IMPORTANT POINT
Petitioners (who have retired prior to December 1994) are entitled to pensionary benefits on the basis of notification dated 10.3.1995 by deleting the words "retiring from December 1994 onwards". Which are arbitrary.

Headnote:Constitution of India-Articles 32 and 14-Cut off date in revised pension scheme-Challenged as arbitrary -Earlier pension calculated at 40 of the average annual basic salary for last five years of service immediately preceding the date of retirement-Notification dated 10.3.95-In it pension is required to be paid on the basis of 40 of the average of the last 10 months salary including average dearness allowance drawn by the officer over the last 10 months of his service-Revised pension to be given for the officers retiring from December, 1994 onwards-Whether arbitrary ? (Yes)-Other reliefs requiring decision on disputed facts-To be decided by competent forum-Result -Petition partly allowed-Case law on contributory PF and General PF stated and explained.
       Held : At the outset, we may state that Mr. V.R. Reddy, learned senior counsel for the petitioners has not pressed for prayer (c) and with regard to prayers (d) and (e) as they involve disputed questions of fact, the issues are not required to be decided and are left open. In affidavit-in-reply filed on behalf of respondent No.2 also it has been submitted that it would have been appropriate for the petitioners to approach the High Court for sorting out the disputed facts. For the said reliefs, it would be open to the petitioners to approach the competent forum. (Para 4)
       As to revised pension cut off date
       Held : From the aforesaid admission, it is clear that petitioners were not required to contribute any amount for getting pension. May be that the Company allocated separate fund and created a trust for paying pension to the retiring employees but their right to get pension is crystallized as per the rules and was not dependant upon availability of the fund and was to be determined on the basis of a rule which provided that they would get a sum equal to 40 percent of the average basic salary for the last five years of service immediately preceding the date of retirement. (Para 10)
       The Pension Scheme including the liberalised scheme available to the employees is non-contributory in character. Payment of pension does not depend upon Pension Fund. It is the liability undertaken by the Company under the Rules and whenever becomes due and payable is to be paid. As observed in Nakara s case (supra), pension is neither a bounty, nor a matter of grace depending upon the sweet will of the employer, nor an ex gratia payment. It is a payment for the past services rendered. It is a social welfare measure rendering socio-economic justice to those who in the hey-day of their life ceaselessly toiled for the employer on an assurance that in their old age they would not be left in lurch. May be that in the present case, the Trust for pension fund is created for Income Tax purposes or for smooth payment of pension, but that would not affect the liability of employer to pay monthly pension calculated as per the Rules on retirement from service and this retirement benefit is not based on availability of pension fund There is no question of pensioners dividing the Pension Fund or affecting the pro rata share on addition of new members to the Scheme. As per Rule (1) quoted above, an employee would become member of the Fund as soon as he enters into a specified category of service of the Company. Under Rule (8) Trustees may withhold or discontinue a pension or annuity or any part thereof payable to a member or his dependants, and that pension amount is non-assignable. Further, the payment of pension was the liability of the employer as per the rules and that liability is required to be discharged by the UOI in lieu of its taking over of the Company. The rights of the employees (including retired) are protected under Section 11 of the Burmah Oil Company (Acquisition of Shares of Oil India (Act 41) Limited and of the Undertakings in India of Assam Oil Company Limited and the Burmah Oil Company (India Trading) Limited Act, 1981. (Para 14)
       Therefore, when an employee retired, all accumulated contribution in respect of employee concerned made by the employer to the pension fund of the trust was crystallized for the benefit of employee. In that set of circumstances, the Court observed that the right of the employee to receive the annuity and quantum of his annuity gets crystallized at the time of purchase of annuity under the then existing scheme of Life Insurance Corporation of India. The Court also observed that the contention was based on misunderstanding of the nature of the annuity which is purchased in the interest of each employee as and when he retires. The position in the present case is altogether different. Right to get pension is obviously different from getting annuity on the basis of accumulated contribution. The rules for grant of pension provide that an employee mentioned in specified category shall automatically be member of pension fund and is entitled to get pension on the date of his retirement. Amount of pension is to be determined as per the Rules. That Rule is modified and the petitioners seek relief on the basis of the amended rule on the ground that there cannot be any discrimination between the employees who retired prior to or after a particular date, as held in Nakara s case which is followed by this Court in various decisions including V. Kasturi (supra). Further, there is no question of pensioners ( retired employees) dividing the pension fund and/or payment of pension to be made only from the pension fund. The liability to pay pension arises because of provision made in the rules. In this view of the matter, the decision in Sasadhar Ckakravarty, 1996(11) SCC 1 would have no bearing. Further, in All India Reserve Bank Retired Officers Association v. Union of India [1992 Supp. (1) SCC 664], Ahmadi, J., (as he then was) speaking for the Court in the aforesaid decision highlighted the observations in Nakara s case found at p. 333 para 46 to the following effect (SCC p. 674 para 7): -
       "... the pension will have to be recomputed in the light of the formula enacted in the liberalised pension scheme and effective from the date the revised scheme comes into force. And beware that it is not a new scheme, it is only a revision of existing scheme. It is not a new retiral benefit. It is an upward revision of an existing benefit. If it was a wholly new concept, a new retiral benefit, one could have appreciated an argument that those who had already retired could not expect it.
       The Court further observed :-
        ....It must be realised that in the case of an employee governed by the CPF (Contributory Provident Fund) scheme his relations with the employer come to an end on his retirement and receipt of the CPF amount but in the case of an employee governed under the pension scheme his relations with the employer merely undergo a change but do not snap altogether. That is the reason why this Court in Nakara case drew a distinction between liberalisation of an existing benefit and introduction of a totally new scheme. In the case of pensioners it is necessary to revise the pension periodically as the continuous fall in the rupee value and the rise in prices of essential commodities necessitates an adjustment of the pension amount but that is not the case of employees governed under the CPF scheme, since they had received the lump sum payment which they were at liberty to invest in a manner that would yield optimum return which would take care of the inflationary trends. This distinction between those belonging to the pension scheme and those belonging to the CPF scheme has been rightly emphasised by this Court in Krishena case.
       Same is the position in the present case. As observed in the aforesaid case, in case of an employee governed under the Pension Scheme, relations with the employer merely undergo a change, but are not snapped altogether. There is no new scheme of payment pension, but it is only a revision of the existing pension scheme. Under the new Pension Scheme, pension is required to be paid on the basis of 40 per cent of the average of the last 10 months salary including average dearness allowance drawn by the officer over the last 10 months of his service instead of earlier 40 per cent of the average annual basic salary for the last five years of service immediately preceding the date of retirement. In view of the aforesaid legal position, this petition is required to be partly allowed and the Respondents are directed to give pensionary benefits to the petitioners on the basis of notification dated 10th March, 1995 by deleting the words "retiring from December, 1994 onwards" from the said notification. The Writ Petition stands disposed of accordingly. There shall be no order as to costs. (Paras 16, 17, 18 and 19)

JUDGMENT

Shah, J.-This petition under Article 32 of the Constitution of India is filed by the petitioners who were employees of the Indian Oil Corporation Limited (Assam Oil Division) and retired prior to 1st December 1994. It is pointed out that Assam Oil Division was formed by transfer of the Undertaking of the Assam Oil Co. Ltd., a 100 subsidiary of the Burmah Oil Company which has been nationalized w.e.f. 14.10.1981. Petitioners were transferred from Assam Oil Co. Limited to the Indian Oil Corporation - Assam Oil Division (In short "AOD"). As per the Assam Oil Company Staff Pension Fund Scheme, they were getting pension on the following basis: -

"A sum equal to 40 percent of the average annual basic salary for the last five years of service immediately preceding the date of retirement"

2. It is pointed out that the Government of India has issued Notification dated 10.3.1995 providing for revision of pension formula in respect of Indian Oil Corporation (AOD) Officers covered by AOD Staff Pension Scheme which reads thus: -

"Pension for the officers retiring from December, 1994, onwards may be computed on the basis of 40 of the average of the last 10 months salary including average dearness allowance drawn by the officer over the last 10 months of his service. If and when pay revision takes place retrospectively, the amount of pension may be adjusted accordingly. No dearness allowance will be paid on pension."

3. Petitioners submit that the cut-off date is discriminatory and that there cannot be any classification of retiree who have retired prior to December, 1994 and who are to retire from December, 1994 onwards and, therefore, they are entitled to have pension on the basis of revised formula. For this, they have relied on the decision rendered by this Court in D.S. Nakara v. Union of India1. In this petition, they have prayed as under:-

(a) Issue a writ, direction or order in the nature of certiorari or any other appropriate writ, direction or order quashing the cut off date mentioned in the impugned communication No. F.29011/1/95-IOC dated 10.3.1995 (Annexure E ), as December, 1994 as having been arbitrarily fixed; and

(b) Issue a writ, direction or order in the nature of mandamus or any other appropriate writ, direction or order to the respondents directing them to extend benefits of the impugned communication No. F. 29011/l/95-IOC dated 10-3-1995 to all the pensioners of IOC (AOD) irrespective of date of retirement;

(c) Issue a writ, direction or order in the nature of mandamus or any other appropriate writ, direction or order directing the respondents to liberalize the AOC Pension Scheme so as to include the Ad hoc Pension Relief to all retirees and who are still in service and to superannuate under the AOC Pension Scheme as is being granted to the ex-employees of AOC who stood transferred to OIL;

(d) Issue a writ, direction or order in the nature of mandamus or any other appropriate writ, direction or order directing the respondents to liberalize the AOC Pension Scheme so as to include the benefits of the CLI linked Pension Relief to all retirees and who are still in service and to superannuate under the AOC Pension Scheme, as is being granted to the eligible pensioners of OIL, BPCL and HPCL;

(e) Issue a writ, direction or order in the nature of mandamus or any other appropriate writ, direction or order directing the respondents to liberalize the pension scheme of the respondent No. 2 so as to include the benefit of restoration of the commuted portion of pension after 15 years as is being granted to the sister companies of the respondent No. 2 i.e. BPCL and HPCL.

4. At the outset, we may state that Mr. V.R. Reddy, learned senior counsel for the petitioners has not pressed for prayer (c) and with regard to prayers (d) and (e) as they involve disputed questions of fact, the issues are not required to be decided and are left open. In

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2001 Supreme(SC) 1300

IMPORTANT POINTPetitioners (who have retired prior to December 1994) are entitled to pensionary benefits on the basis of notification dated 10.3.1995 by deleting the words "retiring from December 1994 onwards". Which are arbitrary.

Cases Referred (2)

IMPORTANT POINT
Petitioners (who have retired prior to December 1994) are entitled to pensionary benefits on the basis of notification dated 10.3.1995 by deleting the words "retiring from December 1994 onwards". Which are arbitrary.