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PETITIONER:

WELFARE ASSOCIATION OF ABSORBEDCENTRAL GOVERNMENT EMPLOYEES

Vs.

RESPONDENT:

UNION OF INDIA & ANR.

DATE OF JUDGMENT15/12/1995

BENCH:

VENKATASWAMI K. (J)

BENCH:

VENKATASWAMI K. (J)

KULDIP SINGH (J)

AHMAD SAGHIR S. (J)

CITATION:

1996 AIR 1201 1996 SCC (2) 187

1995 SCALE (7)295

ACT:

HEADNOTE:

JUDGMENT:

WITH

WRIT PETITION (C) NO. 567 OF 1995

P.V. Sundararajan & Anr.

V.

Union of India

JUDGMENT

K.Venkataswami. J.

These two writ petitions are filed under Article 32 of

the Constitution of India. At the time of argument learned

counsel appearing in these writ petitions confined their

relief to the restoration of one-third portion of the fully

commuted pension as per the decision of this Court in Common

Cause, Registered Society & Ors vs. Union of India, (1987) 1

SCR 497, and consequently to quash para 4 of O.M. 3412/86.

P&PW issued by Government of India Department of Pension and

Pensioner's Welfare dated 5.3.1987.

Brief facts leading to the filing of these two writ

petitions are as follows:-

The members of the petitioner's welfare association in

W.P.(C) No. 11855/85 and the individual petitioners in

W.P.(C) No. 567/85 were Central Govt. Servants. Government

of India some years ago decided to start public

undertakings/enterprises in the core sector of industries.

To start with the Government of India, sent some of their

officers to the public undertakings, on deputation. As it

was felt that services of the officers having sufficient

experience and skill were necessary for the public

enterprises, the Government devised measures to induct those

willing officers to continue in the public enterprises. Such

officers were allowed to be absorbed in those public

undertakings/enterprises. The Government offered to deem

their retirement as retirement in 'public interest'.

Consequent to their deemed retirement, such absorbed/retired

Government servants were offered retrial benefits. These

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persons were also offered the usual facility of commuting

one-third of their original pension under Civil Pensions

(Commutation) Rules and were also offered additional

facility of commuting the balance two-thirds pension also

i.e. to commute the full pension. This facility therefore

creates three categories of these persons (1) the persons

who have not commuted their pension and therefore draw full

monthly pension from the Government; (2) the persons who

have commuted one-third of the pension and therefore will

draw a sliced monthly pension, reduced to the extent of

commuted amount, (3) the persons who have commuted the full

pension and who will not be given any monthly pension by

deeming monthly pension to have been reduced to nil. The

persons falling in the first category continue to derive all

the benefits of being Government pensioner and get all the

Interim Relief, liberalization and/or whatever reliefs are

given by the Government to the petitioners. But the persons

in the second category are denied these benefits to the

extent of "one-third commutation". The third category are

the worst hit and are totally denied of all these benefits.

The above-mentioned second category of the retired

Government servants namely, those who got one-third pension

commuted moved this Court for restoration of their one-third

pension by filing a writ petition under Article 32 of the

Constitution of India, (Vide"Common Cause" vs. Union of

India (1987) 1 SCR 497). The contention put forward in

support of their claim for restoration of the one-third

pension was that the lump sum amount paid gets adjusted by

about 10 or 12 years and therefore, the Government must be

directed to restore the commuted portion of one-third

pension. It was also contended that lately there has been a

substantial improvement in the life expectancy of the people

in India and therefore, there was no justification for

denying the restoration of the commuted one-third portion of

pension which gets adjusted after a period of 10 or 12

years. When that matter came up before this court, a

suggestion was made to the Government to give a new look to

the matter. The respondent Government accepting that

suggestion came forward with a new formula and after

perusing the same this Court in Common Cause vs. Union of

India, (1987) 1 SCR 497 held as follows:-

"As the position now stands, 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. The petitioner 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

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disturbing the 15 year formula so far as

civilian pensioners are concerned. The

age of superannuation used to be 55

until it was reised 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 expire 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 1.4.86. 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.

There-after, the hearing of the matter

has again been delayed on account of

pressing business in the Court. In these

circumstances, 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 1.4.85 so far as the

civilian employees are concerned."

The same was made applicable to the defence personnel

as well in the same judgment.

The respondent while giving effect to the above

judgment denied the same benefit to the petitioners by

inserting para 4 in the impugned O.M. dated 5.3.1987 which

reads as follows:-

"Central Government employees who got

themselves absorbed under Central Public

Sector Undertakings/autonomous bodies

and have received/or opted to receive

commuted value for 1/3rd of pension as

well as terminal benefits equal to the

commuted value of the balance amount of

the pension left after commuting 1/3rd

of pension are not entitled to any

benefit under these orders as they have

ceased to be Central Government

pensioners."

The petitioners in these petitions prayed that the same

relief be given to them. As a matter of fact, in this case

as well the respondent was directed to consider the case of

the petitioners in the light of the judgment in 'Common

Cause' case. Unfortunately, the Government did not came

forward with favourable reply. Hence this decision on

merits.

To appreciate the claim of the petitioners. it is

necessary to set out two relevant rules in the C.C.S.

Pension) Rules 1972. Rule 37 and 37A read as follows :-

Rule 37 : Pension on absorption in or

under a corporation, company or body :

(1) 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 of

pension he shall in addition to the

(retirement gratuity) be granted :- a)

on an application made in this behalf, a

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lump sum amount not exceeding the

commuted value of one-third of his

pension as may be admissible to him in

accordance with the provisions of the

Civil Pensions (Commutation) Rules, and

b) terminal benefits equal to the

commuted value of the balance amount of

pension left after commuting one-third

of pension to be worked out with

reference to the commutation tables

obtaining on the date from which the

commuted value becomes payable subject

to the condition that the Government

servant surrenders his right of drawing

two-third of his pension."

From the above extracts, it will be seen that a clear-

cut distinction is made in Rule 37-A itself between one-

third portion of pension to be commuted without any

condition attached and two-third portion of pension to be

received as terminal benefits with condition attached with

it. It follows that so far as commutation of one-third of

the pension is concerned, the petitioners herein as well as

petitioners in 'Common Cause' case stand on similar footing

with no difference. So far as the balance of two-third

pension is concerned, the petitioners herein have received

the commuted value (terminal benefits) on condition of their

surrendering of their right of drawing two-thirds of their

pension. This was not the case with the petitioners in

'Common Cause' case. That being the position the denial of

benefit given to 'Common Cause' petitioners to the present

petitioners violates Article 14 & 16 of the Constitution.

The reasoning for restoring one-third commuted pension in

the case of 'Common Cause' petitioners equally applies to

the restoration of one-third commuted pension in the case of

these petitioners as well.

No doubt the Government while declining to consider the

case of petitioners favorably took into account a decision

of this court in Welfare Association of Absorbed Central

Government Employees in Public Enterprises vs. Union of

India reported in 1991 (2) SCC 265, holding that the

petitioners in 'Common Cause' case stand on a different

footing then that of the petitioners in the present case. In

that judgment Rule 37-A was not brought to the notice of the

Court. Another reason given by the Government was that the

petitioners on commuting their pension in full cease to be

Central Government pensioners. This is too broad a

contention to be accepted as no statute or rule is quoted in

support of this contention. This stand taken by the

Government does not appear to be correct in view of their

own counter-affidavit filed in this case. In para 8 at page

14 of the counter-affidavit it has been stated as follows :-

"It would be seen from (b) above that

the two-third terminal benefits received

by the absorbees who have opted for lump

sum payment have not only commuted one-

third of their pension but also the

remaining portion of two-third pension

which is termed as "terminal benefits".

The absorbees have in fact commuted the

entire pension and not one-third of

pension."

It would be seen from (b) above, two-third terminal

benefits received by the absorbees is nothing but pension.

Further as per the condition imposed in the absorption

order, the family pension when not provided in the public

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undertakings in which the retired Government servants were

absorbed, the payment of family pension is continued by the

Government. The relevant condition reads as follows :-

"(ii) As regards entitlement to family

pension, the condition imposed reads -

"On his permanent absorption in the

Company his family will be eligible for

family pension subject to the provisions

of Rule 54 of CCS (Pension) Rules, 1972

and any other orders issued by the

Government of India from time to time

provided that he is not covered by any

other family pension scheme applicable

to the Company Staff." This was also the

condition incorporated in respect of

persons who had opted for one-third

commutation."

This also indicates that the stand of the Government is

not correct. Therefore, the denial of restoration of one-

third commuted pension is not justified.

If after the expiry of 15 years, the pensioners who

have opted for one-third commutation, becomes entitled to

restoration of pension on the ground that the lump sum

amount paid had got adjusted before the said period as held

in 'Common Cause' case, there is no good reason for not

applying the same to the petitioners who have commuted their

one-third portion of the pension under Rule 37-A of the

Pension Rules 1972 without any commitment for this portion

of commutation. Presumably the respondent realising the

fallacy have withdrawn the scheme of permitting commutation

of full pension by O.M. No. 4/42/91- P&PW (D) dated

31.3.1995. Para 3 of the Office Memorandum reads as follows

:-

"3. The proposal to review the existing

terms and conditions of absorption had

been under consideration of the Govt.

for quite sometime past. The President

is now pleased to ........ (sic) that

the existing terms and conditions of

absorption shall stand partially

modified to the extent indicated below

:- (a) The existing facility of

receiving capitalisation value

equivalent to 100% commutation of

pension on absorption shall stand

withdrawn; (b) The existing facility to

draw pro-rata monthly pension from the

date of absorption (with option to

commute 1/3rd pension wherever

admissible shall continue to exist."

This means this issue will not arise in future.

For the foregoing reasons, we hold that the petitioners

are entitled to the benefits as given by this Court in

'Common Cause' case so far as it related to restoration of

one-third of the commuted pension. Consequently, the

impugned para 4 of Office Memorandum dated 5.3.1987 is

quashed. The writ petitions are accordingly allowed to the

extent indicated above. No costs.