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PETITIONER:

"COMMON CAUSE" A REGISTERED SOCIETY AND OTHERS

Vs.

RESPONDENT:

UNION OF INDIA

DATE OF JUDGMENT09/12/1986

BENCH:

MISRA RANGNATH

BENCH:

MISRA RANGNATH

BHAGWATI, P.N. (CJ)

CITATION:

1987 AIR 210 1987 SCR (1) 497

1987 SCC (1) 142 JT 1986 991

1986 SCALE (2)974

CITATOR INFO :

RF 1988 SC1407 (3)

R 1988 SC2125 (3)

D 1990 SC1228 (1)

ACT:

Central Civil Services (Commutation. of Pension) Rules,

1981-Commuted value of pension--Deduction from monthly

pension-Restoration of--After completion of 15 years from

date of retirement--Both for Civilian employees and Armed

Forces personnel--Benefit effective from April 1, 1985.

HEADNOTE:

The Central Civil Services (Commutation of Pension)

Rules, 1981 are the rules applicable to civilian employees

under the Government of India. In regard to Defence person-

nel a similar set of regulations is in force. In the case of

civilians the total amount of pension which can be commuted

is upto onethird, while in the case of Defence personnel,

commutation is admissible upto 43% in the case of officers

and upto 45% in respect of other ranks.

In petitions under Article 32, the petitioners have

asked for striking down certain provisions of the said Rules

as they permit the Union to recover more than what is paid

to the pensioners upon commutation and for a direction that

an appropriate scheme rationalising the provisions relating

to commutation be brought into force because there has been

a substantial improvement in the life expectancy of the

people, and since commutation portion out of the pension is

ordinarily recovered within about 12 years, there is no

justification for fixing the period at 15 years.

The respondent--Union of India challenged the maintain-

ability of the petitions as also the claim of the petition-

ers. On the suggestion of the Court, the Union of India

examined the matter and agreed to restore the commuted

portion of the pension in regard to civilian employees at

the age of 70 years or after 15 years, whichever is later,

effective from April 1, 1986. So far as Defence employees

were concerned, it was contended that retirement in their

case was at an early age and merely with 1apse of a period

of 15 years full pension could not be restored because they

receive in consideration of the exigencies of the service a

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higher rate of pension as compared to civilian employees and

the benefit contained in the Government order cannot be

extended to all classes of Defence personnel.

Allowing the petitions,

498

HELD: 1. When a pensioner commutes any part of his

pension upto the authorised limit, his pension is reduced

for the remaining part of his life by deducting the commuted

portion from the monthly pension. [501 B]

2. Commutation brings about certain advantages. The

commuting pensioner gets a lump sum amount which ordinarily

he would have received in course of a spread over period

subject to his continuing to live. Two advantages are cer-

tainly forthcoming out of commutation--(1) availability of a

lump sum amount, and (2) the risk factor. Many State Govern-

ments have already formulated schemes accepting the 15 years

rule. This Court would not be justified in disturbing the 15

years formula so far as civilian pensioners are concerned.

[501 C-D]

3. On the expiry of 15 years from the date of retire-

ment, restoration of commuted value of pension would take

place and it would be just and equitable that the benefit of

commuted portion of the pension should be effective from

1.4.1985 so far as civilian employees are concerned.[500 E,

501 G]

4. The decision of the respondent--Government does not

cover all classes of Defence personnel, having been confined

to personnel of Armed Forces in whose case the retirement

age varies in accordance with the colour service prescribed

for the rank (attaining the age of 37/38 years or more).

Previously the retiring age for the lower ranks such as

sepoys, used to be after 15 years' service but now it has

been enhanced to 20 years' service. A sepoy retiring after

20 years' service is entitled to 5 years of weightage, for

his pension entitlement. Similarly a Naik retiring after 22

years' of service and a Havildar after 24 years' service are

also given credit of five yeats. While a civilian employee

ordinarily retires after a full term of service entitling

him to full pension, it does not happen in the case of the

lower ranks in the Defence services and with the extra-

advantage by the addition of years of credit, the benefit in

terms of money works out in the range of about 75% to 6%.

[501 H-502 B]

5. More than 50% of the Defence personnel belong to the

lowest rank and about 81% in all retire early. The weightage

factor relied upon by the respondent to treat the Defence

personnel differently is not a tenable feature. The Defence

personnel are a class by themselves. In their case, retire-

ment takes effect in certain classes as justified by the

exigencies of the service rather early. Weightage, if any,

is intended to cover this so that an equation for other

purposes could be established. There is no merit in the

stand of respondent that the early age of retirement is

fully compensated by the higher rate of pension. [502C -- D]

6. No separate period need be fixed for the Armed Forces

personnel and

499

they should also be entitled to restoration of the commuted

portion of the pension on the expiry of 15 years as is

conceded in the case of civil pensioners, and for them too

the effective date should be from 1.4.1985. [502 F-G]

7. In dealing with a matter of this nature it is not

appropriate to be guided by the example of Life Insurance;

equally unjust it would be to adopt the interest basis. The

conclusion should be evolved by relating it to the 'years of

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purchase' basis. An addition of two years to the period

necessary for the recovery on the basis of years of purchase

justifies the adoption of the 15 year rule, which appears to

be equitable. [502 E]

JUDGMENT:

ORIGINAL JURISDICTION: Writ Petition No. 3958-61 of 1983.

(Under Article 32 of the Constitution of India)

H. Salve, P.H. Parekh and P.K. Manohar, for the Petitioners.

P.P. Singh, R.D. Agarwala, Ms. S. Relan, C.V.S. Rao,

L.R. Singhand S.R. Srivastava for the Respondent.

The Judgment of the Court was delivered by

RANGANATH MISRA, J. By these applications under Article

32 of the Constitution Common Cause, a registered Society

and three retired Government servants have asked for strik-

ing down certain provisions of the Communication of Pension

Rules applicable to civilian and defence pensioners as they

permit the Union of India to recover more than what is paid

to the pensioners upon commutation and for a direction that

an appropriate scheme rationalising the provisions relating

to commutation be brought into force. The respondent has

filed a counter-affidavit challenging the maintainability of

the petition as also the claim of the petitioners and the

matter has been heard at considerable length from time to

time. Parties have filed written submissions supplementing

their oral arguments.

The Central Civil Services (Commutation of Pension),

Rules, 1981 are the approximate rules in force so far as

civilian employees Under the Government of India are con-

cerned. A set of regulations is in force in regard to De-

fence personnel.

It is not disputed that in the case of civilians the

total amount of pension which can be commuted is upto one-

third while in the case of Defence personnel, commutation is

admissible upto 43 per cent in the case of officers

500

and upto 45 per cent in respect of other ranks. The argument

advancement on behalf of the petitioners that there has been

a substantial improvement in the life expectancy of the

people in India has not been refuted on behalf of the re-

spondent. This Court suggested to the respondent in course

of the hearing that in the changed situation now prevailing

in the country, a new look should be given to the matter. In

deference to the suggestion made by this Court the respond-

ent took time to consider the various aspects raised in the

writ petitions and the oral submissions advanced at the

hearing as also the written notes submitted in Court. II

also took into account the fact that several State Govern-

ments have changed the rule applicable to commutation and

have restored full pension to the pensioners who commuted a

part of their pension after lapse of fifteen years. Union of

India has now agreed to restore the commuted portion of the

pension in regard to all civilian employees at the age of

seventy years or after fifteen years, whichever is later,

and has agreed to make this effective from April 1, 1986.

This decision of the Respondent was communicated to the

learned Attorney General by a letter dated 20.3.1986 reading

thus:

"I am glad to inform you that Government have

taken a decision in the matter of recovery

from pension towards commuted value of pen-

sion. The decision is as follows:

(i) Recovery from pension payable every month

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towards commuted value of pension will stop on

the completion of 15 years from the date of

retirement on superannuation or on the pen-

sioner completing the age of 70 years, which-

ever is later.

(ii) The formulation will apply to all civil-

ian pensioners in whose case the age of re-

tirement on superannuation is 58 years and the

personnel of Armed Forces in whose case the

retirement age varies in accordance with the

colour service prescribed for the rank (at-

taining the age of 37/38 years or more).

(iii) Government have taken this decision as

an act of goodwill to pensioners and to

'extend to them some measure of relief in the

evening of their lives. It is sincerely be-

lieved that there will be no further demand on

this issue and that the pensioners will accept

the decision of the Government without dissent

or reservation.

(iv) The decision will take effect prospec-

tively (from April, 1, 1986)."

501

A distinction has been made in the case of Defence employees

on the ground that retirement in their case is at an early

age and merely with lapse of a period of fifteen years full

pension could not be restored. It has also been pointed out

that the Defence personnel receive in consideration of the

exigencies of the service a higher rate of pension as com-

pared to civilian employees.

As the position now stands, when a pensioner commutes

any part of his pension upto the authorised limit his pen-

sion is reduced for the remaining part of his life by de-

ducting the commuted portion from the monthly pension.

The petitioners have contended that the commuted portion

out of the pension is ordinarily recovered within about 12

years and, therefore, there is no justification for fixing

the period at 15 years. Commutation brings about certain

advantages. The commuting pensioner gets a lump sum amount

which ordinarily he would have received in course of a

spread over period subject to his continuing to live. Thus,

two advantages are certainly forthcoming out of

commutation--(1) availability of a lump sum amount, and (2)

the risk factor. Again many of the State Governments have

already formulated schemes accepting the 15 year rule. In

this background, we do not think we would be justified in

disturbing the 15 year formula so far as civilian pensioners

are concerned.

The age of superannuation used to be 55 until it was

raised to 58. It is not necessary to refer to the age of the

commuting pensioner when the benefit would be restored. It

is sufficient to indicate that on the expiry of fifteen

years from the period of retirement such restoration would

take place.

The respondent--Government has agreed that this benefit

should be extended with effect from 1.4.1986. The writ

applications were filed in 1983. The matter was placed on

board for hearing in February 1984. The Union Government

took some time for responding to the suggestion of the Court

and that is how the disposal was initially delayed. Thereaf-

ter, the hearing of the matter has again been delayed on

account of pressing business in the Court. In these circum-

stances, we think it just and equitable that the benefit

agreed to be extended in respect of the commuted portion of

the pension should be effective from 1.4.1985 so far as the

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civilian employees are concerned.

The decision of the respondent--Government contained in

the above communication does not cover all classes of De-

fence personnel having been confined to personnel of Armed

Forces in whose case the retirement age varies in accordance

the colour service prescribed for the rank (attaining the

age of 37/38 years or more). In regard to those who are

excluded it has been contended that the retirement is at too

early an age and since a higher rate of

502

pension as compared to civilian employees is admissible, the

benefit contained in the Government order cannot be extended

to that class. Previously the retiring age for the lower

ranks such as sepoys, used to be after 15 years' service but

now it has been enhanced to 20 years' service. A sepoy

retiring after 20 years' service is entitled to five years

of weightage, for his pension entitlement. Similarly a Naik

retiring after 22 years of service and a Havildar after 24

years' service are also given credit of five years. While a

civilian employee ordinarily retires after a full term of

service entitling him to full pension, it does not happen in

the case of the lower ranks in the Defence services and with

the extra-advantage by the addition of-years of credit, the

benefit in terms of money works out in the range of about

75% to 6%. It has to be remembered that more than 50% of the

Defence personnel belong to the lowest rank and about 81% in

all retire early. The weightage factor relied upon by the

Respondent to treat the Defence personnel differently is not

a tenable feature. Undoubtedly the Defence personnel are a

class by themselves. In their case, retirement takes effect

in certain classes as justified by the exigencies of the

service rather-early. Weightage, if any, is intended to

cover this so that an equation for other purposes could be

established. There is really no merit in the stand of the

Respondent that the early age of retirement is fully compen-

sated by the higher rate of pension.

In dealing with a matter of this nature, it is not

appropriate to be guided by the example of Life Insurance;

equally unjust it would be to adopt the interest basis. On

the other hand, the conclusion should be evolved by relating

it to the 'years of purchase' basis. An addition of two

years to the period necessary for the recovery on the basis

of years of purchase justifies the adoption of the 15 years

rule. That is more or less the basis which appears to be

equitable. It may be that this would give rise to an addi-

tional burden on the exchequer but it would not be heavy and

after all it would bring some relief to those who have

served the cause of the Nation at great sacrifice. We are,

therefore, of the view that no separate period need be fixed

for the Armed Forces personnel and they should also be

entitled to restoration of the commuted portion of the

pension on the expiry of 15 years as is conceded in the case

of civil pensioners. And for them too the effective date

should be from 1.4.1985.

We direct the respondent--Government to give effect to

this order within a period of three months from now. We

place on record our appreciation of the consideration shown

by the Union of India to ameliorate the hardship of the

pensioners. There will be no order as to the costs.

A.P.J. Petitions

allowed.

503