JUDGMENT

KASLIWAL, J.—This petition under Article 32 of the Constitution of India has been filed by petitioner 1, an association of the retired employees of the South Eastern Railway and petitioner 2 being the convenor of the association. For convenience sake we would hereinafter refer to the above class of pensioners as petitioners. According to the Railway Boards letter No. PC III/79/DP/1 dated June 11, 1979 the Ministry of Railways extended the benefit of merger of Dearness Pay (DP) up to 272 points price index level with average emoluments for calculation of pensionary benefits to the railway servants retired on or after September 30, 1977. It further stipulated that the railway employees retired on or after September 30, 1977 but not later than April 30, 1979 will have an option to choose either of the two alternatives i.e. in favour of the existing rule to have their pension calculated without merger of DP on 272 points price index level or with merger of the same. Such employees were given time up to December 31, 1979 to exercise their option. It was further stated therein that those who will retain their option in existing schemes will be allowed graded relief on pension to the fullest extent admissible from time to time inclusive of price index level i.e. 272 and those who will opt out of the existing scheme i.e. opt in favour of merger of DP shall be allowed to enjoy the instalment of graded relief sanctioned beyond average price index level 272. The pension and gratuity were, therefore, calculated in terms of options exercised by the ex-employees.

2. According to the petitioners at the time of their retirement they were given option as to whether the petitioners would opt for pension and service gratuity/death-cum-retirement gratuity computed after taking into account of a portion of dearness allowance as dearness pay or for pension and service gratuity/death-cum-retirement gratuity excluding dearness allowance as dearness pay. The petitioners opted for pension and service gratuity/death-cum-retirement gratuity to be computed after taking into account dearness allowance as dearness pay. According to the petitioners they have at all material times drawn pension and service gratuity and death-cum-retirement gratuity calculated and/or computed after taking into account dearness pay only. The case of the petitioners is that according to the above circular only 22 per cent of pay has been treated as dearness pay for computation of pension in the case of the employees including the petitioners who opted for pension and service gratuity/death-cum-retirement gratuity after including dearness pay. In June 1979, total dearness allowance payable to the railway servants was 45.5 per cent of pay whereas in computation of pension and service gratuity/death-cum-retirement gratuity only 27 per cent of pay was taken into consideration instead of 45.5 per cent of pay. By another order No. 103/82 dated May 11, 1982 further 15 per cent of basic pay was added as dearness pay in lieu of total dearness allowance in computation of pension for those who had opted for dearness pay in computation of pension. At that time the railway servants in service were drawing 75.5 per cent of pay as dearness allowance.

3. By another order No. 108/83 dated May 25, 1983 a further 0.5 per cent of the basic pay was added to dearness pay thus in all 42.5 per cent in lieu of total dearness allowance was permitted in case of pensioners including the petitioners who opted for dearness pay for computation of pension payable to them. At that time such of the petitioners in service and other railway servants were drawing 99.5 per cent of basic pay as total dearness allowance. Various representations were made on behalf of the railway servants for taking into account entire dearness allowance for the purpose of computation and calculation of pension and service gratuity/death-cum-retirement gratuity in view of paragraphs 501 and 506 of Manual of Railway Pension Rules