1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.5252-5255 OF 2018

(Arising out of SLP(Civil) Nos.7368-71 of 2017)

United Bank of India and others …… Appellants

VERSUS

United Bank of India Retirees’ Welfare

Association and others etc. ..…. Respondents

JUDGMENT

Uday Umesh Lalit, J.

Leave granted.

2.These appeals by special leave are directed against (i) the common

Judgment and Final Order dated 26.09.2016 passed by the High Court at

Calcutta in APO Nos.315 and 316 of 2015; and (ii) against the order dated

2

05.12.2016 passed by the High Court at Calcutta in RVWO Nos.57 and 58

of 2016 in aforementioned APO Nos.315 and 316 of 2015. By its Judgment

and Orders under appeal, the High Court held that there was no justification

for making a distinction between pre November, 2002 retirees and post

November, 2002 retirees and the appellant must pay dearness relief to all

pensioners at the same rate.

3.A Memorandum of Settlement dated 29.10.1993 was entered into

between the managements of 58 banks as represented by the Indian Banks’

Association on one hand and their workmen as represented by the All India

Bank Employees’ Association on the other. Said memorandum recited that

the parties had agreed to introduce pension scheme in banks for the

workmen/employees in lieu of employers’ contribution to the provident fund

and that the pension scheme so agreed was to be broadly on Central

Government/Reserve Bank of India pattern. Paragraph 6 of the

memorandum dealt with Dearness Allowance relief to the pensioners and it

stipulated:

“Dearness relief to pensioners will be granted at such rates as

may be determined from time to time in line with the Dearness

Allowance formula in operation in Reserve Bank of India”

3

4.In exercise of powers conferred by Clause (f) of sub-Section (2) of

Section 19 of Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970, the Board of Directors of the Union Bank of India

after consultation with the Reserve Bank of India and with the previous

sanction of the Central Government made “Union Bank of India

(Employees’) Pension Regulations, 1995 (hereinafter referred to as the

“Pension Regulations”). Paragraph 2(d) defined “average emoluments” to

be the average of pay drawn by an employee during last 10 months of

service in the bank while Para 2(s) defined “pay”. Para 37 of the Pension

Regulations was as under:

“Dearness Relief- (1) Dearness relief shall be granted on basic

pension or family pension or invalid Pension or on

compassionate allowance in accordance with the rates specified

in Appendix II.”

Appendix II to the Pension Regulations dealt with Dearness

Allowance on basic pension. It categorized employees as under:-

“(a)Those workmen who had retired on or after 01.01.1986 and

before 01.11.1992 and those officers who had retired on or

after 01.01.86 but before 01.07.1993.

(b)Those workmen who retired on or after 01.11.1992 and

officers who retired on or after 01.07.1993 and

(c) Those employees who would retire on or after 01.04.1998.”

4

Different rates of Dearness Allowance relief as percentage of basic

pension were prescribed in respect of aforesaid three categories in said

appendix II as under:

“APPENDIX-II

(See Regulation 37)

Dearness relief on basic pension shall be as under:

(1) In the case of employees who were in the workmen

cadre and who retired on or after the 1st day of January, 1986,

but before the 1st day of November, 1992; and in the case of

employees who were in the officers cadre and who retired on

‟

or after the 1st day of January, 1986, but before the 1st day of

July, 1993, dearness relief shall be payable for every rise or be

recoverable for every fall, as the case may be, of every 4 points

over 600 points in the quarterly average of the all India Average

Consumer Price Index for Industrial Workers in the series 1960

= 100. Such increase or decrease in dearness relief for every

said four points shall be calculated in the manner given below:-

Scale of basic pension

(1)

The rate of dearness relief as a per

month percentage of basic pension

(2)

(i)Up to Rs.1250

(ii)Rs.1251 to Rs.

2000

(iii)Rs.2001 to

Rs.2130

(iv) Above Rs.2130

0.67 per cent.

0.67 per cent of Rs.1250 plus 0.55

per cent of basic pension in excess

of Rs.1250.

0.67 per cent of Rs.1250 plus 0.55

per cent of the difference between

Rs.2000 and Rs.1250 plus 0.33 per

cent of basic pension in excess of

Rs.2000.

0.67 per cent of Rs.1250 plus 0.55

5

per cent of the difference between

Rs.2000 and Rs.1250 plus 0.33 per

cent of the difference between

Rs.2130 & Rs. 2000 plus 0.17 per

cent of basic pension in excess of

Rs.2130.

(2)In the case of employees who are in workmen cadre and

who retire on or after 1st day of November, 1992; and in the

case of employees who are in the officers’ cadre and who retire

on or after 1st day of July, 1993, dearness relief shall be payable

for every rise or be recoverable for every fall, as the case may

be, of every 4 points over 1148 points in the quarterly average

of All India Average Consumer Price Index for Industrial

workers in the series 1960=100. Such increase or decrease in

dearness relief for every said four points shall be calculated in

the manner given below:

Scale of basic pension

Per month

(1)

The rate of dearness relief as a per

month percentage of basic pension

(2)

(i)Up to Rs.2400

(ii)Rs.2401 to

Rs.3850

(iii)Rs.3851 to

Rs.4100

(iv)Above Rs.4100

0.35 per cent.

0.35 per cent of Rs.2400 plus 0.29

per cent of basic pension in excess

of Rs.2400.

0.35 per cent of Rs.2400 plus 0.29

per cent of the difference between

Rs.3850 and Rs.2400 plus 0.17 per

cent of basic pension in excess of

Rs.3850.

0.35 per cent of Rs.2400 plus 0.29

per cent of the difference between

Rs.3850 and Rs.2400 plus 0.17 per

cent of the difference between

Rs.4100 & Rs. 3850 Plus 0.09 per

cent of basic pension in excess of

Rs.4100.

6

3. In the case of employees who retire on or after the 1st

day of April, 1998, dearness relief shall be payable for every

rise or be recoverable for every fall, as the case may be, of

every 4 points over 1616 points in the quarterly average of the

All India Average Consumer Price Index for Industrial workers

in the series 1960=100. Such increase or decrease in dearness

relief for every said four points shall be calculated in the

manner given below:

Scale of basic pension

Per month

(1)

The rate of dearness relief as a per

month percentage of basic pension

(2)

(i)Up to Rs.3380

(ii)Rs. 3381 to Rs.

5420

(iii)Rs.5421 to

Rs.5770

(iv) Above Rs.5770

0.25 per cent.

0.25 per cent of Rs.3380 plus 0.21

per cent of basic pension in excess

of Rs.3380.

0.25 per cent of Rs.3380 plus 0.21

per cent of the difference between

Rs.5420 and Rs.3380 plus 0.12 per

cent of basic pension in excess of

Rs.5420.

0.25 per cent of Rs.3380 plus 0.21

per cent of the difference between

Rs.5420 and Rs.3380 plus 0.12 per

cent of the difference between

Rs.5770 & Rs. 5420 Plus 0.06 per

cent of basic pension in excess of

Rs.5770.

5.On 02.06.2005 a Bipartite Settlement was arrived at between the

managements of 50 banks, represented by the Indian Banks’ Association on

one hand and their workmen, represented by the All India Bank Employees’

Association, National Federation of Bank Employees, Bank Employees’

7

Federation of India, Indian National Bank Employees’ Federation and

National Association of Bank Workers on the other. It was inter alia recited:

“(D)The AIBEA, NCBE, BEFI, INBEF and NOBW (hereafter

jointly called the Unions) submitted their Charter of Demands

on various dates between 10

th

June 2002 and 5

th

September

2002 for revision in wages and other service conditions of

workmen to IBA and requested for negotiations on the same,

with a view to arriving at an amicable settlement.

(E)Simultaneously, IBA also raised with the Unions, issues

on behalf of the managements of banks concerned, to be

discussed and settled with a view to improving efficiency of

operations, customer service, utilisation of manpower,

discipline and maintaining harmonious industrial relations.

(F)The parties initially agreed after negotiations that the

total quantum of wage increase arising out of a Settlement to be

signed in this regard shall be Rs.1,288 crores per annum

including the cost of superannuation benefits and accordingly

exchanged minutes on 23

rd

November 2004 at Mumbai. It is

agreed that for the purpose of this settlement, the additional cost

of pension be shared between the parties at the ratio as agreed

and pension costed accordingly.”

Para 7 of the Settlement dealt with Dearness Allowance which was

provided at following rates:

“1.(i)Subordinate Staff

0.18% of ‘pay’

(ii)Clerical Staff

(a)0.18% of ‘pay’ upto Rs.9,650/- plus

(b)0.15% of ‘pay’ above Rs.9,650/- and upto

Rs.15,350/- plus

8

(c)0.09% of ‘pay’ above Rs.15,350/- and upto

Rs.16,350/-.

(d)0.04% of ‘pay’ above Rs.16,350/-.

2.On and from 1

st

February, 2005, Dearness Allowance

shall be payable at 0.18% of Pay."

Para 38 provided for implementation of various provisions of the

Settlement and insofar as “Dearness Allowance- Single Slab Rate (0.18% of

pay)”, the date of implementation was stated to be 01.02.2005.

6.On 02.06.2005 itself, a Joint Note with caption, “Salary Revision for

Officers–Conclusion of Discussions between the Indian Banks and the

Officers’ Association” was prepared. It recited, “The representatives of the

Officers’ Associations have also agreed that the existing service conditions

be modified to the extent what has been stated in Annexure I.” Annexure I to

the Joint Note inter alia dealt with Dearness Allowance and the relevant

paragraph of said Annexure I was to the following effect:

“2)Dearness Allowance

(a)For the period from 1

st

November 2002 to 31

st

January, 2005, Dearness Allowance shall be payable for

every rise or fall of 4 points over 2288 points in the

quarterly average of the All India Average Working Class

Consumer Price Index (General) Base 1960=100 at the

following rates:

(i)0.18% of ‘pay’ upto Rs.9,650/- plus

9

(ii)0.15% of ‘pay’ above Rs.9,650/- and upto

Rs.15,350/- plus

(iii)0.09% of ‘pay’ above Rs.15,350/- and upto

Rs.16,350/-.

(iv)0.04% of ‘pay’ above Rs.16,350/-.

(b)On and from 1

st

February, 2005, Dearness

Allowance shall be payable for every rise or fall of 4

points over 2288 in the quarterly average of the All India

Average Working Class Consumer Price Index (General)

Base 1960=100 at 0.18 of Pay.”

7.The Bipartite Settlement dated 02.06.2005 was operational for a

period of five years from 01.11.2002. Thereafter 9

th

Bipartite Settlement

was arrived at between the parties on 27.04.2010 and was made operational

for five years from 01.11.2007. Clause 7(2) of the 9

th

Bipartite Settlement

was as under:-

“(i) On and from 1.05.2005, in the case of employees

who retired during the period 1.04.1998 to 31.10.2002, dearness

relief shall be payable for every rise or be recoverable for every

fall, as the case may be, of every four points over 1684 points in

the quarterly average of the All India Average Consumer price

Index for Industrial Workers in the series 1960=100. Such

increase or decrease in dearness relief for every said four points

shall be calculated in the manner given below:

Scale of basic pension

Per month

(1)

The rate of Dearness Relief

payable as a percentage of Basic

Pension 0.24 per cent

(2)

(i)Up to Rs.3550 0.24 per cent.

10

(ii)Rs.3551 to Rs.

5650

(iii)Rs.5651 to

Rs.6010

(iv) Above Rs.6010

0.24 per cent of Rs.3550 plus 0.20

per cent of basic pension in excess

of Rs.3550.

0.24 per cent of Rs.3550 plus 0.20

per cent of the difference between

Rs.5650 and Rs.3550 plus 0.12 per

cent of basic pension in excess of

Rs.5650.

0.24 per cent of Rs.3550 plus 0.20

per cent of the difference between

Rs.5650 and Rs.3550 plus 0.12 per

cent of the difference between

Rs.6010 & Rs. 5650 Plus 0.06 per

cent of basic pension in excess of

Rs.6010.

(ii)In respect of retirees for the period 01.11.2002 to

30.04.2005 for whom pension has been revised w.e.f.

01.05.2005 based on definition of pay in terms of Clause 6 of

the Bipartite Settlement dated 2

nd

June, 2005, dearness relief

shall be payable w.e.f. 01.05.2005 for every rise or be

recoverable for every fall as the case may be of every four

points over 2288 points in the quarterly average of All India

Average Consumer Price Index for Industrial Workers in the

series 1960=100@0.18% of the basic pension.

(iii)In respect of employees who retire on or after 1.05.2005,

dearness relief shall be payable for every rise or be recoverable

for every fall, as the case may be, of every four points over

2288 points in the quarterly average of All India Average

Consumer price index for Industrial Workers in the series

1960=100, at the rate of 0.18 per cent of basic pension.

(iv)In respect of employees who retired or died while in

service on or after 1.05.2005 Dearness Relief shall be payable

at 0.18% of the basic pension or family pension or invalid

pension or compassionate allowance as the case may be.

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Dearness Relief in the above manner shall be paid for every rise

or fall of 4 points over 2288 points in the quarterly average of

the All India Average Consumer Price Index for industrial

workers in the series 1960=100.

Note: The Dearness Relief as above shall be payable for the

half year commencing from the 1

st

day of February and ending

31

st

day of July on the quarterly average of index figures

published for the months October, November and December of

the previous year and for the half year commencing from 1

st

day

of August and ending with the 31

st

day of January on the

quarterly average of the index figures published for the months

of April, May and June of the same year.”

8. Thus, in case of employees who had retired during the period

01.04.1998 to 31.10.2002, dearness relief at the rate of 0.24% was awardable

upto Rs.3550/- of basic pension per month and thereafter the percentage for

amounts in excess of Rs.3550/- was successively at reduced rates. On the

other hand, in case of employees who retired during the period 01.11.2002 to

30.04.2005 the percentage of 0.18% was without any such tapering formula.

Further, comparison with Appendix II as originally forming part of the

Pension Regulations shows that with respect to three categories of retirees

the dearness relief was earlier computed on tapering formula. The idea of

tapering formula under the Bipartite Settlement dated 27.04.2010 was

retained with respect to pre November 2002 retirees while the dearness relief

to post November 2002 retirees was to be at the flat rate of 0.18 %.

12

9.Around this time, Reserve Bank of India, which initially was not

giving full compensation against price rise on dearness relief to employees

who retired prior to 01.11.2002 that is to say, was also giving dearness relief

on a tapering formula, started giving full compensation i.e. without any

tapering formula as would be evident from its circulars as under:

(A) Circular dated 01.04.2008

“TELEGRAM: “RESERVE BANK RESERVE BANK OF

INDIA

TELEPHONE: 022-2260100 CENTRAL OFFICE

FAX : 022-22661892HUMAN RESOURCES

022 – 22702524DEVELOPMENT

DEPARTMENT

E-MAIL : cgminchrdd@rbi.org.inMUMBAI – 400 001.

CO.HRDD.No.10139/21.01/2007-08 April 1, 2008

Chaitra 12, 1930 (S)

The Regional Director/Principal Chief General Manager

Chief General Manager-in-Charge/

Chief General Manager/General Manager (Officer-in-Charge)/

Principal,

Reserve Bank of India,

--- --- --- --- ---

Dear Sir,

Payment of Dearness Relief on pension/family pension

In respect of employees retired before November 1, 2002

13

Please refer to the instructions contained in paragraphs 2 (ii),

(iii) and (iv) of circular

CO.HRDD.No.G.97/7704/17.06.05/2007-08 dated February 1,

2008 with regard to payment of Dearness Relief in respect of

employees retired before November 1, 2002.

2. It has been decided that, with effect from March 1, 2008, in

supersession of the above instructions, the Dearness Relief in

respect of employees who retired/died in harness before

November 1, 2002, may be paid as per the rates indicated

below:

Pension/family pension based onRate of Dearness Relief for

the period March 1, 2008 to

July 31,

2008.

Payscales effective from

November 1, 1997 (CPI = 1684)

82.32% of pension/family

pension.

Payscales effective from

November 1, 1992 (CPI = 1148)

166.95% of pension/family

pension

Payscales effective from

November 1, 1987 (CPI=600)

411.38% of pension/family

pension

3.The instructions contained in the “Note” at the end of

paragraphs 2(iii) of the abovementioned circular will stand

modified to that extent. You are requested to recalculate the

Dearness Relief and make payment accordingly.

Yours faithfully,

(A.K. Sarangi)

General Manager”

(B) CIRCULAR DATED 01.08.2008

14

“RESERVE BANK OF INDIA

www.rbi.org.in

CO.HRDD.No.G 46/1344/17.06.05/2008-2009

August 1, 2008

Shravana 10, 1929 (Saka)

The Principal Chief General Manager/

Regional Director/

Chief General Manager-in-Charge/

Chief General Manager/

General Manager (Officer-in-Charge),

Principal,

Reserve Bank of India

__________________

Dear Sir,

Payment of Dearness Allowance/Dearness Relief

Based on All-India Consumer Price Index numbers for

Industrial Workers (base 1960 = 100) available for the quarter

ended June 2008, rate of Dearness Allowance for the quarter

August 2008 to October 2008 for employees in Classes I, III

and IV, drawing pay in the scales of pay based on CPI = 2288,

works out to 39.78% of pay, half of 79.56%.

2. The rates of Dearness Relief on Pension/Family

Pension/Ex-Gratia, for the period August 2008 to January 2009,

shall be worked out as under:

(i) On Pension based on the revised pay scales effective

from November 1, 2002 – 39.78% of basic pension.

(ii)The rates of Dearness Relief in respect of employees who

retired/died in harness before November 1, 2002:

Pension/family pension

based on

Rate of Dearness Relief for the

period August 2008 to January,

15

2009

Pay-scales effective from

November 1, 1997

(CPI = 1684)

89.28% of pension/family

pension

Pay-scales effective from

November 1, 1992

(CPI = 1148)

177.10% of pension/family

pension

Pay-scales effective from

November 1, 1987

(CPI = 600)

430.81% of pension/family

pension

3.You may please arrange to calculate and pay the

Dearness Allowance on “Pay” Dearness Relief on Pension,

Family Pension and Ex-Gratia amount, on the above basis,

unless you receive instructions from Central Office contrary to

above.

Yours faithfully,

(Neeraj Nigam)

Deputy General Manager”

10. Since the benefit of grant of full compensation against price rise on

dearness relief as was extended by Reserve Bank of India, was not extended

to the retirees of United Bank of India who had retired prior to 01.11.2002,

Respondent Nos.1 to 4 herein preferred Writ Petition No.507 of 2012 in the

High Court at Calcutta. It was submitted that though Reserve Bank of India

started giving full compensation against price rise on dearness relief to

retirees prior to 01.11.2002 vide circulars dated 01.04.2008, 01.08.2008 and

01.07.2010, the Appellant Bank continued to make distinction in terms of

16

dearness relief on the basis of dates of retirement of the pensioners and that

such action on part of appellant was clearly opposed to para 6 of the

Settlement dated 29.10.1993. Submitting that the cut-off date fixed by

Appellant Bank was in violation of Reserve Bank of India formula as well as

was arbitrary and irrational, the respondent Nos.1 to 4 claimed full

compensation against price rise on dearness relief. By way of example cases

of respondent Nos.3 to 4 were presented in para 30 of the petition in support

of the submission that the retirees prior to 01.11.2002 were getting

prejudiced. Said para 30 of the petition is quoted here for ready reference.

“30. The loss being suffered every month by the petitioner Nos.

3 and 4 for denial of RBI dearness relief formula on pension is

as follows:-

Santipriya Roy

Date of Retirement 30.09.2002

Basic Pension Rs.7880/-

Dearness Relief per slab on slab basis

Rs.3550/- x 0.24%Rs.8,520/-

Next Rs.2100/- x 0.20 % Rs.4,200/-

Next Rs.360/- x 0.12% Rs.432/-

Next Rs. 1870/- x 0.06% Rs.1,122/-

Rs.7880/- Rs.14,274/-

Dearness Relief for full compensation against price rise

17

Rs.7880/- x 0.24% Rs.18,912/-

Difference per slab Rs.18,912/- (-) Rs.14,274/- =Rs.4,638/-

Total D.R. on Slab basis Rs.14,274/- x 708 slab Rs.10,105.99

Total D.R. on 100% Rs.18,912/- x 708 slab Rs.13,389.69

------------------------------------------

Difference = Rs.3,283.70

------------------------------------------

Kalpataru Bhattachajee

Date of Retirement 31.10.2002

Basic Pension Rs.5431/-

Dearness Relief per slab on slab basis

Rs.3550/- x 0.24% Rs.8,520/-

Next Rs.1881/- x 0.20% Rs.3,762/-

Rs.5431/- Rs.12,282/-

Dearness Relief per slab for full compensation against price

rise.

Rs.5431/- x 0.24%

Rs.13,034/-

Difference per slab Rs.13,034/- (-) Rs.12,282/- =Rs.752/-

Total D.R. on Slab basis Rs.12,282/- x 708 slab Rs.8,695.65

Total D.R. on 100% Rs.13,034/- x 708 slab Rs.9,228.07

---------------------

Difference Rs.532.42”

---------------------

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11.In the affidavit in reply filed on behalf of the appellants it was inter

alia submitted that Pension Regulations having come into force in 1995 the

settlement dated 29.10.1993 had no force and as such no benefit could be

drawn on the basis of Regulations or Circulars issued by Reserve Bank of

India. It was further submitted that the distinction in respect of retirees prior

to 01.11.2002 was on the basis of a Bipartite Settlement dated 27.04.2010

and thus the genesis was stated to be in the agreement between the parties.

12.The aforesaid writ petition was allowed by Single Judge of the High

Court vide judgment and order dated 04.03.2015. It was observed that there

was nothing in Pension Regulations indicating that the Appellant Bank had

abandoned its policy as spelt out in para 6 of the Settlement of 1993 to

follow the rates of relief and formula adopted by Reserve Bank of India.

Relying upon the decision of this Court in D.S. Nakara v. Union of India

1

,

it was observed that the classification made in the instant case denying the

benefit of full dearness relief to retirees prior to 01.11.2002 was arbitrary

and irrational. The Single Judge however directed the Appellant Bank to

take a reasoned decision with regard to grant of 100% dearness relief to

retirees prior to 01.11.2002.

1

(1983) 1 SCC 305

19

13.The Judgment and order passed by the Single Judge directing the

appellant Bank to take fresh decision was questioned by the respondent

Nos.1 to 4 by filing APO No.315 of 2015, while the appellant bank

questioned the decision by filing APO No.316 of 2015, in so far as the

findings rendered and directions issued by the Single Judge were concerned.

Both these appeals were disposed of by the Division Bench on 26.09.2016.

The Division Bench relied upon the decision of this Court in D.S. Nakara

(supra) and in Kallakkurichi Taluk Retired Officials Association Tamil

Nadu and others v. State of Tamil Nadu

2

and observed as under:

“The effect of the joint note is that employees who retired

before the cut-off date would get dearness relief at a lower rate

than those who retired after that date. The dearness relief paid

is relatable to the cost of living index and varies in direct

proportion to the same. It must be borne in mind that dearness

relief is an amount paid to the retirees to neutralise the

astronomical rise in prices. The object of paying dearness relief

is the same, irrespective of the date on which the employee

retires. Inflation hits the employees who retire before the cut-

off date as hard as it does those who retire later. Therefore the

dearness relief cannot be different for two sets of retirees.”

It further observed as under:

“There is no dispute that the Bank Pension Regulations, 1995

have not been amended. These Regulations have been framed

in consonance and under the powers conferred on the Bank

2

(2013) 2 SCC 772

20

under the Banking Companies Act. They have a statutory force

of law. Clause 6 of the Pension regulations mandates that the

dearness relief will be paid to the employees of the member

banks in consonance with that paid by the Reserve Bank of

India to its employees. Therefore a joint note cannot take away

the right of employees to that dearness relief.”

Holding the distinction between pre-November 2002 retirees and post-

November 2002 retirees to be unreasonable, arbitrary and discriminatory the

Division Bench directed the appellant to pay the dearness relief to all

pensioners at the same rate. The direction was issued in following terms:

“Therefore, we direct the Bank to comply with Regulation 6 of

the Pension Regulations and to pay pension to the pre-2002

retirees at the same rate as enjoyed by the post-2002 retirees, as

has been paid to the retired employees of the Reserve Bank of

India. The judgment of the learned Single Judge is modified to

that extent.”

14.The appellant preferred Review Applications being RVWO Nos.57

and 58 of 2016 submitting that the decision dated 26.09.2016 required

certain typographical changes. The Division Bench of the High Court vide

its order dated 05.12.2016 effected changes as stated therein and disposed of

the Review Applications.

21

15.The appellant bank being aggrieved, challenged the decisions dated

26.09.2016 and 05.12.2016 rendered by the Division Bench by filing these

appeals by special leave on or about 07.02.2017. By that time, a decision

rendered by Division Bench of Madras High Court in Writ Appeal Nos.355

of 2013 and allied matters on 17.06.2013 was affirmed by this Court by

dismissing appeals arising therefrom on 01.02.2017.

16.At this stage it may be noted that Writ Petition Nos.50000-50002 of

2006 and allied writ petitions titled as A.B. Kasturirangan v. Canara Bank

etc. were allowed by Single Judge of Madras High Court by judgment and

order dated 14.12.2012. The challenge was to the non-grant of benefit of

100% neutralization of dearness relief to retirees prior to 01.11.2002 on lines

similar to the challenge raised in the present matters. It was observed by the

Single Judge that the Bipartite Settlement dated 02.06.2005 introduced

dearness relief at the slab rate of 0.18% of the basic pension; that the change

from tapering rate of slab rate was not an introduction of a new scheme but

was a modification of the existing one. He further observed that the

classification introduced by the bank was artificial and arbitrary and was not

based on any rational principle and that the bank had virtually created class

within a class. The matter was carried in appeal. While allowing the

22

appeals and setting aside the decision of the Single Judge, the Division

Bench observed as under:

“… the settlement has to be taken as a package deal and when

labour has gained in the matter of wages and if there is some

reduction in the matter of dearness allowance so far as the

award is concerned, it cannot be said that the settlement as a

whole is unfair and unjust and it is not possible to scan the

settlement in bits and pieces and hold some parts good and

acceptable and others bad. It has been further held that unless it

can be demonstrated that the objectionable portion is such that

it completely outweighs all the other advantages gained, the

Court will be slow to hold a settlement as unfair and unjust and

the settlement has to be accepted or rejected as a whole.

……..

… in the case on hand, the respondents are not covered by the

8

th

Bipartite Settlement/Joint Note and they were covered by

earlier Bipartite Settlement/Joint Note and they are not eligible

to get the benefits payable to the persons who are covered by

the 8

th

Bipartite Settlement/Joint Note as they were made

applicable only to those employees who were in service on

01.11.2002. The payment of pension and other related benefits

are covered by the earlier Settlement/Joint Note and hence, it is

not open to the respondents to contend that the benefits in the

form of Dearness Allowance at 0.18% is to be given to them.

In the considered opinion of this Court, the respondents are not

covered under the 8

th

Bipartite Settlement/Joint Note and hence,

the above cited judgment has no application to the case on

hand.”

This view was under challenge in Civil Appeal Nos.8420-8421 of

2013 and was affirmed by this Court on 01.02.2017.

23

17.The appellant in the present matters contended inter alia that the view

taken by Division Bench of Madras High Court was already affirmed by this

Court by dismissing the appeal therefrom on 01.02.2017; that the retirees

prior to 01.11.2002 could not claim same benefit/parity at par with those

who retired after 01.11.2002; that the dearness allowance payable to the

pensioners was linked to the pay and pre 01.11.2002 retirees were being paid

pension or dearness relief thereon as per service conditions applicable to

them at the time of retirement; that the decision of this Court in D.S. Nakara

(supra) would not be applicable in the present case and that the High Court

was in error in relying upon para 6 of Settlement dated 29.10.1993 as said

settlement had worked itself out. In its affidavit in reply the Retirees

Association submitted inter alia that in the Bipartite Settlement dated

02.06.2005, 100% neutralization of dearness allowance was introduced for

the first time by doing away with tapering rate of payment of dearness

allowance and post 01.02.2005 dearness allowance was to be paid at a single

slab rate of 0.18%. However, by subsequent Bipartite Settlement dated

27.04.2010 a distinction was made between pre and post 01.11.20002

retirees. The respondents submitted that the view taken by the High Court

did not call for any interference.

24

18.In this appeal, we heard Mr. Dhruv Mehta, learned Senior Counsel

for the appellant – Bank while the respondent namely Retirees Welfare

Association was represented by Mr. V.K. Bali, learned Senior Counsel. Mr.

A.S. Nambiar and Ms. V. Mohna, learned Senior Counsel appeared in IAs

51316 and 50769 respectively for interveners.

19.Before we deal with the controversy in the present matters, the law on

the point as laid down by this Court may be adverted to:

A]In D.S. Nakara & Others (supra) the principal question which arose

was, “is the date of retirement a relevant consideration for eligibility when a

revised formula for computation of pension is ushered in and made effective

from a specified date.”

3

The inquiry was limited to non-contributory

superannuation or retirement pension paid by government to its erstwhile

employee and for the purpose and object underlying it.

4

In that case formula

for computation of pension was liberalized vide office memorandum dated

25.05.1979 but the benefit was restricted to those government servants who

were in service on 31.03.1979 and retired on or after that date. The

challenge was to arbitrary division of a homogenous class by fixing the

eligibility criteria unrelated to the purpose of revision. In that context the

3

Para 2 of D.S. Nakara

4

Para 21 of D.S. Nakara

25

observations of this Court in Para 42 are relevant. Said Para 42 was as

under:

“42. If it appears to be undisputable, as it does to us that the

pensioners for the purpose of pension benefits form a class,

would its upward revision permit a homogeneous class to be

divided by arbitrarily fixing an eligibility criteria unrelated to

purpose of revision, and would such classification be founded

on some rational principle? The classification has to be based,

as is well settled, on some rational principle and the rational

principle must have nexus to the objects sought to be achieved.

We have set out the objects underlying the payment of pension.

If the State considered it necessary to liberalise the pension

scheme, we find no rational principle behind it for granting

these benefits only to those who retired subsequent to that date

simultaneously denying the same to those who retired prior to

that date. If the liberalisation was considered necessary for

augmenting social security in old age to government servants

then those who, retired earlier cannot be worse off than those

who retire later. Therefore, this division which classified

pensioners into two classes is not based on any rational

principle and if the rational principle is the one of dividing

pensioners with a view to giving something more to persons

otherwise equally placed, it would be discriminatory. To

illustrate, take two persons, one retired just a day prior and

another a day just succeeding the specified date. Both were in

the same pay bracket, the average emolument was the same and

both had put in equal number of years of service. How does a

fortuitous circumstance of retiring a day earlier or a day later

will permit totally unequal treatment in the matter of pension?

One retiring a day earlier will have to be subject to ceiling of

Rs.8100 p.a. and average emolument to be worked out on 36

months’ salary while the other will have a ceiling of Rs.12,000

p.a. and average emolument will be computed on the basis of

last 10 months’ average. The artificial division stares into face

and is unrelated to any principle and whatever principle, if there

be any, has absolutely no nexus to the objects sought to be

achieved by liberalising the pension scheme. In fact this

26

arbitrary division has not only no nexus to the liberalised

pension scheme but it is counter-productive and runs counter to

the whole gamut of pension scheme. The equal treatment

guaranteed in Article 14 is wholly violated inasmuch as the

pension rules being statutory in character, since the specified

date, the rules accord differential and discriminatory treatment

to equals in the matter of commutation of pension. A 48 hours’

difference in matter of retirement would have a traumatic effect.

Division is thus both arbitrary and unprincipled. Therefore, the

classification does not stand the test of Article 14.”

B]The principle laid down in D.S. Nakara (Supra) was explained in

two decisions rendered by Constitution Benches of this Court in Krishena

Kumar v. Union of India and Others

5

and in Indian Ex-Services League

and Others v. Union of India and Others

6

. Paragraphs 12 and 14 of the

latter decision in Indian Ex-Services League (Supra) were as under:

“12. The liberalised pension scheme in the context of which the

decision was rendered in Nakara provided for computation of

pension according to a more liberal formula under which

“average emoluments” were determined with reference to the

last ten months’ salary instead of 36 months’ salary provided

earlier yielding a higher average, coupled with a slab system

and raising the ceiling limit for pension. This Court held that

where the mode of computation of pension is liberalised from a

specified date, its benefit must be given not merely to retirees

subsequent to that date but also to earlier existing retirees

irrespective of their date of retirement even though the earlier

retirees would not be entitled to any arrears prior to the

specified date on the basis of the revised computation made

according to the liberalised formula. For the purpose of such a

5

(1990) 4 SCC 207

6

(1991) 2 SCC 104

27

scheme all existing retirees irrespective of the date of their

retirement, were held to constitute one class, any further

division within that class being impermissible. According to

that decision, the pension of all earlier retirees was to be

recomputed as on the specified date in accordance with the

liberalised formula of computation on the basis of the average

emoluments of each retiree payable on his date of retirement.

For this purpose there was no revision of the emoluments of the

earlier retirees under the scheme. It was clearly stated that ‘if

the pensioners form a class, their computation cannot be by

different formula affording unequal treatment solely on the

ground that some retired earlier and some retired later’. This

according to us is the decision in Nakara and no more.

14. Nakara decision came up for consideration before another

Constitution Bench recently in Krishena Kumar v. Union of

India. The petitioners in that case were retired Railway

employees who were covered by or opted for the Railway

Contributory Provident Fund Scheme. It was held that PF

retirees and pension retirees constitute different classes and it

was never held in Nakara that pension retirees and PF retirees

formed a homogeneous class, even though pension retirees

alone did constitute a homogeneous class within which any

further classification for the purpose of a liberalised pension

scheme was impermissible. It was pointed out that in Nakara ,

it was never required to be decided that all the retirees for all

purposes formed one class and no further classification was

permissible. We have referred to this decision merely to

indicate that another Constitution Bench of this Court also has

read Nakara decision as one of limited application and there is

no scope for enlarging the ambit of that decision to cover all

claims made by the pension retirees or a demand for an

identical amount of pension to every retiree from the same rank

irrespective of the date of retirement, even though the

reckonable emoluments for the purpose of computation of their

pension be different.”

28

C]In Union of India v. P.N. Menon and Others

7

the challenge to

the cut off date and prayer for extension of similar relief of treating a portion

of dearness allowance as pay for the purpose of retirement benefits was the

subject matter. While accepting the appeal and negating the challenge raised

by the concerned retirees, this Court in paragraphs 10 and 11 observed as

under:

“10. The concept of ‘dearness pay’ was evolved in respect of

employees in different pay ranges with different percentages of

the dearness pay. Thereafter the pension and gratuity were

worked out and an option was given to persons, who retired on

or after 30-9-1977 but not later than 30-4-1979, to choose either

of the two alternatives — (i) to have their pension and death-

cum-retirement gratuity calculated on their pay excluding the

element of dearness pay as indicated in paragraph 2 of the said

office memorandum; or (ii) to have their pension and death-

cum-retirement gratuity recalculated after taking into account

the element of dearness pay. If the stand of the respondents is to

be accepted that this scheme should have been made available,

without there being a cut-off date, to all including those who

have retired even 20 to 25 years before the introduction of the

scheme, then, according to us, the whole scheme shall be

unworkable, because it is linked with the payment of dearness

allowance, which is based on the level of price index. Different

institutions/departments have introduced the system of payment

of dearness allowance at different stages to mitigate the

hardship of their employees with the rise in the prices of the

essential articles as a result of the inflation.

11. On behalf of the Union of India, it has been stated that in

the aforesaid office memorandum dated 25-5-1979, 30-9-1977

was fixed as the cut-off date, with reference to the average cost

of living index at 272, which fell on 30-9-1977. It has been

7

1994 (4) SCC 68

29

further stated that those who were entitled to the benefits of the

said office memorandum, were given option either to opt for the

revised formula or retain the existing formula. Some of the

persons entitled to the new formula opted to retain their existing

position, because in their case the application of the new

formula would have resulted either in the reduction of the total

pension or the increase which would have been only marginal.

It has been said that under the office memorandum aforesaid,

dearness allowance with reference to average price index level

at 272 was treated as dearness pay for the purpose of pension

for those who retired after 30-9-1977. It has also been pointed

out that pensioners, who retired on or after 30-9-1977 with the

benefits of dearness pay, became entitled to less dearness relief,

as compared to those who retired before 30-9-1977 or retired

after 30-9-1977, but had opted not to get the benefit of the

impugned office memorandum.”

D].In State of Punjab v. Justice S.S. Dewan (Retired Chief Justice ) and

Others

8

by way of an amendment, the years put in by a judicial officer as

an advocate prior to his induction in judicial service were to be added for

computing length of service for the purpose of pension. The question was

whether the State was justified in limiting this relief to those who retired

after 22.02.1990. The ratio of decision in D.S. Nakara (Supra) was

distinguished on the ground that the benefit conferred was a new benefit and

not an upward revision of the existing pension scheme. This Court found

that it was not a case of liberalization of the existing scheme but introduction

of a new retiral benefit and as such the State was justified in making a

8

(1997) 4 SCC 569

30

distinction between the sets of retirees and limiting the benefit to those who

retired after the cut off date. The observations in paragraphs 6 and 7 quoted

hereunder are relevant:

“6. The change brought about by the amendment is that

whereas in respect of death-cum-retirement benefits members

of the Punjab Superior Judicial Service were earlier governed

by the All India Services (Death-cum-Retirement Benefits)

Rules, now they are governed by the Punjab Civil Services

Rules. Moreover, now in the case of a direct recruit to the

Punjab Superior Judicial Service the actual period of practice at

the Bar not exceeding 10 years has to be added to his service

for the purpose of determining the qualifying service. Formerly,

that is, prior to 22-2-1990, qualifying service of a member of

the Punjab Superior Judicial Service was the length of service

rendered by him as a member of the Punjab Superior Judicial

Service and also as a Judge of the High Court, if he was

elevated to that position before retirement. Even in case of a

direct recruit to that Service his standing at the Bar was

irrelevant but now that period has to be added for determining

the qualifying service. Obviously, this enlargement of the

period of qualifying service would lead to an increase in the

quantum of pension. This has been regarded by the High Court

and as contended by the respondent, liberalisation of the

pension scheme. For that reason, it further held that benefit of a

rule liberalising pension cannot be restricted to persons retiring

subsequently that is after the date of such liberalisation

otherwise it would amount to vicious discrimination violative

of Article 14 of the Constitution. The High Court has also held

that there is nothing in the language of the rule to suggest that

the benefit conferred by it is confined to the persons retiring

after 22-2-1990.

7. Therefore, what we have to consider is what is the nature of

the change made by the amendment. Is it by way of upward

revision of the existing pension scheme? Then obviously the

31

ratio of the decision in D.S. Nakara case would apply. If it is

held to be a new retiral benefit or a new scheme then the benefit

of it cannot be extended to those who retired earlier.”

E]In Col. B.J. Akkara (Retd.) v. Government of India and Others

9

The

principles to be considered in such matters were culled out in para 20 as

under:

“20. The principles relating to pension relevant to the issue are

well settled. They are:

(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

9

(2006) 11 SCC 709

32

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 force.

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.”

F]In Kallakkurichi Taluk Retired Officials Association, Tamil Nadu

and Others v. State of Tamil Nadu

10

the effect of government orders as

regards pension was that employees retiring on or after 01.06.1988 were at a

disadvantage as against those who had retired before 01.06.1988.

Paragraphs 38 and 39 of said decision are quoted hereunder:

10

(2013) 2 SCC 772

33

“38. The instant controversy should not be misunderstood as a

determination of the total carry-home pension of an employee.

All the government orders referred to above, deal with the

quantum of “dearness allowance” to be treated as “dearness

pay” for the calculation of pension. “Dearness pay” is one of

the many components, which go into the eventual determination

of pension. Therefore, the focus in the adjudication of the

present controversy must be on “dearness pay”, rather than on

the eventual carry-home pension. The relevance and purpose of

treating “dearness allowance” as “dearness pay”, has been

brought out in the foregoing paragraphs. Therefore, clearly, the

object sought to be achieved by adding “dearness pay” to the

wage of a retiree, while determining pension payable to him, is

to remedy the adverse effects of inflation. The aforesaid object

has to be necessarily kept in mind, while examining the present

controversy. Any classification without reference to the object

sought to be achieved, would be arbitrary and violative of the

protection afforded under Article 14 of the Constitution of

India, it would also be discriminatory and violative of the

protection afforded under Article 16 of the Constitution of

India.

39. Having given our thoughtful consideration to the

controversy in hand, it is not possible for us to find a valid

justification for the State Government to have classified

pensioners similarly situated as the appellants herein (who had

retired after 1-6-1988), from those who had retired prior

thereto. Inflation, in case of all such pensioners, whether retired

prior to 1-6-1988 or thereafter, would have had the same effect

on all of them. The purpose of adding the component of

“dearness pay” to wages for calculating pension is to offset the

effect of inflation. In our considered view, therefore, the instant

classification made by the State Government in the impugned

Government Order dated 9-8-1989 placing employees who had

retired after 1-6-1988 at a disadvantage, vis-à-vis the employees

who had retired prior thereto, by allowing them a lower

component of “dearness pay”, is clearly arbitrary and

discriminatory, and as such, is liable to be set aside as violative

of Articles 14 and 16 of the Constitution of India.”

34

20.In the light of the principles laid down by this Court as aforesaid, let

us now consider factual perspective in the present matters.

21.At the outset it must be stated that Appendix II to the Pension

Regulations had categorized employees in three different segments and the

dearness relief payable on basic pension in respect of employees in these

three categories was on the basis of tapering formula which differed in each

of the categories. In respect of those who were in the first category i.e. those

who had retired earliest, the dearness relief was 0.67% on the first slab

namely upto Rs.1250/- of basic pension. The rate then tapered and finally

was 0.17% of basic pension in excess of Rs.2130/-. At the same time in

respect of retirees in the second category, the rate of dearness relief was 0.35

per cent in respect of first slab namely upto Rs.2400/-. Here also the

dearness relief was on a tapering formula and finally was 0.09% of basic

pension in excess of Rs.4100/-. The third category which was in respect of

employees who retired after 01.04.1998, the rate was 0.25% for the first slab

upto Rs.3380/-. Going by the tapering formula, the rate was 0.06 per cent of

the basic pension in excess of Rs.5770/-. If Clause 7(2) of the 9

th

Bipartite

Settlement dated 27.04.2010 is compared with the last category of the

35

Appendix II of the Pension Regulations, there is hardly any change in

respect of retirees during the period 01.04.1998 to 31.10.2002. Thus,

whatever benefit was conferred and was enjoyable by the employees who

retired before November 2002 was not taken away.

22.If both categories dealt with by 9

th

Bipartite Settlement dated

27.04.2010 are further compared, the retirees prior to 01.11.2002 would be

entitled to dearness relief on a tapering formula where the initial slab upto

Rs.3550/- is to be governed by quotient of 0.24%. The tapering formula

then ends with 0.06% of basic pension in excess of Rs.6010/-. The starting

point is at a level of 0.24% while the end point tapers to 0.06%. The

maximum advantage is sought to be given to those who are getting basic

pension at lower levels of slab who would get the dearness relief at 0.24%.

As against this, the retirees after 01.11.2002 are to be given dearness relief at

a flat rate of 0.18% of the basic pension. Theoretically, the starting level for

the retirees prior to 01.11.2002 is at a higher level of 0.24% as against the

retirees after 01.11.2002. It could possibly be said that for those who are

with basic pension in the region of Rs.6000/-, on the basis of a tapering

formula may well, in the ultimate analysis, average to the same level of

0.18%.

36

23.The parity that was sought in the petition was not so much regarding

applicability of same rate of 0.18% but was in respect of “flat rate” idea.

The illustrations given in para 30 of the writ petition that we have quoted

hereinabove bring home the point. The calculation of dearness allowance of

Rs.14274/- on basic pension of Rs.7880/- in the case of Santipriya Roy is in

keeping with tapering formula as given in the Bipartite Settlement dated

27.04.2010. The tabular chart then proceeds to calculate full compensation

on account of dearness allowance with slab rate of 0.24% on the entire basic

pension of Rs.7880/- which figure comes to Rs.18912/-. Thus the

submission was that the dearness relief be computed on 0.24% for the

entirety of basic pension and not just for the first slab upto Rs.3550/-. But

such calculation completely disregards that rate which is a flat rate

applicable in case of post 01.11.2002 retirees is not 0.24% for the entire

amount of basic pension but at a different level of 0.18% and the threshold

requirement of quarterly average of the Index is also different. If we were to

simply borrow the same rate of 0.18% in the case of retirees prior to

01.11.2002, the concerned retirees may well be at a disadvantage. For

instance, the basic pension of Rs.7880/- of said Santipriya Roy would yield a

figure of Rs.14184/- with flat rate of 0.18%. It will not therefore be correct

37

to adopt and apply the same rate as is made applicable in case of post

01.11.2002 retirees. What is prayed for is also not the same rate but the

same principle, namely, flat rate be made applicable to pre 01.11.2002

retirees as well but at a rate of 0.24%.

24. Would that be the correct approach? The tapering formula

undoubtedly begins with 0.24% for the first segment of Rs.3550/- of basic

pension and then progressively steps down and finally reaches the level of

0.06% where the basic pension is in excess of Rs.6010/-. What is devised

by way of such tapering formula is higher rate at the lower levels of

segments so that larger number of peoples would get maximum advantage

and the rate thereafter keeps stepping down. Neither can we apply the rate

of 0.18% which will then cause great harm and damage to the retirees nor

can we adopt a flat rate of 0.24% for the entire amount of basic pension.

The benefit which is sought to be conferred by the tapering formula lies in

the averaging which comes to near about the same quantum as is given to

the post 01.11.2002 retirees. At this stage it is noteworthy that no illustration

has been placed on record to submit that even with 0.18% dearness

allowance those who retired after November 2002 walk away with

substantially greater advantage as against pre November 2002 retirees. In

38

any case, this is not a matter where a section of employees merely on

account of date of retirement are being differentiated. If we adopt a flat rate

of 0.24% as is being prayed for, the class of retirees who retired before

01.11.2002 will stand conferred better rate than those employees who retired

after 01.11.2002. Nor can we apply a flat rate of 0.18% for them. Each

class is governed by distinct and different parameters. These are all matters

of policy making. The conferral of advantages of benefits on two different

classes of retirees has a completely distinct formula and rates and it would

not be possible to have a synthesis on any count or to put both the sets of

retirees on any common parameters. Both classes are distinct and do not

form a homogenous group. It would be extremely difficult and hazardous to

adopt a flat rate as is sought to be projected. It is not a case of creating a

class within a class.

25.In our view any attempt to tinker with either the formula or the rate

would make the whole scheme unworkable as was cautioned by this Court in

the case of P.N. Menon and Others (supra). As held in the case of Indian

Ex-Services League and Others (supra) the decision of this Court in D.S.

Nakara (supra) is one of limited application and there is no scope for

enlarging the ambit of that decision to cover all schemes made by the

39

retirees or a demand for an identical amount of pension irrespective of the

date of retirement. The reliance on the resolutions/circulars issued by

Reserve Bank of India was also misplaced. It is true that the tapering

formula was done away with by Reserve Bank of India but that by itself

cannot entitle the retirees prior to 01.11.2002 either to be conferred the

advantage at the same rate made applicable by Reserve Bank of India or at

the flat rate of 0.24% as was sought to be projected.

In our considered view, the assessment made by the Division Bench of

the Madras High Court was absolutely correct. The settlement has to be

taken as a package deal and it would be impossible to hold certain parts

good and acceptable while finding other parts to be bad. Moreover, the

recitals D, E and F in the Bipartite settlement dated 02.06.2005 (quoted

hereinabove) show that a package deal was entered into and Rs.1288 crores

per annum towards all the benefits was set apart for the benefit of the

employees. Any stepping up of benefit for a section of employees is bound

to inflate the figure of Rs.1288 crores per annum though that by itself is not

a ground that weighs with us. In our view both the categories of retirees,

namely, pre November 2002 and post November, 2002 stand on different

footing, the parameters which govern the computation of dearness relief are

also on a different level. The decisions rendered by the Single Judge as well

40

as by the Division Bench of the High Court failed to appreciate these aspects

and in our view, the said decisions are completely erroneous.

26.It may also be noted that the decision of the Division Bench of the

Madras High Court having been confirmed by this Court, the matter stands

concluded. As has been observed in paragraphs 32, 41 and 44 of

Kunhayammed and Others v. State of Kerala and Another

11

, once leave to

appeal had been granted and the appellate jurisdiction of this Court was

invoked the order passed in appeal would attract the doctrine of merger. Be

that as it may, we are satisfied that the Bipartite Settlement did not create

any distinction which was inconsistent with the principles laid down by this

Court.

27. We therefore allow these appeals, set aside the judgments and orders

passed in the appeals and dismiss Writ Petition No.507 of 2012 preferred by

respondent Nos.1 to 4 herein. No order as to costs.

………………………J.

(Adarsh Kumar Goel)

11

(2000) 6 SCC 359

41

…………………..……J.

(Uday Umesh Lalit)

New Delhi,

May 16, 2018