2006 Supreme(SC) 935

2006(9) Supreme 68
SUPREME COURT OF INDIA
(Under Art. 226 of the Constitution of India)
G.P. Mathur and R.V. Raveendran, JJ.
Col. (Retd.) B.J. Akkara - Petitioner
versus
The Govt. of India & Ors. - Respondents
Transferred Case (Civil) No. 72 of 2004
With
T.C. (Civil) Nos. 74/2004, 75-128/2004, 129-140/2004, 141/2004, 2/2005, 14/2005, 15/2005, 16/2005, 17/2005, 18/2005. 28/2005 and 43/2005
Decided on 10-10-2006
Counsel for the Parties :
For the Appearing Parties : Dipak Kumar Jena, Mrs. Minakshi Jena, Pabitra Kumar Biswal, J.M. Khanna, Ms. Shefali Sethi, Ajay Bhalla, Abhinav Jain, Ms. Shikha Sapra, Ms. Abha R. Sharma, Mrs. D. Bharathi Reddy, S. Uday Kumar Sagar, Ms. Bina Madhavan, Pooja Gupta, Hari Kumar G., M/s. Lawyer’s Knit & Co., Satyakam, Ms. Shiva Lakshmi, S. Wasim A. Qadri, Mrs. Anil Katiyar, B.V. Balaram Das and Ms. Sushma Suri, Ghanshyam Joshi, A. Raghunath and A.P. Mohanty, Advocates.

IMPORTANT POINT
Pension is determined with reference to the applicable rules/orders governing pension. The Defence Ministry’s Circular dated 7-6-1999 comes in, only to step up the pension of Medical Officers who retired prior to 1-1-1996.

Headnote:(i) SERVICE LAW - Pension - Determination of - Petitioners served as Medical, Dental and Veterinary Officers in Army Medical Corps, Army Dental Corps and Veterinary Corps controlled by Ministry of Defence - All of them retired prior to 1-1-1996 - Sanction of President to the grant of a Non-Practising Allowance to all AMC officers irrespective of the rank w.e.f. 1-1-1966 - Ministry Circular dated 2-11-1987 clarified that NPA will be treated as ‘pay’ for all service matters - Implementation of recommendations of the Fifth Central Pay Commission - Circular dated 7-6-1999 stating that ‘with effect’ from 1-1-1996, pension of all Armed Forces pensioners irrespective of their date of retirement shall not be less than 50% of the minimum pay in the revised scale of pay introduced w.e.f. 1-1-1996 - Circular dated 11-9-2001 directed to recalculate pension by excluding NPA from Basic Pay - Writ petitions filed for quashing the circular dated 11-9-2001 and to take into account NPA - Whether Circular dated 11-9-2001, is only clarification, or an amendment, to the circular dated 7-6-1999 - It is only a clarification to correct the wrong interpretation of the circular dated 7-6-1999.

       Held : Pension is determined as per relevant rules/orders, by calculating the average of reckonable emoluments (basic pay, Rank Pay and NPA) drawn during the last 10 months of service and then taking 50% thereof as the retiring pension applicable to retirees with 33 years of qualifying service, with proportionate reduction for retirees with lesser period of qualifying service. The basis for calculating the pension in respect of those who retired prior to 1.1.1996, and those retired on or after 1.1.1996 happens to be the same. The retiring pension is 50% of the average reckonable emoluments for retirees with 33 years of qualifying service, with proportionate reduction for those with lesser years of qualifying service. The Presidents decision given effect by Circular dated 7.6.1999 only extends to all pre 1996 retirees, who did not have the benefit of fixation of pension with reference to the revised pay scales which came into effect on 1.1.1996, the benefit of the said revised pay scales, albeit in a limited manner. In so doing, it also puts those who retired on or after 1.1.1986 and pre 1986 retirees on par and on a common platform, removing the disparity, if any, in their pensions. (Para 11)

       The emoluments of those who retired on or after 1.1.1996, calculated with reference to the basic pay in the revised scale of pay plus NPA will certainly be more than the minimum pay in the revised scale of pay and therefore, in their cases, the question of stepping up will not arise. On the other hand, as the pension of pre-1996 retirees was based on the basic pay under the old pay scale plus NPA, and as the old pay scale was much less than the 1996 revised pay scale, their pension required to be stepped up. The extent to which the existing pension should be stepped up is clearly specified in the Circular as "minimum pay in the revised scale of pay". The words used do not give room for any confusion or doubt. A pay scale has basically three elements. The first is the minimum pay or initial pay in the pay scale. The second is the periodical increment. The third is the maximum pay in the pay scale. An employee starts with the initial pay in the pay scale and gets periodical increases (increments) and reaches the maximum or ceiling in the pay scale. Each stage in the pay scale starting from the initial pay and ending with the ceiling in the pay scale, when applied to an employee is referred to as basic pay of the employee. Whenever the government revises the pay scales, a fitment exercise takes place as per the principle of fitment (formula) provided in the rules governing the revision of pay so that the basic pay in the old scale is converted into a basic pay in the revised pay scale. When the circular dated 7.6.1999 used the words 50% of the minimum pay in the revised scale of pay, it referred to 50% of the initial pay in the revised scale of pay.(Para 13)

       The petitioners want to read the words "not less than 50% of the minimum pay in the revised scale of pay" in the Circular dated 7.6.1999, as "not less than 50% of the minimum pay in the revised scale of pay plus NPA". When the language used is clear and unambiguous and the intention is also clear, it is not permissible to add words to the Circular dated 7.6.1999 to satisfy what petitioners consider to be just and reasonable. "Minimum pay in the revised scale of pay" refers only to the initial pay in the revised scale of pay and not anything more. Due to a misinterpretation, NPA was included for the purpose of giving the benefit of stepping up the pension in the case of retired medical officers. The fact that NPA had already been taken into account while calculating the existing pension of the medical officers who retired before 1.1.1996 was lost sight of. The fact that NPA is part of pay and not part of basic pay was also overlooked. Therefore, it became necessary to issue the clarification, which was done by circular dated 11.9.2001, clarifying that it was impermissible to again add NPA to the minimum pay in the revised pay scale for the purpose of stepping up the pension. (Para 16)

       The petitioners next contend that in the case of Medical Officers who retired on or after 1.1.1996, even after the Circulars dated 7.6.1999 and 11.9.2001, NPA is added to basic pay for the purpose of calculating the pension, whereas in the case of pre 1996 retirees, NPA is not being added and that amounts to discrimination. This is a misleading contention. In the case of those retiring on or after 1.1.1996, NPA is added to basic pay, to determine their pension, and not for stepping up the pension. In the case of pre 1996 retirees, as NPA was already added while determining their pension, the question of adding it again, for purposes of stepping up the pension, does not arise.(Para 19)

       Pension is determined with reference to the applicable rules/orders governing pension. The Ministrys Circular dated 7.6.1999 comes in, only to step up the pension from 1.1.1996, if the pension calculated in accordance with the rules/orders is less than 50% of the minimum pay in the revised scale of pay introduced with effect from 1.1.1996. There is no need to step up the pension of those who retired on or after 1.1.1996, as their pension will be more than or in no event less than the minimum provided under the circular dated 7.6.1999. The stepping up is required only to those who retired prior to 1.1.1996 as their pension was lower on account of the fact that their reckonable emoluments for purpose of calculation of pension, was based on the old scales of pay.(Para 21)

       The contention that NPA is taken into account in the case of post 1.1.1996 retirees but not pre 1996 retirees is untenable. NPA is taken as part of pay in the case of both pre and post 1.1.1996 retirees. NPA is not taken into account in the case of any retiree for applying the stepping up benefit under circular dated 7.6.1999. It is a different matter that post 1.1.1996 retirees do not require the benefit under the circular dated 7.6.1999. As already noticed, while calculating pension of the pre 1996 retirees, NPA had already been taken into account as part of pay, and that pension which was determined after taking into account NPA, is found to be less than the minimum guaranteed under the circular dated 7.6.1999, their pension is being increased to the minimum provided in the circular dated 7.6.1999. NPA cannot again be added to the minimum to step up the pension. If that is done, it will amount to taking NPA into account twice for purposes of pension, which is impermissible. The contention of discrimination between pre 1.1.1996 retirees and post 1.1.1996 retirees is, therefore, imaginary. (Para 22)

       (ii) SERVICE LAW - Pension - Army Medical Corps Retirees - Excess payments made on account of the wrong interpretation/understanding of the circular dated 7-6-1999 - Claim of relief against recovery of excess wrong payment - Maintainability - Held, respondents shall not recover any excess payments made towards pension in pursuance of circular dated 7-6-1999.

       Held : Such relief, restraining recovery back of excess payment, is granted by courts not because of any right in the employees, but in equity, in exercise of judicial discretion, to relieve the employees, from the hardship that will be caused if recovery is implemented. A Government servant, particularly one in the lower rungs of service would spend whatever emoluments he receives for the upkeep of his family. If he receives an excess payment for a long period, he would spend it genuinely believing that he is entitled to it. As any subsequent action to recover the excess payment will cause undue hardship to him, relief is granted in that behalf. But where the employee had knowledge that the payment received was in excess of what was due or wrongly paid, or where the error is detected or corrected within a short time of wrong payment, Courts will not grant relief against recovery. The matter being in the realm of judicial discretion, courts may on the facts and circumstances of any particular case refuse to grant such relief against recovery.(Para 25)

       On the same principle, pensioners can also seek a direction that wrong payments should not be recovered, as pensioners are in a more disadvantageous position when compared to in-service employees. Any attempt to recover excess wrong payment would cause undue hardship to them. The petitioners are not guilty of any misrepresentation or fraud in regard to the excess payment. NPA was added to minimum pay, for purposes of stepping up, due to a wrong understanding by the implementing departments. We are therefore of the view that Respondents shall not recover any excess payments made towards pension in pursuance of circular dated 7.6.1999 till the issue of the clarificatory circular dated 11.9.2001. In so far as any excess payment made after the circular dated 11.9.2001, obviously the Union of India will be entitled to recover the excess as the validity of the said circular has been upheld and as pensioners have been put on notice in regard to the wrong calculations earlier made.(Para 26)

       In view of the above, the challenge to the validity of the circular dated 11.9.2001 is rejected. These petitions (Transferred Cases) are dismissed. The Respondents, however, shall not recover the excess, if any, paid to the petitioners between 7.6.1999 and 11.9.2001. Respondents may recover the excess if any paid after 11.9.2001 in appropriate monthly instalments approximately equal to the monthly excess payment.(Para 30)

       (iii) SERVICE LAW - Pension - Determination of - Principles relating to.

       Held : a) In regard to pensioners forming a class, computation of pension cannot be by different formula thereby applying an unequal treatment solely on the ground that some retired earlier and some retired later. If the retiree is eligible for pension at the time of his retirement and the relevant pension scheme is subsequently amended, he would become eligible to get enhanced pension as per the new formula of computation of pension from the date when the amendment takes effect. In such a situation, the additional benefit under the amendment, made available to the same class of pensioners cannot be denied to him on the ground that he had retired prior to the date on which the aforesaid additional benefit was conferred.

       b)But all retirees retiring with a particular rank do not form a single class for all purposes. Where the reckonable emoluments as on the date of retirement (for the purpose of computation of pension) are different in respect of two groups of pensioners, who retired with the same rank, the group getting lesser pension cannot contend that their pension should be identical with or equal to the pension received by the group whose reckonable emolument was higher. In other words, pensioners who retire with the same rank need not be given identical pension, where their average reckonable emoluments at the time of their retirement were different, in view of the difference in pay, or in view of different pay scales being in force.

       c)When two sets of employees of the same rank retire at different points of time, it is not discrimination if:

       (i)when one set retired, there was no pension scheme and when the other set retired, a pension scheme was in force.

       (ii)when one set retired, a voluntary retirement scheme was in force and when the other set retired, such a scheme was not in force; or

       (iii)when one set retired, a PF scheme was applicable and when the other set retired, a pension scheme was in place.

       One set cannot claim the benefit extended to the other set on the ground that they are similarly situated. Though they retired with the same rank, they are not of the same class or homogeneous group. The employer can validly fix a cut-off date for introducing any new pension/retirement scheme or for discontinuance of any existing scheme. What is discriminatory is introduction of a benefit retrospectively (or prospectively) fixing a cut off date arbitrarily thereby dividing a single homogeneous class of pensioners into two groups and subjecting them to different treatment. (Para 20)