2022 Supreme(SC) 226

SUPREME COURT OF INDIA
Dr. Dhananjaya Y. Chandrachud, Surya Kant, Vikram Nath, JJ.
Indian Ex Servicemen Movement & Ors. – Petitioners
Versus
Union of India & Ors. – Respondents
Writ Petition (Civil) No. 419 of 2016
Decided On : 16-03-2022

IMPORTANT POINTS
(1) Pension – Implementation of “One Rank One Pension” Policy for ex-servicemen of defence forces – It is not a legal mandate that pensioners who held same rank must be given same amount of pension – Varying benefits that may be applicable to certain personnel which would also impact pension payable need not be equalised with rest of personnel.
(2) Pension – Cut-off date is used only for the purpose of determining base salary for calculation of pension. Executive is well within its limits to prescribe a policy keeping in view financial implications.
(3) Legitimate Expectation – Doctrine of legitimate expectations can be invoked if a representation made by a public body leads an individual to believe that they would be a recipient of a substantive benefit – Doctrine of legitimate expectations emerges as a facet of Article 14 of Constitution.
(4) Adjudication cannot serve as a substitute for policy.

Headnote:

(A) Service Law – Pension – Implementation of “One Rank One Pension” Policy for ex-servicemen of defence forces – OROP implies that a uniform pension be paid to armed forces personnel retiring in same rank with same length of service irrespective of their date of retirement and any future enhancements in rate of pension to be automatically passed on to past pensioners – There was no conscious policy decision on part of Union Government on modalities for implementing OROP until communication dated 7 November 2015 came into being – Communication of 7 November 2015 cannot be invalidated on the ground that it infringed ‘original understanding’ of OROP – A hierarchy in law exists between statutes and rules – A statutory provision will have precedence over delegated legislation if latter conflicts with former – Similarly, executive instructions cannot override a statute or rules made in pursuance of a statute – But in present case entire canvas is governed by a policy – Terms for implementing the policy were specified on 7 November 2015 – As such, that element of policy cannot be challenged on the notion that there is an inflexible notion of OROP couched in an original understanding – OROP is itself a matter of policy and it was open to makers of policy to determine terms of implementation. (Paras 16 and 25)

(B) Service Law – Pension – Implementation of “One Rank One Pension” Policy for ex-servicemen of defence forces – Communication dated 26 February 2014 to CGDA – Expression “to be automatically passed on” immediately follows upon words “any future enhancement in the rates of pension” – When read together contextually, it signifies that rates of pension would be passed on to past pensioners without any administrative impediments – Expression ‘automatically passed on’ cannot be construed as a commitment with reference to any period of time for computation of benefits – Manner in which and period over which revisions should take place of pensions, salaries and other financial benefits is a pure question of policy – Decision of Central Government to revise pension every five years cannot be held to violate precepts underlying Article 14 – Salaries and pensions thus account for nearly 63 per cent of total defence budget estimates for 2020-2021 – In making policy choices, Union Government is entitled to take into account priorities towards modernization of armed forces and to modulate grant of financial benefits so as to sub-serve and balance distinct priorities – OROP principle is applicable to all retired army personnel, irrespective of date of retirement – Cut-off date is only prescribed for determining base salary used for computing pension – While for those who retired on or after 2014, last drawn salary is used for computing pension; for those who retired prior to 2014, average of salary drawn in 2013 is used – This policy only seeks to protect those who retired before 2014 since last drawn salary of prior retirees might be too low and incomparable to pay of 2014 retirees – Moreover, if maximum salary drawn is to be used as base value instead of taking average salary, additional outlay of Rs 1,45,339.34 Crores would be incurred – Executive is well within its limits to prescribe a policy keeping in view financial implications. (Paras 37, 38 and 40)

(C) Constitution of India – Article 32 – Implementation of “One Rank One Pension” Policy for ex-servicemen of defence forces – Canvass which is sought to be traversed in these proceedings under Article 32 of Constitution trenches upon a domain which is reserved for executive policy – Adjudication cannot serve as a substitute for policy – All pensioners who hold same rank may not for all purposes form a homogenous class – Benefit of a new element in a pensionary scheme can be prospectively applied – However, scheme cannot bifurcate a homogenous group based on a cut-off date – It is not a legal mandate that pensioners who held same rank must be given same amount of pension – Varying benefits that may be applicable to certain personnel which would also impact pension payable need not be equalised with rest of personnel – There is constitutional infirmity in OROP principle as defined by communication dated 7 November 2015 – Definition of OROP is uniformly applicable to all pensioners irrespective of date of retirement – It is not the case of petitioners that pension is reviewed ‘automatically’ to a class of pensioners and ‘periodically’ to another class of pensioners – Cut-off date is used only for the purpose of determining base salary for calculation of pension – While for those who retired after 2014, last drawn salary is used to calculate pension, for those who retired prior to 2013, average salary drawn in 2013 is used – Since uniform application of last drawn salary for the purpose of calculating pension would put prior retirees at a disadvantage, Union Government has taken a policy decision to enhance base salary for calculation of pension – Varying pension payable to officers of same rank retiring before and after 1 July 2014 either due to MACP or different base salary used for calculation of pension cannot be held arbitrary. (Paras 46, 48 and 49)

(D) Doctrine – Legitimate Expectation – Doctrine of legitimate expectations can be invoked if a representation made by a public body leads an individual to believe that they would be a recipient of a substantive benefit – Doctrine of legitimate expectations emerges as a facet of Article 14 of Constitution – On the other hand, promissory estoppel, being a private law concept, can be invoked if State has entered into a private contract with another entity but is inapplicable where a representation has been made by State in discharge of its public functions – Doctrine of legitimate expectations is applicable in latter situation. (Para 26)

Facts of the case:

Instant petition under Article 32 of the Constitution addresses a challenge to manner in which “One Rank One Pension”1 policy for ex-servicemen of defence forces has been implemented by the first respondent2 through a letter dated 7 November 2015 issued to the Chiefs of three defence forces. The letter defines OROP as the payment of uniform pension to armed services personnel retiring in the same rank with the same length of service, irrespective of the date of retirement. OROP, in terms of the letter, aims to bridge the gap between the rate of pension of current and past pensioners at periodic intervals. The petitioners contend that in the course of implementation, the principle of OROP has been replaced by ‘one rank multiple pensions’ for persons with the same length of service. The petitioners contend that the initial definition of OROP was altered by first respondent and, instead of an automatic revision of rates of pension, the revision now would take place at periodic intervals. Petitioners submit that the deviation from the principle of automatic revision of rates of pension, where any future enhancement to the rates of pension are automatically passed on to the past pensioners, is arbitrary and unconstitutional under Articles 14 and 21 of the Constitution.

Findings of Court:

In terms of the communication dated 7 November 2015, benefit of OROP was to be effected from 1 July 2014. Para 3 (v) of the communication states that “in future, the pension would be re-fixed every five years”. Such an exercise has remained to be carried out after the expiry of five years possibly because of the pendency of the present proceedings.

Result : Petition disposed of with observations.