(1) RESPONDENT 1 retired from the service of the State of Punjab on 31-12- 1982. Respondent 2 retired from the service of the State of Punjab on 31-10- a 1982. Their pensionary benefits were calculated as per the rules then existing.

(2) BY a notification dated 9/7/1985, issued by the Government of Punjab, Department of Finance, it was decided that dearness allowance and ad hoc dearness allowance sanctioned up to Consumer Price Index Level 568 will be treated as dearness pay, for purposes of calculating pension, gratuity/DCRC and terminal gratuity in respect of the employees retiring on or after 31-3- 1985.

(3) BY another circular dated 24/11/1988 the employees were allowed to accumulate earned leave up to 360 days. The existing employees were given an option, either to be governed by the existing rules or by the new decision, which option was exercisable within a period of four months from the date of issue of the above-mentioned circular. It further provided that encashment of leave at the time of retirement shall be admissible up to 240 days to those employees who opt for the revised orders contained in the circular letter. The circular letter further sta