for consideration before the Apex Court. To find out the ratio laid down in above cases, we need to refer a few judgments of the Apex Court in detail.
22. The first judgment on which reliance has been placed by the learned counsel for the petitioners is O.P Nos.3489 & 20427 of 1997 -: 36 :- D.S.Nakara and Others v. Union of India ([1983] 1 SCC
305) which needs to be noted in detail. In the aforesaid case, Government of India, Ministry of Finance issued Office Memorandum dated 25.05.1979 whereby the formula for computation of pension was liberalised but made it applicable to Government servants who were in service on 31.03.1979 and retired from service on or after that date. The formula introduced a slab system for computation of pension. Prior to the above liberalisation, average emoluments of 36 months' service provided the measure of pension because the pension was related to the average 36 months' just preceding the retirement. By the liberalaised scheme average emoluments of 10 months preceding the date of retirement has to be taken for computation of pension, a slab system for computation of average pension has been introduced and ceiling was raised. However, the pensioner who retired prior to the specified date, i.e., 31.03.1979 had to earn pension on the average emoluments of 36 months' salary just O.P Nos.3489 & 20427 of 1997 -: 37 :- preceding the date of retirement which naturally was lower and the slab system and enhanced ceiling was not available to them. Petitioners, who had retired prior to 31.03.1979 challenged the aforesaid decision of Government of India, Ministry of Finance contending violation of Article 14 and it was contended that the retirees prior to 31.03.1979 and those who retired after 31.03.1979 forms a homogeneous class and discrimination between them regarding computation of pension is arbitrary and discriminatory. Question which was raised before the Apex Court was noted in paragraph 2 of the judgment which is as follows:
"2. Do pensioners entitled to receive superannuation or retiring pension under Central Civil Service (Pension) Rules, 1972 ('1972 Rules' for short) form a class as a whole? Is the date of retirement a relevant consideration for eligibility when a revised formula for computation of pension is ushered in and made effective from a specified date? Would differential treatment to pensioners related to the date of retirement quo the revised formula for computation of pension attract Art.14 of the Constitution and the element of discrimination liable to be declared unconstitutional as O.P Nos.3489 & 20427 of 1997 -: 38 :- being violative of Art.14? These and the related questions debated in this group of petitions call for an answer in the backdrop of a welfare State and bearing in mind that pension is a socio economic justice measure providing relief when advancing age gradually but irrevocably impairs capacity to stand on one's own feet."
23. In the above case, the Apex Court had stated the entire history of payment of pension and considered the object and purpose of pension. While elaborating the goals and objects of pension, the following was stated in paragraph 26:
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 self respect, and
(ii) at a standard equivalent at the pre-retirement level.
This approach may merit the criticism that if a developing country like India cannot provide an employee while rendering services 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 determining the minimum amount required for living O.P Nos.3489 & 20427 of 1997 -: 39 :- 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 self sufficiency 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. The philosophy prevailing in a given society at various stages of its development profoundly influences its 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', (sec Social Security law by Prof. Harry Calvert, p. 1)."
24. The Apex Court held that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inhers economic security in the fall of life. The following was observed in paragraph 29:
O.P Nos.3489 & 20427 of 1997 -: 40 :- "29. Summing up it can be said with confidence that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to aging process and, therefore, one is required to fall back on savings, One such saving in kind is when you gave your best in the hey day of life to 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 emolument 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 paid to be a deferred portion of the compensation or 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."
25. In the above background the Apex Court examined the Office Memorandum dated 25.05.1979 and held that classification between those who retired prior to 31.03.1979 and those who retired after that date is arbitrary and has no nexus to the object to be achieved. O.P Nos.3489 & 20427 of 1997 -: 41 :- In paragraph 42, the Apex Court held the division arbitrary and unprincipled in the following words:
"42. If it appears to be undisputable, as it is does to us that the pensioners for the purpose of pension benefits form a class, would its upward revision permit a homogeneous class to be divided by arbitrarily fixing an eligibility criteria unrelated to purpose of revision, and would such Classification be founded on some rational principle? The classification has to be based, as is well settled, on some rational principle and the rational principle must have nexus to the objects sought to be achieved. We have set out the objects underlying the payment of pension. If the State considered it necessary to liberalise the pension scheme, we find no national principle behind it for granting these benefits only to those who retired subsequent to that date simultaneously denying the same to those who retired prior to that date. If the liberalisation was considered necessary for augmenting social security in old age to Government servants then those who retired earlier cannot be worst off than those who retire later. Therefore, this division which classified pensioners into two classes is not based on any rational principle and if the rational principle is the one of dividing pensioners with a view to giving something more to persons otherwise equally placed, it would be discriminatory. To illustrate, take two persons, one retired just a day prior and another a day just succeeding the specified date. Both were in the same pay bracket, the O.P Nos.3489 & 20427 of 1997 -: 42 :- average emolument was the same and both had put in equal number of years of service. How does a fortuitous circumstance of retiring a day earlier or a day later will permit totally unequal treatment in the matter of pension. One retiring a day earlier will have to be subject to ceiling of Rs. 8,100/- p. a. and average emolument to be worked out on 36 months' salary while the other will have a ceiling of Rs. 12,000/- p.a. and average emolument will be computed on the basis of last ten months average. The artificial division stares into face and is unrelated to any principle and whatever principle, if there be any, has absolutely no nexus to the objects sought to be achieved by liberalising the pension scheme. In fact this arbitrary division has not only no nexus to the liberalised pension scheme but it is counter productive and runs counter to the whole gamut of pension scheme. The equal treatment guaranteed in Art.14 is wholly violated in as much as the pension rules being statutory in character, since the specified date, the rules accord differential and discriminatory treatment to equals in the matter of commutation of pension. A 48 hours difference in matter of retirement would have a traumatic effect. Division is thus both arbitrary and unprincipled. Therefore, the classification does not stand the test of Art.14."
26. However, it is relevant to note that the Apex Court held that even though persons who retired on 31.03.1979 are entitled to take benefit of the O.P Nos.3489 & 20427 of 1997 -: 43 :- liberalised pension scheme, they are not entitled to claim any arrears of pension. The following was laid down in paragraph 49:
"49. But we make it abundantly clear that arrears are not required to be made because to that extent the scheme is prospective. All pensioners whenever they retired would be covered by the liberalised pension scheme, because the scheme is a scheme for payment of pension to a pensioner governed by 1972 Rules. The date of retirement is irrelevant. But the revised scheme would be operative from the date mentioned in the scheme and would bring under its umbrella all existing pensioners and those who retired subsequent to that date. In case of b pensioners who retired prior to the specified date, their pension would be computed afresh and would be payable in future commencing from the specified date. No arrears would be payable. And that would take care of the grievance of retrospectivity. In our opinion, it would make a marginal difference in the case of past pensioners because the emoluments are not revised. The last revision of emoluments was as per the recommendation of the Third Pay Commission (Reghubar Dayal Commission). If the emoluments remain the same, the computation of average emoluments under amended R.34 may raise the average emoluments, the period for averaging being reduced from last 36 months to last 10 months. The slab will provide slightly higher pension and if someone reaches the maximum the old lower ceiling will not deny O.P Nos.3489 & 20427 of 1997 -: 44 :- him what is otherwise justly due on computation. The words "who were in service on 31st March, 1979 and retiring from service on or after that date" excluding the date for commencement of revision are words of limitation introducing the mischief and are vulnerable as denying equality and introducing an arbitrary fortuitous circumstance can be severed without impairing the formula. Therefore, there is absolutely no difficulty in removing the arbitrary and discriminatory portion of the scheme and it can be easily severed."
27. One more aspect which was examined by the Constitution Bench in the above case was the financial implication in such matters. The Apex Court made the following pertinent observations in paragraph 63:
"63. The financial implication in such matters has some relevance... ..Therefore, we are satisfied that the increased liability consequent upon this judgment is not too high to be unbearable or such as would have detracted the Government from covering the old pensioners under the scheme."
28. The Apex Court had also noted in the said case that there is no such fund as pension fund and the pension being non-contributory, liability of the State continues to pay pension till life.
O.P Nos.3489 & 20427 of 1997 -: 45 :-
29. It is relevant to note that in D.S. Nakara's case, the Apex Court was considering the question of benefit to be extended to the retirees of a specified date of liberalised pension. The formula for computation of liberalised pension was held to be applicable to retirees prior to the specified date and subsequent to it. However, liberalised formula was to be applied on the emoluments which were received by the retirees prior to the date and only benefit extended was for computation. In the present case we are concerned with the entitlement of gratuity. We shall notice a little later how it is different from computation of pension.
30. Judgment of the Apex Court which has been relied on by the learned counsel for the Bank relating to payment of gratuity needs to be noted is State Government Pensioners' Association and Others v. State of Andhra Pradesh ([1986] 3 SCC 501). In the above case a large number of employees retired prior to 01.04.1978. By a Government Order dated 26.03.1980, the principle for computation of gratuity was liberalised. O.P Nos.3489 & 20427 of 1997 -: 46 :- The issue which arose for consideration has been noted by the Apex Court in paragraph 1 of the judgment which is to the following effect:
"Does that part of the provision which provides for payment of a larger amount of gratuity with prospective effect from the specified date offend Art. 14 of the Constitution of India? Whether gratuity must be paid on the stepped up basis, to all those who have retired before the date of the upward revision, with retrospective effect, even if the provision provides for prospective operation, in order not to offend Art. 14 of the Constitution of India? A Division Bench of the High Court of Andhra Pradesh says , no'. In our opinion it rightly says so. The petitioners, erstwhile Government employees who had retired "before"
April 1, 1978, inter alia claimed and contended before the High Court that they were entitled to the benefit of the Government order No. 88 dated 26th March, 1980 providing that :
"(b) Retirement gratuity may be 1/3rd of pay drawn at the time of retirement for every 6 monthly service subject to maximum of 20 months pay limited to Rs.
30,000/-."
The said order in so far as gratuity is concerned is made effective from 1st April, 1978. Says the High Court :-"
31. The Apex Court in the aforesaid case held that the Revised Pension Rules 1980 are not admissible to O.P Nos.3489 & 20427 of 1997 -: 47 :- those who retired prior to 01.04.1978 because at the time of retirement they were governed by the then existing rules and their gratuity was calculated and paid. The following was further observed in paragraph 1:
"In our opinion, the arrears relating to gratuity benefit computed according to the Revised Pension Rules of 1980 may not be paid to the pensioners that retired prior to 1-4- 1978 because at the time of retirement they were governed by the then existing Rules and their gratuity was calculated on that basis. The same was paid. Since the revised scheme is operative from the date mentioned in the scheme, i.e. 1-4- 1978, the continuing rights of the pensioners to receive pension and family pension must also be revised according to that scheme. But the same cannot be said with regard to gratuity, which was accrued and drawn. The reason why their Lordships of the Supreme Court in Nakara's case, AIR 1983 SC 130 refused to grant arrears to the pensioners that retired prior to the stipulated date would ipso facto apply for refusing to grant the revised gratuity, since that would amount to asking the State Government to pay arrears, relating to gratuity after revising them according to the new scheme for those that retired prior to 1-4-1978 and that would amount to giving retrospective effect to the A.P. Revised Pension Rules, 1980, which came into effect from 29-10-1979 and in the case of Part II of those Rules from 1-4-1978. The scheme is prospective and not retrospective."
32. The High Court in the aforesaid case dismissed O.P Nos.3489 & 20427 of 1997 -: 48 :- the Writ Petition filed by the employees which judgment was challenged in the Apex Court. The Apex Court approved the view of the High Court. Revision of gratuity from a specified date was upheld by the Apex Court. It was held that such revision of gratuity by a specified date cannot be in any manner violative of Article 14 of the Constitution. The following was held in paragraph 2:
"2. We fully concur with the view of the High Court. The upward revision of gratuity takes effect from the specified date (April 1, 1978) with prospective effect. The High Court has rightly understood and correctly applied the principle propounded by this Court in Nakara's case AIR 1983 SC 130. There is no illegality or unconstitutionality (from the platform of Art.14 of the Constitution of India) involved in providing for prospective operation from the specified date. Even if that part of the Notification which provides for enforcement with effect from the specified date is struck down the provision can but have prospective operation not retrospective operation. In that event (if the specified date line is effaced), it will operate only prospectively with effect from the date of issuance of the notification since it does not retrospectively apply to all those who have already retired before the said date. In order to make it retrospective so O.P Nos.3489 & 20427 of 1997 -: 49 :- that it applies to all those who retired after the commencement of the Constitution on 26th January, 1950 and before the date of issuance of the notification on 26th March, 1980, the Court will have to rewrite the notification and introduce a provision to this effect saying in express terms that it shall operate retrospectively. Merely striking down (or effacing) the alleged offending portion whereby it is made effective from the specified date will not do. And this, the Court cannot do. Besides, giving prospective operation to such payments cannot by any stretch of imagination be condemned as offending Art. 14. An illustration will make it clear. Improvements in pay scales by the very nature of things can be made prospectively so as to apply to only those who are in the employment on the date of the upward revision. Those who were in employment say in 1950, 1960 or 1970, lived, spent, and saved, on the basis of the then prevailing cost of living structure and pay scale structure, cannot invoke Art. 14 in order to claim the higher pay scale brought into force say, in 1980. If upward pay revision cannot be made prospectively on account of Art. 14, perhaps no such revision would ever be made. Similar is the case with regard to gratuity which has already been paid to the petitioners on the then prevailing basis as it obtained at the time of their respective dates of retirement. The amount got crystallized on the date of retirement on the basis of the salary drawn by him on the date of retirement. And it was already paid to them on that footing. The transaction is completed and closed. O.P Nos.3489 & 20427 of 1997 -: 50 :- There is no scope for upward or downward revision in the context of upward of downward revision of the formula evolved later on in future unless the provision in this behalf expressly so provides retrospectively (downward revision may not be legally permissible even). ..."
33. The Constitution Bench judgment of the Apex Court in D.S.Nakara's case (supra) was considered by another Constitution Bench of the Apex Court in Krishena Kumar v. Union of India ([1990] 4 SCC 207) especially on the ratio of the said judgment. In the aforesaid case, petitioners were the employees who retired from Railway and were in receipt of provident fund benefits. Provident Fund Scheme was current in the Railways since long. In the year 1957 Provident Fund Scheme was replaced by a pension scheme. Employees who entered into Railway service on or after April 1, 1957 were automatically covered by the scheme. Those employees who were already in service on April 1, 1957 were given an option either to retain the Provident Fund benefits or to switch over to the pensionary benefits. The pension scheme was liberalised on several occasions. The O.P Nos.3489 & 20427 of 1997 -: 51 :- Railway had even subsequent to 1957 gave option to the provident fund retirees to opt for the pension scheme. Petitioners have not opted for pension. Challenge in the Writ Petition was that Railway by various Notifications, last being 08.05.1987 gave fresh option to some of the provident fund retirees while denying the benefit to the other provident fund retirees who were identically placed but were separated from the rest by the arbitrary cut off date. It was contended that the specified date in the Notification giving option having formed the basis for discrimination between the similarly placed provident fund retirees which was arbitrary and against the objects to be achieved and is clearly violative of Article 14. Heavy reliance was placed on D.S.Nakara's case (supra) by the petitioners in Krishena Kumar's case (supra). In the context of precedent, the Apex Court made the following observations in paragraphs 19 and 20:
"19. The doctrine of precedent, that is being bound by a previous decision, is limited to the decision O.P Nos.3489 & 20427 of 1997 -: 52 :- itself and as to what is necessarily involved in it. It does not mean that this Court is bound by the various reasons given in support of it, especially when they contain "propositions wider than the case itself required." This was what Lord Selborne said in Caledonian Railway Co. v. Walker's Trustees (1882 (7) AC 259) and Lord Halsbury in Quinn v. Leathem, 1901 AC 495 (502). Sir Frederick Pollock has also said: "Judicial authority belongs not to the exact words used in this or that judgment, nor even to all the reasons given, but only to the principles accepted and applied as necessary grounds of the decision."
20. In other words, the enunciation of the reason or principle upon which a question before a Court has been decided is alone as a precedent. The ratio decidendi is the underlying principle, namely, the general reasons or the general grounds upon which the decision is based on the test or abstract from the specific peculiarities of the particular case which gives rise to the decision. The ratio decidendi has to be ascertained by an analysis of the facts of the case and the process of reasoning involving the major premise consisting of a pre existing rule of law, either statutory or judge - made, and a minor premise consisting of the material facts of the case under immediate consideration. If it is not clear, it is not the duty of the Court to spell it out with difficulty in order to be bound by it. In the words of Halsbury, 4th Edn., Vol. 26, para 573:
"The concrete decision alone is binding between the parties to it but it is the abstract ratio decidendi, as ascertained on a consideration of the judgment in relation O.P Nos.3489 & 20427 of 1997 -: 53 :- to the subject matter of the decision, which alone has the force of law and which when it is clear it is not part of a tribunal's duty to spell out with difficulty a ratio decidendi in order to be bound by it, and it is always dangerous to take one or two observations out of a long judgement and treat them as if they gave the ratio decidendi of the case. If more reason than one are given by a tribunal for its judgment, all are taken as forming the ratio decidendi."
34. Referring to D.S. Nakara's case the Apex Court held that in D.S. Nakara's case, the court had treated the pension retirees in a homogeneous class and the provident fund retirees were not in mind. The Apex Court held that in D.S. Nakaras case it was never held that both the pension retirees and the provident fund retirees formed a honogenous class and that any further classification among them would be violative of Article
14. The Apex Court in Krishena Kumar's case (supra) held that rights by the Government in respect of provident fund is finally crystalised on the date of retirement whereas under the pension scheme the Government's obligation does not begin until the employee retires. Rules governing provident fund are entirely different from the Rules governing pension. The following was observed in paragraph 32:
O.P Nos.3489 & 20427 of 1997 -: 54 :- "32. In Nakara (AIR 1983 SC 130) it was never held that both the pension retirees and the P. F. retirees formed a homogeneous class and that any further classification among them would be violative of Art. 14.
On the other hand the Court clearly observed that it was not dealing with the problem of a "fund". The Railway Contributory Provident Fund is by definition a fund. Besides, the Government's obligation towards an employee under C. P. F. scheme to give the matching contribution begins as soon as his account is opened and ends with his retirement when his rights qua the Government in respect of the Provident Fund is finally crystallized and thereafter no statutory obligation continues. Whether there still remained a moral obligation is a different matter. On the other hand under the Pension Scheme the Government's obligation does not begin until the employee retires when only it begins and it continues till the death of the employee. Thus, on the retirement of an, employee Government's legal obligation under the Provident Fund account ends while under the Pension Scheme it begins. The rules governing the Provident Fund and its contribution are entirely different from the rules governing pension. it would not, therefore, be reasonable to argue that what is applicable to the pension retirees must also equally be applicable to P. F. retirees. This being the legal position the rights of each individual P. F. retiree finally crystallised on his retirement whereafter no continuing obligation remained while, on the other hand, as regards pension retirees, the obligation continued till O.P Nos.3489 & 20427 of 1997 -: 55 :- their death. The continuing obligation of the State in respect of pension retirees is adversely affected by fall in rupee value and rising prices which, considering the corpus already received by the P. F. retirees they would not be so adversely affected ipso facto. It, cannot, therefore, be said that it was the ratio decidendi in Nakara that the State's obligation towards its P. F. retirees must be the same as that towards the pension retirees. An imaginary definition of obligation to include all the government retirees in a class was not decided and could not form the basis for any classification for the purpose of this case. Nakara cannot, therefore, be an authority for this case."
35. In another Constitution Bench judgment in Indian Ex-Services League v. Union of India ([1991] 2 SCC 104), the Apex Court had again occasion to consider the ratio of D.S.Nakara's case. Writ Petition was filed by ex-servicemen. The liberalised pension formula was made applicable by the Government of India, Ministry of Finance dated 05.05.1979 also to the members of the Armed Forces. Apart from other claims in some of the Writ Petitions before the Apex Court claim for payment of gratuity on the ground of liberalised pension was also raised by the pre-April 1978 retirees. Apex Court O.P Nos.3489 & 20427 of 1997 -: 56 :- held that the concept of gratuity is different from pension and claim of gratuity can be made only on the date of retirement on the basis of salary drawn on the date of retirement and the said amount being already paid, transaction was completed and closed. Following was observed in paragraph 21:
"21. One of the prayers made in these writ petitions is for grant of same Death cum Retirement Gratuity to the pre-1-4-1979 retirees as to the post-1-4- 1979 retirees. A similar claim was rejected by this Court in State Government Pensioners' Association v. State of Andhra Pradesh 1986 (3) SCC 501 (AIR 1986 SC 1907) on the ground that the claim for gratuity can be made only on the date of retirement on the basis of the salary drawn on the date of retirement and being already paid on that footing the transaction was completed and closed. It could then not be reopened as a result of the enhancement made at a later date for persons retiring subsequently. This concept of gratuity being different from pension has also been reiterated by the Constitution Bench in Krishena Kumar's case (AIR 1990 SC 1782). With respect, we are in full agreement with this view. This claim of the petitioners also, therefore, fails."
The Apex Court in the above case has quoted with approval earlier judgment of the Apex Court in State O.P Nos.3489 & 20427 of 1997 -: 57 :- Government Pensioners' Association v. State of A.P. (supra) which we have already noted above.
36. Another judgment which is relevant to be noticed is Union of India v. P.N. Menon ([1994] 4 SCC
68). In the above case, the respondent had retired prior to 30.09.1977. Office Memorandum dated 25.05.1997 was issued by the Government of India treating portion of the dearness allowance as pay for the purpose of retirement benefits in respect of Government servants who retired on or after 30.09.1977. Petitioners filed Writ Petition in the High Court claiming that the said benefit should also be extended to the all retired Government servants including those who retired prior to 30.09.1977. Petitioners placed reliance on the judgment in D.S. Nakara's case and contended that the classification between retirees prior to 30.09.1977 and subsequent to 30.09.1977 is arbitrary and violative of Article 14 of the Constitution of India. The Apex Court held in the said case that due to many constraints it is not always possible for the Government to extend the O.P Nos.3489 & 20427 of 1997 -: 58 :- same benefit to one and all irrespective of superannuation and a scheme implemented with cut of date cannot be held to be violative of Article 14, which is fully sustainable. In paragraph 8, the following has been stated:
"8. Whenever the Government or an authority, which can be held to be a State within the meaning of Art.12 of the Constitution frames a scheme for persons who have superannuated from service, due to many constraints, it is not always possible to extend the some benefits to one and all, irrespective of dates of superannuation. As such any revised scheme in respect of post retirement benefits, if implemented with a cut off date, which can be held to be reasonable and rational in the light of Art.14 of the constitution need not be held to be invalid. It shall not amount to 'picking out a date from the hat' as was said by this Court in the case of D. R Nim v. Union of India, AIR 1967 SC 1301, in connection with fixation of seniority. Whenever a revision takes place, a cut off date becomes imperative, because the benefit 'has to be allowed within the financial resources available with the Government."
37. Another judgment which is to be noticed is State of Punjab v. Amar Nath Goyal ([2005] 6 SCC 754). In the above case, respondents were employees of the O.P Nos.3489 & 20427 of 1997 -: 59 :- Government of Punjab who retired during 31.07.1993 to 31.03.1995. A Circular was issued by the Government on 13.12.1996 under which a Government employee who retired/died on or after 01.04.1995 is entitled to get gratuity on the basis of addition of a portion of the dearness allowance to the basic pay which benefit was refused to the respondents, hence they filed the Writ Petition in the High Court. The High Court partially allowed the Writ Petition and held that those employees who retired on or after 01.07.1993 shall be entitled to get higher amount, consequent to the merger of a portion of dearness allowance to the basic pay. Judgment of the High Court was challenged by the State of Punjab. Before the Apex Court, the argument was made on the ground of violation of Article 14 in so far as the employees who retired prior to 01.04.1995 and those who retired thereafter. Reliance was placed on the judgment of the Apex Court in D.S. Nakara's case. In paragraph 22, the Apex Court had noted the contention of the parties which is extracted below:
O.P Nos.3489 & 20427 of 1997 -: 60 :- "22. The thrust of the arguments by the learned counsel on behalf of the employees has been on the alleged violation of Art.14 of the Constitution. They contend that the decision of the Central Government/State Governments to make available the increased quantum of gratuity (with revised ceiling) only to employees, who retired or died on or after 1-4-1995, is discriminatory and arbitrary. They also contend that all retirees/dead persons form a homogeneous class and any discrimination or distinction between retirees/dead persons prior to 1-4-1995 and those who retired/died on or after 1-4-1995 had no rational basis, nor was intended to serve any purpose. Heavy reliance was placed on the judgment of this Court in D.S. Nakara v. Union of India1 ("D. S. Nakara"). We are afraid that the refrain of D. S. Nakara (1983 (1) SCC 305 : 1983 SCC (L&S) 145) has been played too often to retain its initial charm, which has been worn thin by subsequent dicta."
38. The Apex Court did not accede to the argument of the petitioner that decision of the Government to limit the benefit who retired after 01.04.1995 is either irrational or arbitrary. The Apex Court further held that the financial and economic implications are also relevant and germane for any policy decision. The following was observed in paragraphs 26, 32 and 37:
O.P Nos.3489 & 20427 of 1997 -: 61 :- "26. It is difficult to accede to the argument on behalf of the employees that a decision of the Central Government/State Governments to limit the benefits only to employees, who retire or die on or after 1-4-1995, after calculating the financial implications thereon, was either irrational or arbitrary. Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government, at the Centre or at the State level.
32. The importance of considering financial implications, while providing benefits for employees, has been noted by this Court in numerous judgments including the following two cases. In State of Rajasthan v.
Amrit Lal Gandhi (1997 (2) SCC 342 : 1997 SCC (L&S) 512 : AIR 1997 SC 782) this Court went so as far as to note that:
"Financial impact of making the Regulations retrospective can be the sole consideration while fixing a cutoff date. In our opinion, it cannot be said that this cutoff date was fixed arbitrarily or without any reason. The High Court was clearly in error in allowing the writ petitions and substituting the date of 1-1-1986 for 1-1-1990." (Ibid (emphasis supplied).
37. In the instant case before us, the cutoff date has been fixed as 1-4-1995 on a very valid ground, namely, that of financial constraints. Consequently, we reject the contention that fixing of the cutoff date was arbitrary, irrational or had no rational basis or that it offends Art.14."
O.P Nos.3489 & 20427 of 1997 -: 62 :-
39. Thus in the above case the challenge to the cut off date for extending the benefit of merger of dearness allowance into pay which consequently increases the computation of gratuity with a specified date was upheld and was not held to be violative of Articles 14 and 16.
40. Another judgment which needs to be noted is State of A.P. v. A.P. Pensioners' Association ([2005] 13 SCC 161). The State of Andhra Pradesh constituted a Pay Revision Commission which recommended revision of pay scale notionally from 01.07.1998 with financial benefits from 01.04.1999. Government Order dated 11.08.1999 was issued which provided that persons who retired between 01.07.1998 and 31.03.1999 shall also be eligible for the revised pay scales, 1999. The notional pay fixed in the revised pay scales shall in such cases count towards pensionary benefits. But no Government employee shall be entitled to any monetary benefit for any period prior to 01.04.1999. Original Applications were filed before the Administrative Tribunal by the retired employees who had retired between the period 01.07.1998 and 01.04.1999 O.P Nos.3489 & 20427 of 1997 -: 63 :- praying for payment of pensionary benefits including commutation, pension, gratuity and encashment of leave. The Tribunal held that the applicants were not entitled to gratuity and encashment of earned leave based on their notional pay fixed in the revised scale of pay. But they were held to be eligible for commutation of pension. Both the State as well as the employees filed Writ Petitions before the High Court. The High Court dismissed the Writ Petition filed by the State while the Writ Petition filed by the employees were allowed. The State filed a Special Leave Petition before the Apex Court. Similar submission which is sought to be raised in the present case was raised before the Apex Court challenging the cut off date, 01.04.1999 for giving pensionary benefits. It is useful to quote paragraph 19 of the judgment which contained the relevant submissions:
"19. Mr. Uday Umesh Lalit, learned senior counsel appearing on behalf of the Respondents, on the other hand, supported the judgment of the High Court contending that it is not a case where 1.4.1999 was fixed O.P Nos.3489 & 20427 of 1997 -: 64 :- as a cut off date for the purpose of grant of terminal benefits in terms of the rules. The rules, it was urged, read as a whole would clearly point out that the same had come into force with effect from 1.7.1998 wherefor a legal fiction has been created and in that view of the matter, although the monetary benefit was to be paid with effect from 1.4.1999, the entitlement to the scale of pay for all purposes including that of computation of the amount of gratuity as also commutation of pension, etc. cannot be denied. Other GOMs Nos. 156,157, 158 and 206 issued after GO No. 114, having not been issued under the proviso to Art.309 of the Constitution of India, whereas GO NO. 114 having been so issued, the same could not whittle down the effect of a statutory rule. In any event, the said GOMs have been declared ultra vires by the Tribunal which finding has not been set aside by the High Court."
41. The Apex Court held that those employees who retired between the period 01.07.1998 and 01.04.1999 would have received the actual benefit calculated in terms of the said Rule and the submission of the learned counsel for the respondents that they became entitled to get enhanced pay and gratuity from 01.07.1998 was rejected. The Apex Court made the following observations in paragraph 28:
O.P Nos.3489 & 20427 of 1997 -: 65 :- "28. Computation of retirement gratuity payable to a Government servant is, therefore, required to be done on the basis of the formula laid down therein. A bare perusal of the aforementioned rule clearly shows that for the purpose of computation either 1/4th of the emolument for each completed six monthly period of service, or 3/16th of emoluments for each completed six monthly period of service, is to be taken into consideration. Such emoluments necessarily were payable either immediately before the date of retirement or the date of death. On 1.4.1999, in view of the clear expressions contained in the aforementioned GO No. 114, those employees who retired between the period 1.7.1998 and 1.4.1999 would have received the actual benefit calculated in terms of the said rule. The submission of Mr. Lalit to the effect that they became entitled to enhanced pay and, therefore, to enhanced gratuity from 1.7.1998 is not wholly correct. They became entitled thereto but only notionally for the purpose of calculation of such recurring liability of the State which became payable with effect from 1.4.1999. The High Court has heavily relied upon the purported legal fiction created in the said rule to the effect that the same would come into force with effect from 1.7.1998. The legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom."
42. It was stated by the Apex Court that the rule O.P Nos.3489 & 20427 of 1997 -: 66 :- not only created a legal fiction but also provided the operation of limitation thereof. It was held that the Rule itself provided a limitation for operation, the consequences flowing from the legal fiction have to be understood in the light of the limitations prescribed. The following was laid down in paragraph 30:
"30. The case at hand indeed poses a different problem. Although like Gurupad Khandappa Magdum (supra) a notional revision of pay was to be considered as if the same took effect from 1.7.1998, but the rule went further and stated that actual monetary benefit thereof shall be given with effect from 1.4.1999. The rule, therefore, not only creates a legal fiction but also provides the limitations in operation thereof. If the effect of the legal fiction is extended in the manner suggested by Mr. Lalit, clause (4) of the rule will become otiose. In other words, all the consequences ordinarily flowing from a rule would be given effect to if the rule otherwise does not limit the operation thereof. If the rule itself provides a limitation on its operation, the consequences flowing from the legal fiction have to be understood in the light of the limitations prescribed. Thus, it is not possible to construe the legal fiction as simply as suggested by Mr. Lalit."
43. Ultimately in paragraph 41, the Apex Court held that the intention of the State was not to grant any O.P Nos.3489 & 20427 of 1997 -: 67 :- benefit towards payment of gratuity even in relation to those employees who had retired in between 01.07.1998 and 31.03.1999. The following was held in paragraph 41:
"41. We, therefore, are of the opinion that the intention of the State was not to grant any benefit towards payment of gratuity even in relation to those employees who had retired in between 1.7.1998 and 31.3.1999."
44. The above case fully supports the submission raised by the learned counsel for the Banks. In the above case also the pay scale was revised with effect from 01.07.1998 but the rule contemplated that no benefit towards gratuity between the period 1st April, 1998 and 31.03.1999 shall be payable. The argument that revision of pay scale from 01.07.1998 creates a legal fiction and it has to be deemed that those employees who received higher revised pay scale and that should also count towards receiving monetary benefits by the retired employees during the relevant period was rejected on the ground that the rules itself contained a limitation which has to be given effect to. O.P Nos.3489 & 20427 of 1997 -: 68 :-
45. Another judgment which closely resembles with the facts of the present case is the judgment in State of Bihar v. Bihar Pensioners Samaj ([2006] 5 SCC 65). The State of Bihar issued a Notification dated 19.04.1990 regulating pension, family pension and death- cum-retirement gratuity. The effective date of notification was fixed as 01.01.1986. However, the Notification declared that financial benefits of revision of pay should be only with effect from March, 1989 and no arrears will be paid from 01.03.1989. Apart from the pension, the notification also revised death- cum-retirement gratuity but again no revision of death- cum-retirement gratuity was made in respect of Government servants who retired/died in harness on or after 01.01.1986 and upto 28.02.1989. The Association of the employees filed a Writ Petition challenging the Notification. The High Court quashed the Notification and directed the Government to take a decision in accordance with law. Judgment of the High Court was challenged in the Apex Court and the Special Leave O.P Nos.3489 & 20427 of 1997 -: 69 :- Petition was summarily rejected. On 15.12.2000 the Governor of Bihar issued an Ordinance, namely, the Bihar State Government Employees Revision of Pension, Family Pension and Death-cum-Retirement Gratuity (Validation and Enforcement) Ordinance, 2000. The said Ordinance was subsequently replaced by the Bihar Act 3 of 2001. The said Act validated the revision of pension and gratuity in accordance with the Notification as mentioned above. Writ Petition was filed by the Bihar Pensioners Samaj which was allowed and the Validation Act was struck down. Appeal was filed by the State of Bihar. Provisions of Section 4 of the Validation Act has been extracted in paragraph 15 of the judgment, which is to the following effect:
"15. In our view, the contention is unsound. In any event, we need not pursue this contention any further, as the Division Bench of the High Court had itself taken the view that it was perfectly open to the State Government to fix 1-3-1989 as the effective date of the notifications and, in any event, the two earlier judgments of the Division Benches had merely directed the State Government to consider the issue in the light of the O.P Nos.3489 & 20427 of 1997 -: 70 :- judgments. What is more relevant to us today is that, after considering the effect of the two judgments, the State Legislature passed "the Validation Act" in which the validating S.4 and 5 read as under:
"4. Validation of revision of pension/gratuity. -- Notwithstanding any judgment, decree or order of any court, tribunal or authority the Government Resolutions Nos. 1853(F) and 1854(F) both dated 19-4-1990 would be deemed to have been enforced from 1-3-1989 and the benefits of pension/family pension and gratuity given to the government employees under the said two resolutions would be deemed to have been due to the employees w.e.f. 1-3-1989 only and the said date would be deemed always to have been the cut off date for the said two resolutions.
5. Overriding effect of the Act. --
Notwithstanding anything to the contrary contained in any judgment, decree or order passed by any court, tribunal or authority and in any other law for the time being in force the provisions of this Act shall prevail and have effect."
46. The Apex Court set aside the judgment of the High Court and held that fixation of the cut off date for payment of the revised benefits under the two notifications concerned was not arbitrary and fixing of a cut-off date for granting of benefits is well within the powers of the Government. It was further held that financial constraints is also a valid ground for O.P Nos.3489 & 20427 of 1997 -: 71 :- introducing a cut-off date. The following was observed in paragraphs 17 and 18:
"17. We think that the contention is well founded. The only ground on which Art.14 has been put forward by the learned counsel for the respondent is that the fixation of the cut off date for payment of the revised benefits under the two notifications concerned was arbitrary and it resulted in denying arrears of payments to certain sections of the employees. This argument is no longer res Integra. It has been held in a catena of judgments that fixing of a cut off date for granting of benefits is well within the powers of the Government as long as the reasons therefor are not arbitrary and are based on some rational consideration.
18. A supplementary affidavit filed on behalf of the State Government by Mukesh Nandan Prasad dated 9- 9-2002 brings out in para 8 that the total amount of financial burden, which would arise as a result of making effective the payments from 1-1-1986 would be about 2038.34 crores. In other words, the State Government declined to pay the arrears from 1-1-1986 on the ground of financial consideration, which, undoubtedly, is a very material consideration for any administration. In State of Punjab v. Amar Nath Goyal (2005 (6) SCC 754) this Court had occasion to consider the very same issue. After referring to a number of other authorities, it was held that financial constraints could be a valid ground for introducing a cut off date while introducing a pension O.P Nos.3489 & 20427 of 1997 -: 72 :- scheme on revised basis. Thus, refusal to make payments of arrears from 1.1.1986 to 28-2-1989 on the ground of financial burden cannot be held to be an arbitrary ground or irrational consideration. Hence, the argument based on Art.14 of the Constitution must fail."
47. Now we proceed to consider the other judgments relied on by the learned counsel for the petitioners. We have already noticed in detail the Division Bench judgment in Syndicate Bank v. Celine Thomas (2005 KHC 1841).
48. Next judgment relied on by the learned counsel for the petitioners is Chairman, Railway Board v. C.R.Rangadhamaiah [1997] 6 SCC 623), a Constitution Bench judgment. In the above case, challenge was made to the Notification issued by the Railway Administration making amendments in Rule 2544 of Indian Railway Establishment Code. The provision of Rule 2544 provided that for the purpose of calculation of average emoluments actual amount of running allowance drawn by a railway servant during the month limited to maximum 75% has to be taken into consideration. The said rule O.P Nos.3489 & 20427 of 1997 -: 73 :- was amended. Letter dated 17.07.1981 was issued by the Railway Board communicating the decision that for the purpose of retirement benefits 55% of the basic pay shall be taken into account and the said provision was made applicable to 1st April, 1979. The said letter has been noticed in paragraph 6 of the judgment which is to the following effect:
"6. By letter of the Railway Board dated July 17, 1981 the decisions taken on the recommendations of its Committee on Running Allowances were communicated. In the said letter it was stated :
"3.23. Reckoning of Running Allowance as Pay. (i) For the specified purposes for which running allowance is reckoned as Pay at present, 30% of the basic pay of the running staff concerned will be reckoned except as below :
(a) for the purpose of retirement benefits, 55% of basic pay will be taken into account. This provision will be made applicable retrospectively from 1-4-1979 so that those running staff who have already retired with effect from that date or afterwards will also have their retirement benefits recalculated and resettled.
(ii) xxxx xxxx xxxx"
49. Earlier letter dated 22.03.1976 was issued by the Railway Board where the decision regarding O.P Nos.3489 & 20427 of 1997 -: 74 :- modification of the existing rules pertaining to treatment of running allowance was also indicated. Writ Petitions were filed before the Delhi High Court which were subsequently transferred to Central Administrative Tribunal which were allowed and order of the Railway Board dated 23.06.1976 was quashed. Notification dated 05.12.1988 was issued by the Railway Board amending Rule 2544 by which certain amendments were made which amendment reduced the running allowance to the maximum of 45% and was made effective from 01.04.1979. In paragraph 8 of the judgment amendments have been extracted which are to the following effect:
"8. No steps were taken by the Railway Administration to challenge the correctness of the said judgment of the Tribunal and it has become final. After the said decision of the Tribunal, the impugned notifications were issued on December 5, 1988. Notification No. G.S.R. 1143 (E) is as follows :
"G.S.R. 1143 (E) :- In exercise of the powers conferred by the proviso to Art.309 of the Constitution, the President is pleased to amend R.2544 of Indian Railway Establishment Code, Volume II (Fifth Reprint) as in the Annexure.
O.P Nos.3489 & 20427 of 1997 -: 75 :- This amendment will be effective from 1-1-1973. ANNEXURE R.2544 Sub-rule g(i) and g(ii) may be substituted by the following :
g(i) "For the purpose of calculation of average emoluments :- actual amount of running allowance drawn by the Railway servant during the month limited to a maximum of 45% of pay, in the revised scales of pay".
g(ii) "For the purpose of gratuity and / or death cum retirement gratuity :- the monthly average of running allowances drawn during the 365 days of running duty immediately preceding the date of quitting service limited to 45% of average pay drawn during the same period, in the revised scale of pay."
Notification No. G.S.R. 1144 (E) is as under :
"G.S.R. 1144 (E) :- In exercise of the powers conferred by the proviso to Art.309 of the Constitution, the President is pleased to amend R.2544 of the Indian Railway Establishment Code, Volume II (Fifth reprint) as in the Annexure.
The amendment will be effective from 1-4-1979. ANNEXURE R.2544 Sub-rule g(i) and g(ii) may be substituted by the following :
g(i) "For the purpose of calculation of average emoluments :- 55% of basic average pay, in the revised scales of pay, drawn during the period;"
O.P Nos.3489 & 20427 of 1997 -: 76 :- g(ii) "For the purpose of gratuity and / or death cum retirement gratuity :- 55% of basic average pay, in the revised scales of pay, drawn during the period."
50. Question which was up for consideration before the Apex Court has been extracted in paragraph 14 which is to the following effect:
"14. The question which, therefore, needs to be examined is whether the amendments made in R.2544 by the impugned notifications, to the extent they have been given effect from January 1, 1973 and April 1, 1979, can be treated as a valid exercise of the power to make rules under the Proviso to Art.309 of the Constitution."
51. The Apex Court after examining the amendment held that the rule which seeks to reverse from an anterior date a benefit which has been granted or availed as being violative of Articles 14 and 16 of the Constitution of India to the extent it operates retrospectively. The following was laid down in paragraphs 20, 25 and 28:
"20. It can, therefore, be said that a rule which operates in futuro so as to govern future rights of those already in service cannot be assailed on the ground of retrospectivity as being violative of Art.14 and 16 of the O.P Nos.3489 & 20427 of 1997 -: 77 :- Constitution, but a rule which seeks to reverse from an anterior date a benefit which has been granted or availed, e.g., promotion or pay scale, can be assailed as being violative of Art.14 and 16 of the Constitution to the extent it operates retrospectively.
25. In these cases we are concerned with the pension payable to the employees after their retirement. The respondents were no longer in service on the date of issuance of the impugned notifications. The amendments in the rules are not restricted in their application in futuro. The amendments apply to employees who had already retired and were no longer in service on the date the impugned notifications were issued.
28. It has also been laid down by this Court that the reckonable emoluments which are the basis for computation of pension are to be taken on the basis of emoluments payable at the time of retirement. (See :
Indian Ex-services League v. Union of India, 1991 (1) SCR 158 at p. 173 : 1991 AIR SCW 327 at p. 339)."
52. Ultimately, the Apex Court stuck down the said amendments by stating the following in paragraphs 32 and 33:
"32. It is no doubt true that on December 5, 1988 when the impugned notifications were issued, the rights guaranteed under Art.31(1) and 19(1)(f) were not available since the said provisions in the Constitution stood omitted with effect from June 20, 1979 by virtue of the Constitution (Forty fourth Amendment) Act, 1978. But the notifications G.S.R. 1143 (E) and G.S.R. 1144 (E) O.P Nos.3489 & 20427 of 1997 -: 78 :- have been made operative with effect from January 1, 1973 and April 1, 1979 respectively on which dates the rights guaranteed under Art.31(1) and 19(1)(f) were available. Both the notifications insofar as they have been given retrospective operation are, therefore, violative of the rights then guaranteed under Art.19(1) and 31(1) of the Constitution.
33. Apart from being violative of the rights then available under Art.31(1) and 19(1)(f), the impugned amendments, insofar as they have been given retrospective operation, are also violative of the rights guaranteed under Art.14 and 16 of the Constitution on the ground that they are unreasonable and arbitrary since the said amendments in R.2544 have the effect of reducing the amount of pension that had become payable to employees who had already retired from service on the date of issuance of the impugned notifications, as per the provisions contained in R.2544 that were in force at the time of their retirement."
53. The above judgment of the Apex Court has no application to the present case. Present is not a case of reducing any retiral benefit which was admissible to the Writ Petitioners. Gratuity which was crystalised at the time of retirement of petitioners was computed and paid. Present is a case where petitioners were asking enhanced payment of gratuity on the ground of pay O.P Nos.3489 & 20427 of 1997 -: 79 :- revision. The above case has no application which is clearly distinguishable.
54. Next judgment which has been relied on by the learned counsel for the petitioners is LIC of India v. Retired LIC Officers Association ([2008] 3 SCC 321). Question up for consideration was whether the Chairman of the Life Insurance Corporation can issue instructions in terms of Regulation 51 of the Life Insurance Corporation of India (Staff) Regulations, 1960 with regard to gratuity. The LIC effected revision of scales of pay for the period from 01.08.1992 to 01.07.1994. Different cut off dates were fixed for grant of different nature of allowances as also the pay. The Chairman of the LIC in purported exercise of his power under Regulation 51 issued an order fixing 01.04.1993 as the cut off date for revision of pay and 01.08.1994 as the cut off date for the purpose of payment of gratuity on the basis of revised pay. However, so far as those employees who had retired prior to 01.08.1994 are concerned, they were directed to be entitled to reduced O.P Nos.3489 & 20427 of 1997 -: 80 :- gratuity based on unrevised scale of pay with effect from 01.04.1993 and arrears of pay were directed to be paid only with effect from 01.08.1994. The High Court upheld the validity of the instructions issued by the Chairman. Claim of the respondent were allowed in part by the learned Single Judge. The judgment of the learned Single Judge was extracted in paragraph 6 which is to the following effect:
"6. The claim of Respondent No. 1 was allowed in part by a learned Single Judge of the High Court by his order dated 8th July, 2003 holding:
"A reading of Ext. P3 (instructions issued by the Chairman for supplementary of Revisionist in respect of class I officers and claimed IV will definitely go to show that it cannot operate as far as the claims for gratuity is concerned. It is admitted that at least certain officers, represented by the petitioner Association were deemed as having revised salary from April, 1993 onwards. In that view, at the time of retirement, they were deemed as getting a salary which alone could have been taken notice of for computing gratuity, if Regulation No. 77 has any application. It is definite that the restriction in Ext. P3 and benevolence in Regulation No. 77 could not have coexisted because the Corporation is offering gratuity at the rate less than the amount an employee had notionally drawn at the time of their respective retirement. It is also pertinent to note that when powers were O.P Nos.3489 & 20427 of 1997 -: 81 :- conferred on the Chairman under Regulation No. 51(2), specific reference was there about the incidents of DA and other allowances. There is no reference to any alteration permissible in respect of gratuity. It leads to the position that the regulation did not permit the Chairman to disturb criterian for gratuity payment by exercise of powers under Regulation No. 51(2)."
It was further held:
"There was no power on the part of the Bank Management in that case to disturb the settlement, and the gratuity was to be paid on the basis of last drawn pay. Likewise, in the present case, it would not have been permissible for the Chairman to unsettle the benefits that had been spoken to by Regulation No. 77 while issuing Ext. P3 order."
55. Decision of the learned Single Judge was affirmed by the Division Bench. The LIC filed an appeal challenging the said judgment. In paragraph 10 of the judgment Regulation 51 was extracted which is to the following effect:
"10. Appellant Corporation in exercise of its powers conferred upon it by clauses (b) and (bb) of sub- section (2) of S.49 of the Life Insurance Corporation Act, 1956, with the previous approval of the Central Government, made Regulations known as "Life Insurance Corporation of India (Staff) Regulations, 1960 (in short 'the Regulations'). Chapter IV of the said Regulations deal with "Pay and Allowances". Regulation 51 thereof reads as O.P Nos.3489 & 20427 of 1997 -: 82 :- under:
51. "Scales of Pay:(1) The scales of pay, dearness allowance and other allowances (wherever payable) applicable to the employees of the Corporation in India shall be as prescribed in Schedule II hereto.
(1A) The basic pay and other allowance admissible from time to time to an employee belonging to Class II shall be regulated in accordance with the provisions contained in Schedule III.
(2) Whereas the scales of pay, dearness allowance or other allowances applicable to the employees of the Corporation or any class of them are revised in pursuance of any award, agreement or settlement, or otherwise, the method of fixation of pay in the new scales, the eligibility for the benefit of revision, the date from which the revision shall apply, and other matters connected therewith or incidental thereto shall be regulated by instructions issued by the Chairman in this behalf."
(Emphasis supplied)"
56. Question before the Apex Court was whether the power conferred on the Chairman can be exercised with regard to the payment of gratuity which is otherwise covered by the Regulation 77. In paragraphs 12, 18 and 19, the following has been stated:
"12. Regulation 51 indisputably confers power upon the Chairman to fix a date from which the revision in pay shall apply. It applies to pay, dearness allowance and other allowances applicable to the employees of the Corporation. The question, as would appear from the O.P Nos.3489 & 20427 of 1997 -: 83 :- discussions made hereinafter, is as to whether the expression "the date from which the revisions shall apply, and other matters connected therewith or incidental thereto", would also include the matter relating to payment of gratuity which is otherwise covered by Regulation 77 thereof.
18. It may be true, as was contended by Mr. Patwalia, that the cut off dates were fixed upon holding negotiations with the Unions. However, the jurisdiction of the Chairman to fix a cut off date is in question in terms of sub regulation (2) of Regulation 51. Instructions have been issued under the said provision alone. Instructions not only cover the scales of pay from a particular date but different dates have been fixed for different types of allowances. We have noticed hereinbefore that whereas dearness allowance and some other allowances, as for instance 'house rent allowance' and 'city compensatory allowance' are envisaged by IInd Schedule appended to the said Regulations, the other allowances, and for instance, the 'Provident Fund' and 'Gratuity' have nothing to do therewith. Provident Fund and Gratuity are ordinarily governed by the Acts enacted by the Parliament, subject to the conditions contained therein.
19. Regulation 77 of the Regulations, specifies the employees who would be entitled to payment of gratuity. Clause (2) of Regulation 77 provides for the manner in which the amount of gratuity shall be payable. Neither the payment of Provident Fund nor the payment of Gratuity is thus covered by the provisions contained in O.P Nos.3489 & 20427 of 1997 -: 84 :- Chapter IV of the Regulations."
57. In paragraph 26, the following has been stated:
"26. The Chairman of the Corporation has himself given a retrospective effect to revision in scales of pay. Such a retrospective effect has also been given so as to benefit a class of employees. The employees, irrespective of the fact whether they had superannuated or not, were given the benefit of arrears of pay from 1st August, 1993. By reason of grant of such benefit both to serving employees as also the superannuated employees, both the class of employees became entitled thereto as of right. If by reason thereof, even a retired employee, as on the date of retirement, became entitled to the benefit of the revised scale of pay, the same for all intent and purpose must be taken to be the permanent basic pay, apart from other allowances, if any, which are required to be taken into consideration for the purpose of computation of the amount of gratuity.
58. The observations made in paragraph 26 does appear to hold that when the benefit of arrears of pay was given from 01.08.1993, those employees who retired became entitled to the benefit of revised scales of pay. However, there are two reasons due to which the above case has to be held as distinguishable from the facts of the present case. The reasons are: (i) in the above O.P Nos.3489 & 20427 of 1997 -: 85 :- case it was held that Chairman of the LIC could not have exercised any power under Regulation 51(2) with regard to gratuity which was payable according to computation under Regulation 77 and it is clear from the facts of the case that revision of scales of pay was made during the period from 01.04.1993 and the Chairman has issued direction fixing different cut off dates for different nature of allowances. The Apex Court had noticed the question which was to be answered in paragraph 1 which is to the following effect:
"1. Jurisdiction of the Chairman of the Life Insurance Corporation of India (Corporation) to issue instructions in terms of Regulation 51 of the Life Insurance Corporation of India Class I Officers (Revision of Terms and Conditions of Service) Instructions, 1996 is in question in this appeal which arises out of a judgment and order dated 29th September, 1995 passed by a Division Bench of the Kerala High Court in Writ Appeal No.32 of 2004."
59. Paragraphs 18 and 19 as extracted above made it clear that the Chairman has no power to issue any order under Regulation 51 regulating the gratuity. It O.P Nos.3489 & 20427 of 1997 -: 86 :- was held by the Apex Court that the power of sub delegatee is more restricted and a delegatee cannot act in violation of the statute. Further a sub-delegatee cannot exercise any power which is not meant to be conferred upon him by reason of statutory provisions. In paragraph 28, the following was stated:
"28. Contention of Mr. Patwalia that the Chairman of the Corporation having power even to fix the cut off dates for different purposes, the jurisdiction exercised by him to do so for payment of gratuity, which has a direct nexus with the revised pay of scale cannot be accepted. Once he fixes a cut off date for the purpose of giving effect to the agreement vis a vis the payment of arrears in terms thereof, he cannot exercise further jurisdiction in respect of a matter which is not controlled by Chapter IV but is controlled by other provisions of statutes and Parliament Acts governing the field. A delegatee must exercise its powers within the four corners of the statute. The power of a sub delegatee is more restricted. A delegatee cannot act in violation of a statute. A sub delegatee cannot exercise any power which is not meant to be conferred upon him by reason of statutory provisions. It must conform not only to the provisions of the Regulations and the Act but O.P Nos.3489 & 20427 of 1997 -: 87 :- also other Parliamentary Acts. (See - Kurmanchal Inst. of Degree and Diploma and Others v.
Chancellor, M.J.P. Rohilkhand Univ. and Others, 2007 KHC 3640 : 2007 (6) SCC 35 : AIR 2007 SC 2253, Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Others, 2006 KHC 536 : 2006 (4) SCC 327 : 2006 (2) KLT 270 : ILR 2006 (3) Ker. 65 : JT 2006 (5) SC 41 : 2006 (3) LLN 124 :
2006 (2) CLR 15 : 2006 SCC (L&S) 796, Bombay Dyeing and Mfg. Co. Ltd. v. Bombay Environmental Action Group and Others, 2006 KHC 406 : 2006 (3) SCC 434 : AIR 2006 SC 1489 : JT 2006 (3) SC 235, State of Kerala and Others v. Unni and Another, 2007 (2) SCC 365 : 2007 (1) KHC 73 : 2007 (1) KLT 151 : AIR 2007 SC 819 : 2007 (1) KLJ 97, State of Orissa and Another v. M/s. Chakobhai Ghelabhai and Company, 1961 (1) SCR 719 : AIR 1961 SC 284 : 1960 (11) STC 716 and M/s. Shroff and Co. v. Municipal Corporation of Greater Bombay and Another, 1989 Supp (1) SCC 347 : 1989 (72) STC 150 : 1989 (21) ECC 24).
60. Thus the above case principally turns on the finding that the Chairman could not have issued any executive instruction in exercise of the powers under Regulation 51 for fixing the cut off date for payment of gratuity. Hence benefit of payment of gratuity from the O.P Nos.3489 & 20427 of 1997 -: 88 :- date of revision of pay scale was extended. In the present case there is no such issue that the pay revision and various dates for extending benefits were beyond the power of settlement which was entered into between IBA and Officers of the Public Sector Banks. In the present case revision of pay scale as well as fixing cut off date for extending benefit of gratuity has been done by the orders issued by the banks and there is no challenge to the settlement. The question as to whether the joint note dated 23.06.1995 violates any statutory provision shall also be considered hereinafter separately. (ii) Chairman was held to be sub-delegatee in the subordinate legislation, i.e. LIC Regulation, 1960 and that he could not exercise the power beyond his delegation.
61. In view of the aforesaid facts, the above judgment is distinguishable.
62. From the above discussion, it is clear that fixation of cut off date for extending benefit of gratuity from a different date as compared to revision O.P Nos.3489 & 20427 of 1997 -: 89 :- of pay scale can neither be said to be arbitrary, discriminatory nor violative of Articles 14 and 16 of the Constitution. Fixation of such cut off date have already been upheld by the Apex Court in State Govt. Pensioners' Association v. State of A.P., State of A.p. V. A.P. Pensioners' Association and State of Bihar v. Bhiar Pensioners Samaj (supra). Thus, we do not find any illegality on the ground of fixation of cut off date as 01.11.1994 for extending the benefit of gratuity in the present case. Thus, the view of the Division Bench in Syndicate Bank v. Celine Thomas (supra) holding cut off as arbitrary cannot be approved.
63. Petitioners in O.P. No.20427 of 1997 has also challenged the second proviso to Regulation 46(2) which proviso was added in Regulation 46(2) after joint note dated 23.06.1995 and was in accordance with the said settlement. The proviso held that those Officers who ceased to be in service during the period 01.07.1993 to 31.10.1994 shall receive gratuity with regard to scale of pay as applicable at the time of their retirement and O.P Nos.3489 & 20427 of 1997 -: 90 :- shall not get the benefit of revised pay scale. We having already found the classification valid and the respondents having power to fix a cut off date for extending benefit of gratuity, challenge to the second proviso to Regulation 46(2) of the Canara Bank Regulations, 1979 also fails.
64. One more submission which is raised by the learned counsel for the petitioners is that Regulation 1979 of the State Bank of Travancore has not been amended in accordance with the joint note dated 23.06.1995. The said submission has been refuted by the learned counsel for the Bank and he submitted that amendment were also carried out in the Regulation in pursuance of the joint note. But the amendment having not been produced before us, we proceed to examine the said submission on the premise that amendments have not been carried out. Further, whether the joint note dated 23.06.1995 violates any statutory provisions of 1979 Regulation is another issue to be answered.
65. Regulation 46(2) of the 1979 Regulation O.P Nos.3489 & 20427 of 1997 -: 91 :- provides for computation of gratuity. There is no dispute in the present case that according to Regulation 46 as existing at the time of retirement, the gratuity was paid to them. The Constitution Bench of the Apex Court in Indian Ex-Services League v. Union of India (supra) had laid down that claim for gratuity can be made only on the date of retirement on basis of the salary drawn on the date of retirement and after receiving the payment of gratuity on that footing the transaction was treated as complete and closed (paragraph 21 of the judgment). Joint note and settlement dated 23.06.1995 revised the pay scale and gave benefits of gratuity to those employees who retired on or after 01.11.1994. The benefit of pay revision which have been extended to the petitioners by a subsequent settlement between the Management and Officers Organisations which gives some benefits to them cannot be said to violate any provisions of statutory regulation. Similarly, giving any particular benefit with effect from 01.11.194, i.e., financial benefit of O.P Nos.3489 & 20427 of 1997 -: 92 :- gratuity cannot be said to violate any provisions of statutory regulation when the right of petitioners to receive gratuity was crystalised on the date of retirement and they had already received gratuity. We thus are of the view that giving various benefits with different dates to the petitioners under the settlement dated 23.06.1995 cannot be said to be violative of any provisions of the 1979 Regulation. Thus, the above argument has to be rejected.
66. There is one more reason due to which the challenge by the petitioners cannot be accepted. From the facts brought on record it is clear that benefits of pay revision and extension of other benefits were extended on the basis of the joint note and settlement dated 23.06.1995 after series of discussion with IBAs and Officers of the Public Sector Banks and all having agreed for the said benefits and the manner of extension of such benefits, recommendation was made which was accepted by the Management and orders were issued thereunder. Although the joint note and settlement dated O.P Nos.3489 & 20427 of 1997 -: 93 :- 23.06.1995 cannot be said to be a "settlement" within the meaning of the Industrial Disputes Act, 1947, the principles laid down with regard to the ground for challenge of a "settlement" can also be applied to the settlement entered between the IBA and Officers of the Public Sector Banks. The Apex Court in Herbertsons Limited v. The Workmen of Herbertsons Limited and Others ([1976] 4 SCC 736) had occasion to consider the nature of settlement entered into between the workmen and Management under the Industrial Disputes Act, 1947. The Apex Court held that settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of dearness allowance so far as the award is concerned, it cannot be said that the settlement as a whole is unfair and unjust. The following observations were made in paragraph 21:
"21. ...... When, therefore, a negotiations take place which have to be encouraged, particularly between labour and employer in the interest of general peace and well being there is O.P Nos.3489 & 20427 of 1997 -: 94 :- always give and take. Having regard to the nature of dispute, which was raised as back as 1968, the very fact of the existence of a litigation with regard to the same matter which was bound to take some time must have influenced both the parties to come to some settlement. The settlement has to be taken as a package deal and when labour has gained in the matter of wages and if there is some reduction in the matter of dearness allowance so far as the award is concerned, it cannot be said that the settlement as a whole is unfair and unjust."
67. Further the Apex Court held that the settlement cannot be judged on the touchstone of the principles which are laid down by the Supreme Court for adjudication. The following was stated in paragraph 24:
"24....The settlement, therefore, cannot be judged on the touchstone of the principles which are laid down by this Court for adjudication.
68. Lastly, the Apex Court held that the settlement cannot be in bits and pieces and the settlement has to be accepted or rejected as a whole. The following was observed in paragraph 27:
"27. It is not possible to scan the settlement in bits and pieces and hold some parts good and O.P Nos.3489 & 20427 of 1997 -: 95 :- acceptable and others bad. Unless it can be demonstrated that the objectionable portion is such that it completely outweighs all the other advantages gained the Court will be slow to hold a settlement as unfair and unjust. The settlement has to be accepted or rejected as a whole and we are unable to reject it as a whole as unfair or unjust....."
69. The Apex Court in Reserve Bank of India v. C.N.Sahasranaman ([1986 (supp)] SCC 143) has held that settlement of disputes by direct negotiations or settlement through collective bargaining is always to be preferred. The following was laid down in paragraph 60:
"60. It is well to bear in mind the fact that settlement of disputes by direct negotiations or settlement through collective bargaining is always to be preferred for it is best suited for industrial peace which is the aim of legislation for settlement of labour disputes. See the observations in New Standard Engineering Co. Ltd. v. N. L. Abhyankar, AIR 1978 SC 982 at P. 984 : 1978 (2) SCR 798.
This view has again been reiterated by this Court in Tata Engineering and Locomotive v. Their Workmen, AIR 1981 SC 2163 : 1982 (1) SCR 929. The order of this Court dated 2nd May, 1984 and the referendum and the result thereof have been set out hereinbefore."
O.P Nos.3489 & 20427 of 1997 -: 96 :-
70. The Division Bench judgment of this Court in State Bank of Travancore and Others v. P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011) had also taken the view that invocation of Article 14 in the context of negotiated settlement was uncalled for and on the aforesaid ground it did not agree with the earlier Division Bench judgment in Syndicate Bank v. Celine Thomas (2005 KHC 1841).
71. In view of the foregoing discussion, we are of the opinion that extending the benefit of gratuity only with effect from 01.11.1994 to the Officers of the Banks can neither be said to be arbitrary, discriminatory nor violative of Articles 14 and 16 of the Constitution of India.
72. We thus hold that the Division Bench judgment in Syndicate Bank v. Celine Thomas (2005 KHC 1841) does not lay down the correct law and the judgment of the Division Bench in State Bank of Travancore and Others v. O.P Nos.3489 & 20427 of 1997 -: 97 :- P.Gopinathan Nair and Others (W.A.No.2185 of 2009 decided on 10th June, 2011) lays down the correct law and is approved.
73. The Reference is answered accordingly. In the result, both the Original Petitions are dismissed.
ASHOK BHUSHAN, CHIEF JUSTICE.
A.M.SHAFFIQUE, JUDGE.
A.K. JAYASANKARAN NAMBIAR, JUDGE.
vsv