Important point
Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government at the Centre or at the State level.

Headnote:Service Law—Central Civil Services (Pension) Rules, 1972—Retirement gratuity/death gratuity—Respondents, employees of Government of Punjab who retired during the period 31-7-1993 to 31-3-1995—They sought benefit of a circular dated 13-12-1996 under which State Government employees, who retired or died on or after 1-4-1995, were entitled to get retirement gratuity/death gratuity on basis of addition of certain portion of dearness pay to the basic pay—Refusal of this benefit to them was challenged—High Court held that such of the State Government’s employees, who had retired on or after 1-7-1993, were entitled to higher amount of death gratuity and retirement gratuity consequent upon merger of a portion of dearness allowance into the basic pay—Employees who had retired before 1-7-1993 were refused this benefit—Decision of the Central Government/State Governments to make available the increased quantum of gratuity only to employees, who retired or died on or after 1-4-1995—This date of 1-4-1995 was recommended in the Interim Report of the Fifth Central Pay Commission—Government noticed that the consequential financial burden would be very heavy—Whether decision of the Central and State Governments to restrict revision of quantum of gratuity as well as the increased ceiling of gratuity consequent upon merger of a portion of dearness allowance into dearness pay was irrational or arbitrary —(No).
       Held : It is difficult to accede to the argument on behalf of the employees that a decision of the Central Government/State Governments to limit the benefits only to employees, who retire or die on or after 1.4.1995, after calculating the financial implications thereon, was either irrational or arbitrary. Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government, at the Centre or at the State level. (Para 26)
       As we have already noticed, 1.4.1995 was the date suggested by the Fifth Central Pay Commission (“Pay Commission”) in its Interim Report. The Central Government took a conscious stand that the consequential financial burden would be unbearable. It, therefore, chose to taper down the financial burden by making the benefits available only from 1.4.1995. It is trite that, the final recommendations of the Pay Commission were not ipso facto binding on the Government, as the Government had to accept and implement the recommendations of the Pay Commission consistent with its financial position. This is precisely what the Government did. Such an action on the part of the Government can neither be characterized as irrational, nor as arbitrary so as to infringe Article 14 of the Constitution. (Para 28)
       In the result, we set aside the common judgment and order of the High Court of Punjab & Haryana in CWP No. 4995/97 and in connected matters decided thereby, in so far as they purport to grant the revised death-cum-retirement gratuity to government employees who died or retired before the prescribed cut-off date of 1.4.1995. (Para 39)

Judgment

Srikrishna, J.—Delay condoned. Leave granted in the Special Leave Petitions.

2. This group of Special Leave Petitions and Transferred Cases raise the same issue of law, though the origin of the cases and the paths by which they found their way to this Court are different. A brief resume of the facts is called for.

Civil Appeal No. 129 of 2003 :

3. The respondents are employees of the Government of Punjab who retired during the period 31.7.1993 to 31.3.1995. They sought the benefit of a circular dated 13.12.1996 under which the State Government employees, who retired or died on or after 1.4.1995, were entitled to get retirement gratuity/death gratuity on the basis of addition of certain portion of the dearness pay to the basic pay. This benefit was refused to them. The respondents challenged the decision of the State Government declining them the aforesaid benefit by a group of writ petitions (numbered CWP No. 4995/97 and others) before the High Court of Punjab & Haryana. The High Court partially allowed the writ petition and held that such of the State Government’s employees, who had retired on or after 1.7.1993, were entitled to the higher amount of death gratuity and retirement gratuity consequent upon the merger of a portion of dearness allowance into the basic pay. The High Court, however, refused to grant this benefit to employees who had retired before 1.7.1993.

4. The High Court also directed the State Government and its officers to calculate the death/retirement gratuity of the respondents who had retired on or after 1.7.1993 in accordance with the notification dated 13.12.1996. The said judgment of the Division Bench of the Punjab & Haryana High Court is challenged in this appeal.

Civil Appeal No. 1061 of 2005 :

5. The respondents, retired employees of the Education Department of the Government of Punjab, were superannuated during the period 31.7.1993 to 31.3.1995. They also sought the benefits flowing from the order of the Government of Punjab dated 13.12.1996 and sought a higher quantum of death-cum-retirement gratuity. These benefits having been refused to them, they too moved the High Court of Punjab & Haryana by a Civil Writ Petition (CWP No. 17666/98). This writ petition was allowed by order dated 3.5.2002 following the judgment in CWP No. 4995/97. Being aggrieved thereby, the State of Punjab is in appeal.

Civil Appeals @ Special Leave Petitions (Civil) Nos. 12071-12072 of 2004:

6. The respondent-employees in this case retired on 28.2.1994 from Postal Department Service, H.P. Circle i.e. prior to the prescribed cut-off date of 1.4.1995. He sought the higher amount of death-cum-retirement gratuity subject to the increased maximum limit under the Office Memorandum (“O.M.”) dated 14.7.1995 issued by the Government of India. This O.M. directed that a certain percentage of dearness allowance was to be treated as part of basic pay for the purpose of calculating the death gratuity and retirement gratuity in respect of the Central Government employees who retired after 1.4.1995. However, the Central Government rejected his claim on the ground that he had retired prior to 1.4.1995. The employee then moved the Central Administrative Tribunal (“CAT”) (Chandigarh Bench) by his Original Applications. The CAT directed that the benefit of O.M. dated 14.7.1995 be extended to the employee concerned, on the undertaking that, if the connected matters pending at the time in the Bombay High Court were to be adversely decided against him, he would refund the monies with interest.

7. The Union of India moved the High Court of Himachal Pradesh by writ petition CWP No. 462/03, which was dismissed on the ground that a similar matter was pending before the Bombay High Court against a decision of the Full Bench of the CAT (Mumbai Bench), and that the decision given by the Bombay High Court would decide the rights and contentions of the parties. The Union of India’s Civil Review No. 32/03 was also dismissed on 11.09.2003. Aggrieved thereby,

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2005 Supreme(SC) 1035

Important pointFinancial and economic implications are very relevant and germane for any policy decision touching the administration of the Government at the Centre or at the State level.

Cases Referred (18)

Important point
Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government at the Centre or at the State level.