JUDGMENT

THAKKAR, J. :— 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 :-

"Therefore, we are now only concerned whether this G.O. Ms. No. 88, dated 26-3-1980, should be made applicable to the pensioners that retired prior to 1-4-1978 by revising their gratuity payable to them. The learned Advocate-General, contends, that gratuity is something different from the other pensionary benefits like the pension and the family pension, which are continuing ones. The Gratuity that accrued to the petitioners prior to 1-4-1978 was calculated on the then existing Rules and paid. In that way, the pensioners retired prior to 1-4-1978 will form themselves into a distinct class for purposes of the payment of benefit of gratuity from the others that retired after 1-4-1978, from which date, the revised pension rules are made to be applied by the Government. On the other hand, it is the contention of the writ petitioners that gratuity is a part and parcel of the pensionary benefits and the same cannot be looked at separately from the other pensionary reliefs. The learned counsel for the Writ Petitioners, no doubt, cited two decisions V. P. Gautama, IAS Retd. v. Union of India, (1983) 2 Serv LR 346, and M. P. Tandon v. State of U. P. 1984 Lab IC 677 (All), where their Lordships that decided the above two cases, held, that no distinction can be made in the pensionary benefits including death-cum-retirement gratuity benefit between the pensioners that retired prior to the stipulated date and after the stipulated date.

In the decision D. S. Nakara v. Union of India, AIR. 1983 SC 130, their Lordships of the SC enunciated the principle as follows :

"With the expanding horizons of socioeconomic justice, the Socialist Republic and Welfare State which the country endeavours to set up and the fact that the old men who retired when emoluments were comparatively low are exposed to vegaries of continuously rising prices, the falling value of the rupee consequent upon inflationary inputs, by introducing an arbitrary eligiibility criterion, being in service and retiring subsequent to the specified date for being eligible for the liberalised pension scheme and thereby dividing a homogeneous class, the classification being not based on any discernible rational principle and being wholly unrelated to the objects sought to be achieved by grant of liberalised pension and the eligibility criteria devised being thoroughly arbitrary, the eligibility for liberalised pension scheme of "being in service on the specified date and retiring subsequent to that date" in the memoranda Exs. P1 and P2, violated Art. 14 and is unconstitutional and liable to be struck down."

After thus enunciating the principle, their Lordships have taken care to observe as follows :

"But we make it abundantly clear that arrears are not required to be made because to that extent the scheme is prospective."

In our opinion, the arrears relating to gratuity benefit computed according to the Rev