IMPORTANT POINTS
1. Pension, as is well known, is not a bounty. It is treated to be a deferred salary. It is akin to right of property. It is co-related and has a nexus with the salary payable to the employees as on the date of retirement.
2. By reason of executive instructions an employee cannot be deprived of a vested or accrued right.

Headnote:SERVICE LAW — Karnataka Civil Services Rules — Rules 296, 297 — Pension — Computation of quantum of pension — Case of revision of pay and consequent revision in pension — Appellants, retired teachers of the University and Private Aided Colleges to whom UGC scales of pay were applicable — They had retired during the period 1-1-1996 to 31-3-1998 — They were being paid the same salary as was being paid to the teachers of the Government colleges — Revised scales of pay as recommended by the Pay Revision Committee became applicable to appellants w.e.f. 1-1-1986 — By a notification dated 12-5-1988, Government of Karnataka extended revision of pensionary benefits contemplated by the order dated 17-8-1987 to the teachers of the aided educational institutions — Central Government revised scales of pay of its employees w.e.f. 1-1-1996 — Government of India stated that revision of pension structure for retired teachers shall be as is applicable to the employees working in Central Universities — Government of Karnataka issued appropriate notification extending UGC pay scales as revised from 1-1-1996 to teachers of Government and Aided Colleges — Whether appellants having been given the benefit of revised pay scales w.e.f. 1-1-1996 could have been deprived of the retiral benefits calculated with effect therefrom — (No).
       Held : The fact that the appellants herein were treated to be at par with the holders of similar posts in Government Colleges is neither denied nor disputed. The appellants indisputably are governed by the UGC scales of pay. They are entitled to the pensionary benefits also. They had been given the benefits of the revision of scales of pay by 10th Pay Revision Committee w.e.f. 1.1.1986. The pensionary benefits payable to them on attaining the age of superannuation or death were also stated to be at par with the employees of the State Government. The State of Karnataka, as noticed hereinbefore, for all intent and purport, has treated the teachers of the Government Aided Colleges and the Regioinal Engineering Colleges on the one hand and the teachers of the colleges run by the State itself on the other hand at par. Even the financial rules were made applicable to them in terms of the notifications, applying the rule of incorporation by reference. Although Rule 296 of the Rules per se may not be applicable so far as the appellants are concerned, it now stands admitted that the provisions thereof have been applied to the case of the appellants also for the purpose of computation of pensionary benefits. Therefore there cannot be any doubt whatsoever that the term "Emoluments" as contained in Rule 296 of the Rules would also apply to the case of the appellants. (Para 18)
       It is one thing to say that the State can fix a cut off date unless and until the same is held to be arbitrary or discriminatory in nature, the same would be given effect for carrying out the purpose for which it was fixed. In this case, the cut-off date for all intent and purport had been fixed as 1.1.1996. It is, thus, not a case where cut-off date was fixed as 1.4.1998 as the State merely intended to confer only same benefits.(Para 20)
       The State while implementing the new scheme for payment of grant of pensionary benefits to its employees, may deny the same to a class of retired employees who were governed by a different set of rules. The extension of the benefits can also be denied to a class of employees if the same is permissible in law. The case of the appellants, however, stands absolutely on a different footing. They had been enjoying the benefit of the revised scales of pay. Recommendations have been made by the Central Government as also the University Grant Commission to the State of Karnataka to extend the benefits of the Pay Revision Committee in their favour. The pay in their case had been revised in 1986 whereas the pay of the employees of the State of Karnataka was revised in 1993. The benefits of the recommendations of the Pay Revision Committee w.e.f. 1.1.1996, thus could not have been denied to the appellants. (Para 21)
       It is now well settled that a notification can be issued by the State accepting the recommendations of the Pay Revision Committee with retrospective effect as it was beneficent to the employees. Once such a retrospective effect is given to the recommendations of the Pay Revision Committee, the concerned employees despite their reaching the age of superannuation in between the said dates and/or the date of issuance of the notification would be deemed to be getting the said scales of pay as on 1.1.1996. By reason of such notification as the appellants had been derived of a vested right, they could not have been deprived therefrom and that too by reason of executive instructions. (Para 22)
       Pension, as is well known, is not a bounty. It is treated to be a deferred salary. It is akin to right of property. It is co-related and has a nexus with the salary payable to the employees as on the date of retirement.(Para 24)
       These appeals involve the question of revision of pay and consequent revision in pension and not the grant of pension for the first time. Only the modality of computing the quantum of pension was required to be determined in terms of the notification issued by the State of Karnataka. For the said purpose, Rule 296 of the Rules was made applicable. Once this rule became applicable, indisputably the computation of pensionary benefits was required to be carried out in terms thereof. The Pension Rules envisage that pension should be calculated only on the basis of the emoluments last drawn. No order, therefore, could be issued which would be contrary to or inconsistent therewith. Such emoluments were to be reckoned only in terms of the statutory rules. If the State had taken a conscious decision to extend the benefit of the UGC pay scales w.e.f. 1.1.1996, to the appellants allowing them to draw their pay and allowances in terms thereof, we fail to see any reason as to why the pensionary benefits would not be extended to them from the said date.(Para 25)
       The impugned orders furthermore is opposed to the basic principles of law inasmuch as by reason of executive instructions an employee cannot be deprived of a vested or accrued right. Such a right to draw pension to the extent of 50 of the emoluments, computed in terms of the rules, w.e.f. 1.1.1996, vested to the appellants in terms of Government notification read with Rule 296 of the Rules. (Para 27)
       As the amount calculated on the basis of the revised scales of pay on and from 1.1.1996 to 31.3.1998 have not been paid to the appellants by the State of Karnataka as ex gratia, and in fact was paid by way of emoluments to which the appellants became entitled to in terms of their conditions of service, which in turn are governed by the statutory rules, they acquired a vested right therein. If the appellants became entitled to the benefits of the revised scales of pay, and consequently to the pension calculated on the said basis in terms of the impugned rules, there would be reduction of pension with retrospective effect which would be violative of Articles 14 and 16 of the Constitution of India.(Para 28)
       The appellants had retired from service. The State therefore could not have amended the statutory rules adversely affecting their pension with retrospective effect. (Para 30)

JUDGMENT

S.B. Sinha, J. — These appeals involving identical questions of fact and law were taken up for hearing together and are being disposed of by this common judgment.

2. The appellants in these appeals are retired teachers of the University and Private Aided Colleges (to whom UGC scales of pay were applicable). They have retired during the period 1.1.1996 to 31.3.1998. So far as the teachers of the University or Privates Aided Colleges are concerned, indisputably, they were being paid the same salary as was being paid to the teachers of the Government colleges. The appellants in Civil Appeal No.1391/2006, have retired from the Karnataka Regional Engineering College, Surathkal, Karnataka, which was established by the Government of India at the request of the Government of Karnataka. It is a centrally aided institution as envisaged under Entry 64 of List 1 of the Seventh Schedule to the Constitution of India. So far as the said institution is concerned, its expenditure used to be borne by the Government of India and the State of Karnataka. It, however, has been notified by the Government of India as a Deemed University with effect from 26.6.2002.

3. It is not in dispute that the revised scales of pay as recommended by the Pay Revision Committee became applicable to the appellants with effect from 1.1.1986. It is also not in dispute that the UGC scales of pay were applicable to them. The Government of Karnataka, by a letter dated 17.12.1993 directed that the matter relating to the fixation of pension on the basis of UGC pay scales would be governed by Rule 296 of the Karnataka Civil Services Rules (hereinafter referred to as the Rules), providing for computation of emoluments for the purpose of pension and gratuity of a Government servant. In the said letter it was stated:

"The term emoluments has been defined and redefined from time to time whenever pension has been revised by Executive orders. The terms Emoluments for purpose of pensionary benefits as defined in G.O. Dated 17.8.87 benefits includes among other things the last pay drawn. It is therefore, clarified that the pay drawn by the teachers of degree colleges in respect of whom UGC scales have been extended by G.O. No.ED 88 UNI 88 dtd. 30.3.90 w.e.f. 1.1.86 and who have opted to UGC scales of pay, the last pay drawn by them in the UGC scales of pay among other things may be treated as emoluments for purpose of pensionary benefits under G.O. Dtd. FD 20 SRS 87 (I) dtd. 17.8.87."

4. In continuation of the said letter dated 17.12.1993, the Government of Karnataka by letter 12.10.1994, clarified that the pay drawn by the teachers of degree colleges in respect of whom UGC scales of pay had been extended by G.O. No. ED 28 UNI 88 dtd. 30.3.90, may be treated as emoluments for the purpose of settling pensionary benefits under G.O. No.FD 20 SRS 87(F) dated 17.8.87. It was further stated:

"It is further clarified that the clarification issued already on 17.12.93 equally applies in respect of teachers of aided degree colleges also to whom the benefit of UGC scales of pay as contemplated in G.O. ED 88 UNI 88 dated 30.3.90 have been extended. Action may be taken accordingly."

5. By a notification bearing G.O. No. ED No. 442 dated 12.5.88, the Government of Karnataka extended the revision of pensionary benefits contemplated by the aforesaid order dated 17.8.87, to the teachers of the aided educational institutions, whose pension was to be paid out of the consolidated fund of the State. It stands admitted that whereas 80 of the additional amount required for discharging the said liability was to be borne by the Central Government, 10 thereof was to be borne by the institution concerned and the rest 10 amount was to be raised by way of additional generation of revenue, as would appear from the letter of the Ministry of Human Resource Development, Department of Education, Government of India dated 17.8.98.

6. It is furthermore not in dispute that the Central Government purs

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2006 Supreme(SC) 494

Cases Referred (8)