2005 Supreme(SC) 1469

2005(8) Supreme 420
Supreme Court of India
(From Andhra Pradesh High Court)
B.P. Singh and S.B. Sinha JJ.
State of Andhra Pradesh & Anr. —Appellants
versus
A.P. Pensioners Association & Ors. —Respondents
Civil Appeal Nos. 6704-6780 of 2005
(Arising out of SLP (C) Nos. 5394-5470 of 2004)
Decided on 11-11-2005
Counsel for the Parties :
For the Appellants : H.S. Guru Raja Rao, P.P. Rao, Sr. Advocates, P. Vinay Kumar, Mrs. D. Bharathi Reddy, Ms. Sneha Bhaskaran, Advocates.
For the Respondents : Uday Umesh Lalit, Kailash Vasudev and A.K. Ganguly, Sr. Advocates, R. Santhana Krishnan, A.V.V.S. Bhujanga Rao, Vijaya Kumar, Ms. K. Radha Rani, D. Mahesh Babu, C.B.N. Babu, Bimal Roy Jad, C.S.N. Mohan Rao, C.M. Angad, Advocates.

Headnote:Service Law—Andhra Pradesh Revised Scales of Pay Rules, 1999—Rules 1(2), 3, 5 and 9—A.P. Civil Pensions (Commutation) Rules, 1944—Rules 3(d) and (e)—Computation of retirement gratuity payable to a Government servant—State of A.P. constituted a Pay Revision Commission for the purpose of considering the question of revision of scale of pay of employees working with it as also merger of D.A. etc.—Commission recommended revised scales of pay notionally from 1.7.1998 with financial benefits from 1.4.1999—By GO (P) No. 114, mode and manner for implementing recommendations of the Commission on pension and other terminal benefits were specified—GOM No. 158 was issued on 16.9.1999 enhancing the limit of commutation of pension to 40 of pension sanctioned to pensioners w.e.f. 1.4.1999—Such enhancement is applicable only in relation to persons who retired or died on or after 1.4.1999—Applications filed by employees who had retired between the period 1.7.1998 and 1.4.1999 praying for payment of pensionary benefits including commutation, pension, gratuity and encashment of leave in terms of para 9 of GO No. 114—Tribunal held that applicants were not entitled to gratuity and encashment of earned leave based on their notional pay fixed in revised scale of pay—High Court set aside findings recorded by the Tribunal—Whether judgment of the High Court is sustainable—(No).

       Held : It has not been disputed before us that GO No. 114 is in two parts. Paragraphs 1 to 23 only state the factual backdrop leading to issuance of the notifications. It is also not in dispute that the statutory rule embedded in GO No. 114 does not speak of gratuity. It has further not been disputed before us that the minutes of meeting dated 24.7.1999, held by the Chief Minister of the State with the representatives of the employees, do not contain any agreement as opined by the High Court. GO No. 114 being in two parts, the first part which is in the nature of preamble or statement of background facts cannot be treated to be a part of the rules framed and notified in terms of proviso to Article 309 of the Constitution of India. Paragraph 16 of the GO, as has been noticed hereinbefore, in no uncertain terms states that separate orders were being issued in regard to recommendations of PRC on pension and other terminal benefits. Only because clauses 9 and 16 of the said GO speak of pensionary benefits and/or other terminal benefits, the same, in our opinion, would not mean that they embraced within their fold all benefits which under different provisions of a statute or even different statutes could come within the preview thereof. For the aforementioned purpose, the provisions of the notification are to be read as a whole. The intention of the State in issuing the aforementioned notification although may have to be gathered in the backdrop of the facts stated in the preamble portion thereof, indisputably the legal right of the Respondents, if any, must be found out from the notification portion itself. The notification read as a whole does not suggest that the State of Andhra Pradesh thereby intended to pay before 1.4.1999 retirement gratuity reckoned on the basis of the revised scale of pay as recommended by the PRC. (Paras 24 to 26)

       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. (Para 28)

       It is, therefore, beyond any shadow of doubt that the financial implication is a relevant criterion for the State Government to determine as to what benefits can be granted pursuant to or in furtherance of the recommendations made by the PRC. The PRC also said that while revision of pay shall take effect from 1.7.1998, the monetary benefit would be payable only from 1.4.1999. If monetary benefit was payable only from 1.4.1999, all rights to get the benefits computed on the basis of the revised scale of pay would only be for the purpose of payment of pay with effect from 1.4.1999 or payment of the recurring amount of pension with effect from that date. Clause (4) does not make any exception so far as payment of actual monetary benefit is concerned for the purpose of payment of gratuity or otherwise. Had that been so, the rule would have stated expressly. On the other hand, GO No. 157 dated 16.9.1999 fixed the maximum limit of gratuity under rule 46 of the A.P. Revised Pension Rules with effect from 1.4.1999 only. 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. (Paras 39 to 41)

       For the reasons aforementioned, the judgment and order of the High Court cannot be sustained. We, however, agree with the Tribunal that the employees are eligible for computation of portion of revised pension in terms of Rule 3 of A.P. Civil Pensions (Commutation) Rules, 1944. (Para 42)