PETITIONER: T.S. THIRUVENGADAM Vs. RESPONDENT: THE SECRETARY TO GOVT. OF INDIA, MINISTRY OF FINANCE, DATE OF JUDGMENT17/02/1993 BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) KASLIWAL, N.M. (J) CITATION: 1993 SCR (1)1078 1993 SCC (2) 174 JT 1993 (1) 609 1993 SCALE (1)625 ACT: Civil Services: Central Civil Services (Pension) Rules, 1972 Retirement benefits Govt. servants absorbed in public sector Undertakings-Government of India Memorandum dated 16.6.1967- Revised Terms and Conditions-Made applicable to those who retired after the issue; of Memorandum-Validity of. Constitution of India, 1950. Articles 14 and 16-Retirement benefits to Govt. servants absorbed in Public Sector Undertakings-Government of India- Memorandum dated 16.6.1967-Terms and Conditions revised-Made applicable from date of issue of the Memorandum- Reasonableness of the classification-Cut-off date-whether arbitrary and discriminatory. HEADNOTE: The appellant was serving the Audit Department of the Government of India. He was sent on foreign service to the Public Sector Undertaking Neyveli Lignite Corporation Ltd. (N.L.C.) and was absorbed there. Before joining N.L.C. he had already completed 15 years of pensionable government service. Retirement benefits in such cases were regulated by Memorandum dated November 10, 1960 issued by the Ministry of Finance (Department of Expenditure), New Delhi. According to the said Memorandum the retirement benefits for service rendered by a government servant before his absorption in a public undertaking were admissible equal to what the government would have contributed had the individual been on contributory provident fund terms, with 2% simple interest thereon. The Government of India subsequently issued Memorandum dated June 16, 1967 providing revised terms and conditions of absorption in Central Public Sector Undertakings but restricted the revised benefits only to those who were absorbed on or after June 16, 1967. The appellant retired 1078 1079 from the public undertaking and was paid a sum of Rs. 3036 as retirement benefits in terms of the Memorandum dated November 10, 1960. The benefit of the revised terms and conditions of absorption as contained in the government Memorandum dated June 16, 1967 was denied to the appellant on the ground that he was absorbed in the public undertaking prior to the date of coming into force of the said Memorandum. The appellant challenged the same by riling a Writ Petition before the High Court. Subsequently, the Writ Petition was transferred to the Central Administrative Tribunal which rejected the claim of the appellant. Being aggrieved against the Tribunal's judgment, the appellant preferred the present appeal. It was contended on behalf of the appellant that it was not open to the government to deny the benefit of the 1967 Memorandum to those employees who were absorbed prior to the date of the Memorandum as it would be arbitrary and that such classification is violative of Articles 14 and 16 of the Constitution. On behalf of the respondents, it was contended that the revised retirement benefits were introduced to attract more and more government servants for permanent absorption in government undertakings to build up their cadres, and this being a new incentive, it has been given effect to from the date of issue of orders and there was nothing arbitrary or discriminatory in fixing the cut-off date. Allowing the appeal, this Court, HELD : 1.1. The object of bringing into existence the revised terms and conditions in the Memorandum dated June, 16, 1967 was to protect the pensionary benefits which the Central Government servants had earned before their absorption into the public undertakings. Restricting the applicability of the revised Memorandum only to those who are absorbed after the coming into force of the said Memorandum, would be defeating the very object and purpose of the revised Memorandum. The appellant along with other Central Government employees was sent on foreign service to the public undertaking in the year 1961. He was absorbed in the year 1964. All those who joined foreign service alongwith the appellant but were absorbed after June 16, 1967 have been given the benefits under the revised Memorandum. Denying the same to the appellant would be contrary to fairplay and justice. Assuming that the revised 1080 Memorandum is an incentive to attract Central Government employees to public undertakings, the persons who are so attracted do not become a different class. They join the same class to which the persons like the appellant belong. Therefore, all those Central Government employees who were absorbed in public undertakings either before June 16,1967 or thereafter and were serving the public undertakings, are entitled to the benefits provided under the Memorandum dated June 16, 1967. [1083G-H; 1084A-B-C] 1.2. It is no doubt correct that the Memorandum dated June 16, 1967 is prospective which only means that the benefits therein can be claimed only after June, 16,1967. The Memorandum, however, takes into consideration the past event that is the period of service under the Central Government for the purpose of giving pro-rata pension. Whoever has rendered pensionable service prior to coming into force of the Memorandum would be entitled to claim the benefits under the said Memorandum. Restricting the benefits only to those who were absorbed in public undertaking after June 16, 1967 would be arbitrary and hit by Articles 14 and 16 of the Constitution. [1084E] 2. Rule 37 of Central Civil Services (Pension) Rules, 1972 provides that a government servant who has been permitted to be absorbed in service in a Central Government public undertaking in public interest, be deemed to have retired from service from the date of such absorption and shall be eligible to receive retirement benefits in accordance with the orders of the Government applicable to him. Admittedly the appellant was permitted to be absorbed in the Central Government public undertaking in public interest. The appellant, as such, shall be deemed to have retired from government service from the date of his absorption and is eligible to receive the retirement benefits. It is no doubt correct that the retirement benefits envisaged under Rule 37 are to be determined in accordance with the Government orders but the plain language of the Rule does not permit any classification while granting the retirement benefits. When the Rule specifically provides that all the persons who fulfil the pre-conditions prescribed therein shall be deemed to have retired from government service from the date of absorption and shall be eligible to receive retirement benefits then the government while granting benefits cannot deny the same to some of them on the basis of arbitrary classification. All those person who fulfil the conditions under Rule 37 are a class by themselves 1081 and no discrimination can be permitted within the said class. The government action in restricting the benefits under the revised Memorandum dated June 16, 1967 only to those who are absorbed after that date goes contrary to the Rule and cannot be sustained. [1085C-G] JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 666 of 1993.
From the Judgment and Order dated 14.6.1988 of the Central
Administrative Tribunal, Madras in T.A. No. 12 of 1988.
M.N. Krishnamani, T. Raja and Pravir Choudhary for the
Appellant.
Altaf Ahmad, Addl. Solicitor General, V.N. Ganpule, Hemant
Sharma and S.N. Terdol for the Respondents.
The Judgment of the Court was delivered by
KULDIP SINGH, J. Special leave granted.
Applications for impleadment are allowed.
The appellant was in the service of the Central Government
for a period of about 15 years. He was thereafter
permanently absorbed in a public undertaking, from where he
retired on April 1, 1984. The question for our
consideration is whether the appellant on absorption in the
public undertaking was eligible for pro-rata pension and
death-cum-retirement gratuity based on the length of his
qualifying service under the Government till the date of
absorption.
The appellant was serving the Audit Department (Defence
Service) of the Government of India as Substantive Upper
Division Clerk. He was sent on foreign service to Neyveli
Lignite Corporation Ltd. (public sector undertaking) on
January 9/10, 1961. He was permanently absorbed in the
public undertaking with effect from August 1, 1964. It is
not disputed that the appellant, having joined Central
Government service on July 25, 1949, had completed 15 years
of pensionable government-service. On the date of
appellant’s permanent absorption in the public undertaking
the retirement benefits were regulated by Memorandum dated
November 10, 1960 issued by the Ministry of Finance
(Department of Expenditure), New Delhi.
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According to the said Memorandum the retirement benefits for
service rendered by a government servant before his
absorption in a public undertaking, were admissible equal to
what the government would have contributed had the
individual been on contributory provident fund terms, with
2% simple interest thereon. The Government of India
subsequently issued Memorandum dated June 16, 1967 providing
revised terms and conditions of absorption in Central Public
Sector Undertakings but restricted the revised benefits only
to those who were absorbed on or after June 1.6, 1967. The
operative features of the revised instructions were as
under:-
(i) A permanent government servant with not
less than 10 years qualifying service on
absorption in public undertaking was eligible
for pro-rata pension and death-cum-retirement
gratuity based on the length of his qualifying
service under government till the date of
absorption. The pension was to be calculated
on the basis of average emoluments immediately
before absorption.
(ii)The pro-rata pension, gratuity, etc.
admissible in respect of the service rendered
under the government was disbursable only from
the date the government servant would have
normally superannuated had be continued in
service.
The appellant retired from the public undertaking on April
1, 1984. It is not disputed that on January 15, 1974 the
appellant was paid a sum of Rs. 3036 as retirement benefits
in terms of the Memorandum dated November 10, 1960. The
benefit of the revised terms and conditions of absorption as
contained in the Government Memorandum dated June 16, 1967
was denied to the appellant on the short ground that he was
absorbed in the public undertaking prior to the date of
coming into force of the said Memorandum.
The appellant filed a writ petition tinder Article 226 of
the Constitution of India on October 19, 1984 in the Madras
High Court seeking a mandamus directing the respondents to
grant him pro-rata pension and all other benefits admissible
under the revised Memorandum dated June 16, 1967. As an
interim measure the High Court directed that the appellant
be paid 50 per cent of the pro-rata pension and other
pensionary benefits
1083
under the Memorandum dated June 16, 1967 from the date of
his absorption in the public undertaking. The writ petition
was transferred to the Central Administrative Tribunal,
Madras. The tribunal by its judgment dated June 14, 1988
dismissed the application and rejected the claim of the
appellant. This appeal by way of special leave is against
the judgment of the Central Administrative Tribunal.
The appellant has questioned the validity of the condition
imposed in the Memorandum dated June 16, 1967 making the
Memorandum applicable only to such of the employees who are
absorbed in the public undertakings on or after June 16.
1967. According to the appellant it was not open to the
government to deny the benefit of the Memorandum to those
employees who were absorbed prior to the date of the
Memorandum as it would bring into existence arbitrary
classification in respect of government employees absorbed
in the public undertakings prior to June 16, 1967 and
thereafter. The appellant has contended that such
classification is not warranted under Articles 14 and 16 of
the Constitution as it has no nexus with the object sought
to be achieved by the government Memorandum.
The contention of the respondents, on the other hand, is
that the revised retirement benefits were introduced to
attract more and more government servants for permanent
absorption in government undertakings to build up their
cadres, It was thus an incentive for encarding suitable
persons in the government undertakings. According to the
respondents, being a new incentive, it has been given effect
from the date of issue of orders and there is nothing
arbitrary or discriminatory in fixing the cut-off date.
There is no dispute that Neyveli Lignite Corporation Ltd. is
a body which is sponsored, financed and controlled by the
Central Government. More and more government functions are
being brought under the government undertakings and
autonomous bodies. There is considerable mobility from
Central Government Departments to the public undertakings.
The object of bringing into existence the revised terms and
conditions in the Memorandum dated June 16, 1967 was to
protect the pensionary benefits which the Central Government
servants had earned before their absorption into the public
undertakings. Restricting the applicability of the revised
Memorandum only to those who are absorbed after the coming
into force of, the said Memorandum, would be defeating the
very object and
1084
of the revised Memorandum. It is not disputed that the
appellant along with other Central Government employees was
sent on foreign service to the public undertaking in the
year 1961. He was absorbed in the year 1964. All those,
who joined on foreign service alongwith the appellant but
were absorbed after June 16, 1967, have been given the
benefits under the revised Memorandum. Denying the same to
the appellant would be contrary to fairplay and justice.
Assuming that the revised Memorandum is an incentive to
attract Central Government employees to public undertak-
ing,,, the persons who are so attracted do not become a
different class. They join the same class to which the
persons like the appellant belong. Therefore, all those
Central Government employees who were absorbed in public
undertakings either before June 16, 1967 or thereafter and
were serving the public undertakings, are entitled to the
benefits provided under the Memorandum dated June 1.6, 1967.
We do not, also, find substance in the contention that the
revised benefits being new it could only be prospective in
operation and cannot be extended to employees who were
absorbed earlier. It is no doubt correct that the
Memorandum dated June 16, 1967 is prospective which only
means that the benefit.-, therein can be claimed only after
June 16, 1967. The Memorandum, however, takes into
consideration the past event that is the period of service
under the Central Government for the purposes of giving pro-
rata pension. Whoever has rendered pensionable service
prior to coming into force of the Memorandum would be
entitled to claim the .benefits under the said Memorandum.
Restricting the benefits only to those who were absorbed in
public undertakings after June 16, 1967 would be arbitrary
and hit by Articles 14 and 16 of the Constitution.
We may examine the claim of the appellant under the Central
Civil Services (Pension) Rules, 1972 (the Rules). Rule 37
of the Rules is as under:-
” A Government servant who has been permitted
to be absorbed in a service or post in or
under a corporation or company wholly or
substantially owned or controlled by the
Government or in or under a body controlled or
financed by the Government shall, if such
absorption is declared by the Government to be
in the public interest, be deemed to have
retired from service from the date of
1085
such absorption and shall be eligible to
receive retirement benefits which he may have
elected or deemed to have elected, and from
such date as may be determined, in accordance
with the orders of the Government applicable
to him:
Provided that no declaration regarding
absorption in the public interest in a service
or post in or under such corporation, company
or body shall be required in respect of a
Government servant whom the Government may, by
order, declare to be a scientific employee.”
Rule 37, thus, provides that a government servant who has
been permitted to be absorbed in service in a Central
Government public undertaking in public interest, be deemed
to have retired from service from the date of such
absorption and shall be eligible to receive retirement
benefits in accordance with the orders of the Government
applicable to him. It is not disputed that the appellant
was permitted to be absorbed in the Central Government
public undertaking in public interest. The appellant, as
such, shall be deemed to have retired from government
service from the date of his absorption and is eligible to
receive the retirement benefits. It is no doubt correct
that the retirement benefits envisaged under Rule 37 are to
be determined in accordance with the government order but
the plain language of the rule does dot permit any
classification while granting the retirement benefits. When
the Rule specifically provides that all the persons who
fulfil the pre-conditions prescribed therein shall be deemed
to have retired from government service from the date of
absorption and shall be eligible to receive retirement
benefits then the government while granting benefits cannot
deny the same to some of them on the basis of arbitrary
classification. All those persons who fulfil the conditions
under Rule 37 are a class by themselves and no
discrimination can be permitted within the said class. The
government action in restricting the benefits under the
revised Memorandum dated June 16, 1967 only to those who are
absorbed after that date goes contrary to the Rule and
cannot be sustained.
We, therefore, allow the appeal, set aside the judgment of
the Central Administrative Tribunal and direct the
respondents to grant pro-rata pension and other benefits to
the appellant under the office Memorandum dated June 16,
1967. The respondents are directed to finarise the benefits
1086
within three months from today and all the arrears of
pension etc. shall be paid to the appellant within one month
thereafter with 12% interest. Any payment already received
by the appellant under the interim order of the High Court
has to be adjusted. The appellant shall be entitled to
costs which we quantify as Rs. 10,000.
We allow I.A. 4/91 and direct that the applicants therein
namely, K.B.L. Mathur, Jaswant Lal Jetlie and C.L. Soni
whose cases are identical to that of the appellant be also
given benefit of the Memorandum dated June 16, 1967 in
similar terms as directed by us in respect of the appellant.
These applicants shall, however, be not entitled to costs.
G.N.
Appeal allowed.
1087