PETITIONER:

D.S. NAKARA & OTHERS

        Vs.

RESPONDENT:

UNION OF INDIA

DATE OF JUDGMENT17/12/1982

BENCH:

DESAI, D.A.

BENCH:

DESAI, D.A.

CHANDRACHUD, Y.V. ((CJ)

TULZAPURKAR, V.D.

REDDY, O. CHINNAPPA (J)

ISLAM, BAHARUL (J)

CITATION:

 1983 AIR  130           1983 SCR  (2) 165

 1983 SCC  (1) 305       1982 SCALE  (2)1213

 CITATOR INFO :

 R          1983 SC 937 (34)

 R          1984 SC 121 (28)

 R          1984 SC1064 (18)

 R          1984 SC1247 (1)

 RF         1984 SC1361 (19)

 RF         1984 SC1560 (2)

 F          1985 SC1196 (2,7)

 D          1985 SC1367 (39,43)

 RF         1986 SC 210 (19,20,22,26)

 R          1986 SC 584 (1)

 R          1986 SC1907 (1,2)

 R          1987 SC 943 (8)

 RF         1987 SC2359 (17)

 D          1988 SC 501 (3,4,6,7)

 RF         1988 SC 740 (13)

 D          1988 SC1291 (9)

 R          1988 SC1645 (8)

 D          1989 SC 665 (7)

 F          1989 SC2088 (7)

 R          1990 SC 334 (104)

 RF         1990 SC 883 (6)

 E          1990 SC1760 (9)

 RF         1990 SC1923 (3)

 D          1990 SC2043 (2,7)

 E          1991 SC1182 (6 TO 16,18,19,23)

 RF         1991 SC1743 (1,2,4)

 R          1992 SC  96 (11)

 R          1992 SC 767 (2,4,TO 8,10)

ACT:

     Constitution of  India, Art.  14-Central Civil Services

(Pension) Rules,  1972 and Regulations governing pension for

Armed  Forces  Personnel-Liberalisation       in  computation  of

pension effective  from specified date-Divides pensioners so

as to  confer benefit  on some while denying  it to others-

Classification arbitrary, devoid of rational nexus to object

of liberalisation and violative of Art. 14

     Constitution   of   India,   Art.    14-Doctrine   of

severability-Severance may have effect of enlarging scope of

legislation.

     Rules  and Regulations  governing        grant  of  pension-

Pension is  a right-Deferred  portion  of  compensation      for

service rendered-Also a social-welfare measure.

HEADNOTE:

     By a  Memorandum dated  May 25,  1979 (Exhibit P-1) the

Government of  India liberalised the formula for computation

of pension  in respect of employees governed by the Central

Civil Services (Pension) Rules, 1972 and made it applicable

to employees retiring on or after March 31, 1979. By another

Memorandum issued  on September       23, 1979  (Exhibit P-2)  it

extended the  same, subject  to certain       limitations, to the

Armed Forces'  personnel retiring on or after April 1, 1979.

Petitioners 1  and 2  who had  retired in the year 1972 from

the Central  Civil Service  and the  Armed  Forces'  service

respectively, and  petitioner No.  3, a       registered  society

espousing the  cause of        pensioners all over  the  country,

challenged the validity of the above two memoranda in so far

as the  liberalisation in  computation of  pension had        been

made applicable only to those retiring on or after the date

specified and  the benefit of liberalisation had been denied

to all those who had retired earlier.

     Counsel for  petitioners contended       that all pensioners

entitled to  receive pension under the relevant rules form a

class irrespective  of the  dates of  their  retirement      and

there cannot  be a  mini-classification within       this  class;

that the  differential treatment  accorded to  those who had

retired prior  to the specified date is violative of Art. 14

as the  choice of specified date is wholly arbitrary and the

classification based  on  the fortuitous  circumstance  of

retirement before  or subsequent  to the  specified date  is

invalid;  and  that  the   scheme  of liberalisation   in

computation of pension must  be  uniformly  enforced with

regard to all pensioners.

166

     Counsel for respondents contended that a classification

based on  the date of retirement is valid for the purpose of

granting pensionary  benefits; that the specified date is an

integral part  of  the scheme  of  liberalisation  and        the

Government would  never have  enforced the  scheme devoid of

the date;  that the  doctrine of  severability  cannot  be

invoked to  sever the  specified date  from the scheme as it

would have  the effect of enlarging the class of pensioners

covered by the scheme and when the legislature has expressly

defined the  class to which the legislation applies it would

be outside  the judicial function to enlarge the class; that

there is not a single case where the court has included some

category within the scope of provisions of a law to maintain

its   constitutionality;    that   since   the       scheme   of

liberalisation has  financial implications, the Court cannot

make it retroactive;  that  if        more  persons divided the

available cake the residue  falling to        the share  of each,

especially to  the share  of those  who are  not before      the

court would become far less and therefore no relief could be

given to  the petitioners  that pension is always correlated

to the  date of retirement and the court cannot change the

date of retirement and impose fresh  commutation  benefit

which may  burden the  exchequer to  the  tune       of  Rs. 233

crores; and that the third petitioner has no locus standi in

the case.

     Allowing the petitions,

^

     HELD: Article  14 strikes at  arbitrariness  in  State

action and ensures fairness and equality of treatment. It is

attracted where equals are  treated differently without any

reasonable basis.  The principle underlying the guarantee is

that all  persons similarly  circumstanced shall  be treated

alike both  in privileges conferred and liabilities imposed.

Equal laws  would have to be  applied to  all in  the same

situation and  there should be no discrimination between one

person and  another if as regards the subject-matter of the

legislation  their   position  is  substantially  the  same.

Article 14  forbids class legislation but permits reasonable

classification for   the  purpose   of          legislation. The

classification must   be   founded   on   an  intelligible

differentia which  distinguishes persons  or things that are

grouped together  from those  that are left out of the group

and that  differentia must  have a  rational  nexus  to      the

object sought  to be achieved by the statute in question. In

other words, there ought to be causal connection between the

basis of  classification and  the object of the statute. The

doctrine of  classification was evolved by the Court for the

purpose of sustaining a legislation or State action designed

to help weaker sections  of the  society.  Legislative       and

executive action  may accordingly  be sustained by the court

if  the   State satisfies  the twin  tests  of  reasonable

classification and  the rational principle correlated to the

object sought  to be  achieved. A  discriminatory action  is

liable to  be struck  down unless  it can  be shown  by      the

Government that the departure was not arbitrary  but was

based on  some valid  principle       which  in  itself  was not

irrational, unreasonable or discriminatory.

     [176 B,  178 D-E, 179 B-C,  177 C-D, 179 C-D, 176 E-F,

179 H, 180 A-C]

     Maneka Gandhi  v. Union  of India, [1978] 2 S.C.R. 621;

Ram Krishna  Dalmia v. Shri Justice  S.R. Tendolkar & Ors.,

[1959] S.C.R.  279; In re Special  Courts  Bill,  [1979]  2

S.C.R, 476;  E.P Royappa  v. State  of Tamil  Nadu, [1974] 2

S.C.R. 348;  Ajay Hasia        etc. v.  Khalid Mujib Sehravardi &

Ors., [1981] 2 S.C.R. 79; Air India etc. v. Nargesh Meerza &

Ors., [1982]  1 S.C.R. 438 and Ramana Dayaram  Shetty  v.

International Airport  Authority of  India &  Ors., [1979] 3

S.C.R. 1014, referred to.

167

     In the  instant case,  looking to the  goals  for the

attainment of  which pension  is paid  and the welfare State

proposed to  be set  up  in  the  light  of  the  Directive

Principles of  State Policy and Preamble to the Constitution

it indisputable that pensioners for payment of pension from

a  class.   When  the  State  considered  it  necessary  to

liberalise the pension scheme in order  to augment  social

security in  old age  to government  servants it  could      not

grant the  benefits of liberalisation only  to  those who

retired subsequent  to the  specified date and deny the same

to those  who had  retired prior  to that date. The division

which classified  the pensioners  into two  classes  on      the

basis of  the specified        date was  devoid  of  any  rational

principle and  was both        arbitrary  and unprincipled  being

unrelated to  the object  sought to  be achieved by grant of

liberalised pension  and the  guarantee of  equal  treatment

contained in  Art. 14  was violated  inasmuch as the pension

rules  which   were  statutory in  character meted  out

differential and  discriminatory treatment  to equals in the

matter of computation of pension from the dates specified in

the impugned memoranda. [190 F-H, 194 A-C, 194 F-H]

     (ii) Prior to the liberalisation of  the formula       for

computation of pension average emoluments of the last  36

months' service of the employee provided  the        measure  of

pension. By  the liberalised  scheme, it  is now  reduced to

average emoluments  of the  last 10 months' service. Pension

would now be on the higher side on account of two fortuitous

circumstances, namely, that the  pay scales  permit  annual

increments and usually there are promotions in the last one

or two  years of  the employee's  service. Coupled with it a

slab system  for computation  has been introduced  and the

ceiling of  pension has        been raised. Pensioners who retired

prior to  the specified        date would  suffer triple jeopardy,

viz., lower  average emoluments,  absence of slab system and

lower ceiling.

                                                 [191 A-D]

     (iii) Both the impugned memoranda do not spell out the

raison d'etre  for liberalising       the pension formula. In the

affidavit in opposition it is stated that the liberalisation

was decided  by the  government in  view of  the  persistent

demand of  the employees  represented in the scheme of Joint

Consultative Machinery.        This would  clearly imply  that the

pre-liberalised scheme did not provide adequate protection

in old  age, and that a further liberalisation was necessary

as a  measure of economic security. The government also took

note of the fact that continuous upward movement of the cost

of living  index and  diminishing purchasing  power of rupee

necessitated upward revision of pension. When the government

favourably responded  to the  demand it       thereby ipso  facto

conceded that  there was  a larger  available national cake,

part  of  which could  be  utilised  for  providing  higher

security  to   retiring        employees.   With  this  underlying

intendment of  liberalisation, it cannot be asserted that it

was good  enough only  for those who would retire subsequent

to the  specified date but not for those  who had  already

retired. [191 F-G, 192 A, 191 H, 192 B]

     2. If  removal of arbitrariness can be brought about by

severing the  mischievous portion,  the discriminatory       part

ought  to  be  removed retaining  the beneficial  portion.

[198 F]

     In the  instant case, the petitioners do not challenge,

but seek  the benefit  of the  liberalised  pension  scheme.

Their grievance is of  the denial  to them  of the  same by

arbitrary introduction of words  of  limitation.  There  is

nothing

168

immutable about the choosing  of an event as an eligibility

criteria subsequent  to a  specified date.  If the  event is

certain but  its occurrence at a point of time is considered

wholly  irrelevant   and  arbitrarily  selected  having  an

undesirable effect  of dividing       a homogeneous class and of

introducing discrimination  the same  can be  easily severed

and set aside. It  is therefore  just and  proper that       the

words  introducing  the        arbitrary  fortuitous circumstance

which are  vulnerable as  denying equality  be       severed and

struck down. In Exhibit P-1 the words:

          "That in  respect of the Government servants who

     were in  service on  the 31st  March, 1979 and retiring

     from service on or after that date.

and in Exhibit P-2, the words:

          "the new  rates of  pension are effective from Ist

     April 1979 and  will  be applicable  to all  service

     officers who  became/become noneffective  on  or  after

     that date"

are  unconstitutional  and  are   struck  down          with  the

specification  that  the  date mentioned  therein  will  be

relevant as  being one from which  the liberalised  pension

scheme becomes operative. Omitting the unconstitutional part

it is  declared that  all pensioners  governed by  the       1972

Rules and  Army Pension        Regulations shall  be entitled  to

pension as  computed under  the liberalised  pension  scheme

from  the  specified  date,  irrespective  of  the  date  of

retirement. Arrears  of pension       prior to the specified date

as per  fresh computation is not admissible. [190A-C, 198 G,

198 E-F, 205 F-H, 209 F-H, 210 A-D]

     D.R. Nim  v. UNion        of India,  [1967] 2 S.C.R. 325; and

Jaila Singh  & Anr.  v. State  of Rajasthan  & Ors.,  [1975]

Supp. S.C.R. 428, relied on.

     Union of  India & Anr. v. M/s. Parameswaran Match Works

etc., [1975]  2 S.C.R. 573; and  D.C. Gouse  & Co.  etc. v.

State of  Kerala & Anr. etc., [1980] 1 S.C.R. 804, explained

and distinguished.

     Louisville Gas  Co. v.  Alabama Power  Co., 240 U.S. 30

[1927], referred to.

     (ii) The  reading down  of the  impugned  memoranda  by

severing the  objectionable portion  would  not      render the

liberalised   pension  scheme  vague,   unenforceable   or

unworkable. The Court is not legislating in reading down the

memoranda;  when   the Court  strikes down  the  basis  of

classification as  violative of       Art. 14  it merely  sets at

naught  the    unconstitutional   portion   retaining the

constitutional portion.   There   is  no   difficulty   in

implementing the  scheme omitting  the event happening after

the specified  date, retaining the more  human formula        for

computation  of   pension.  The pension  will have  to  be

recomputed  in accordance  with   the        provisions  of the

liberalised pension  scheme as salaries were required to be

recomputed in  accordance with the  recommendation  of        the

Third  Pay   Commission        but  becoming operative  from the

specified date. The Court  is satisfied that the additional

financial liability that may be imposed by bringing

169

in pensioners  who retired prior to April 1, 1979 within the

fold of the liberalised pension scheme is not too high to be

unbearable or  such as would have  detracted the Government

from covering  the old pensioners  under  the scheme. The

severance of  the nefarious  unconstitutional part  does not

adversely affect  future pensioners  and their       presence  in

these petitions is irrelevant.

              [204 G-H, 197 E-F, 206 B, 196 G, 208 G, 199 B]

     (iii)  To say  that  by  its  approach  the  Court  is

restructuring the  liberalised pension scheme is  to ignore

the constitutional  mandate. The  Court       is  not  conferring

benefits  by   its  approach;  it  is  only  removing the

illegitimate classification  and after its removal  the law

takes its own course. [206 D-E]

     (iv)  It  is  not   correct  to  say  that   if the

unconstitutional part  is struck  down the  Parliament would

not  have   enacted  the   measure.  The   executive, with

parliamentary mandate, liberalised the pension scheme. It is

implicit in  the scheme        that the  need to  grant  a  little

higher rate  of pension        to the pensioners  was  considered

eminently just. One could  have understood  persons in       the

higher pay  bracket being  excluded from  the benefit of the

scheme because it would have meant that those in the higher

pay bracket  could fend        for themselves.  Such is  not the

exclusion. The exclusion is  of a whole class of people who

retired before a certain  date. Parliament  would not have

hesitated  to  extend  the   benefit  otherwise  considered

eminently just and this  becomes clearly  discernible from

p.35 of the 9th  Report of  the Committee on Petitions (6th

Lok Sabha), April 1979. [206 H, 207 A-E]

     (v) Whenever classification is held to be impermissible

and  the   measure  can          be  retained by   removing the

unconstitutional  portion   of the   classification, the

resultant effect  may be  of enlarging the class. In such a

situation the  court can strike down the words of limitation

in an  enactment. That is what is called  reading down the

measure. There is no  principle that  severance limits       the

scope of legislation but can never enlarge it. [205 B-C]

     Jaila Singh  & Ors. v State of Rajasthan & Ors., [1975]

Supp. S.C.R.  428 and Randhir Singh v. Union of India & Ors.

[1982] 1 S.C.C. 618, relied on.

     (vi) The absence of precedent does not deter the court.

Every new  norm of socio-economic justice, every new measure

of social justice commenced for the first time at some point

of time in history. If at that time it was rejected as being

without a   precedent, law  as  an  instrument  of  social

engineering would  have long since been dead. [193 G, 193 C-

D]

     (vii)  The   court is   not  making   the        scheme   of

liberalisation retroactive  by its approach. Retroactiveness

is implicit  in the theory of wages. When revised pay-scales

are introduced from a  certain date, all existing employees

are brought  on to  the revised       scales adopting a theory of

fitments and  increments for  past service.  The benefit  of

revised scales is not  limited to  those who  enter service

subsequent to  the date fixed for introducing revised scales

but is  extended to all those in service prior to that date.

Even in the case  of the  new retiral benefit of  gratuity

under the  Payment of  Gratuity Act,  1972, past service was

taken into  consideration. The scheme of  liberalisation is

not a new retiral benefit; it is

170

an upward  revision of an  existing  benefit. Pension has

correlation  to   average  emoluments  and  the  length  of

qualifying service  and any  liberalisation would  pro tanto

ber etroactive in the narrow sense of the term. Assuming the

government had not prescribed the specified date and thereby

provided that  those retiring, pre and past the  specified

date, would  all be  governed  by  the liberalised  pension

scheme it  would be  both prospective  and retroactive. Only

the pension  will have to be recomputed in the light of the

formula enacted  in  the  liberalised pension scheme and

effective from the date the revised scheme comes into force.

A statute  is not properly called retroactive because a part

of the  requisites for its action  is drawn  from  a time

antecedent to its passing.

                      [195 H, 196 H, 196 G, 196 D, 196 B-D]

     Craies on Statute Law,  Sixth Edition, p. 387 referred

to.

     (viii) There  is no question of pensioners dividing the

pension fund  which, if        more persons  are admitted  to       the

scheme, would pro rata affect the share. The pension scheme,

including the  liberalised scheme,  is non-contributory  in

character. The payment of  pension is a statutory liability

undertaken by  the  Government.       Whatever  becomes  due        and

payable on  account of pension is  recognised as an item of

expenditure and is budgeted  for every        year. At  any given

point of  time there  is no  fixed or pre-determined pension

fund which is divided amongst eligible pensioners. [195 C-G]

     (ix) The  date of retirement of each employee remaining

as it  is, there  is no        question of  fresh  commutation  of

pension of  the pensioners  who retired       prior to 31st March

1979 and have already availed of the benefit of commutation.

It is not open to them to get that benefit at this late date

because commutation   has  to be  availed  of within the

specified time limit from  the date  of actual       retirement.

[206 C-D]

     3. The  discernible  purpose  underlying the  pension

scheme must  inform the interpretative process and it should

receive a liberal construction. [185 G-H]

     (i) Pension  is a right; not  a bounty  or  gratuitous

payment. The  payment of  pension does not depend  upon the

discretion of  the Government  but is  governed by the rules

and a  government  servant  coming  within  those  rules  is

entitled to claim pension. [186 A-B]

     Deoki Nandan  Prasad v.State  of  Bihar  &      Ors.,[1971]

Supp. S.C.R.  634 and  State of       Punjab & Anr.v Iqbal Singh,

[1976] 3 S.C.R. 360, referred to.

     (ii) The  pension payable to a  government employee is

earned by rendering long and efficient service and therefore

can be said to be a deferred portion of the compensation for

service rendered. [185 F]

     (iii) Pension  also has  a broader significance in that

it is  a  social-welfare  measure  rendering  socio-economic

justice by  providing economic security in old age to those

who toiled ceaselessly in the hey-day of their life. [185 D-

E, 186 B-C]

     (iv) Pension  as a        retirement benefit is in consonance

with and  in furtherance  of the  goals of the Constitution.

The goals for which pension is

171

paid themselves give a fillip and  push to  the policy  of

setting up a welfare state. The preamble to the Constitution

envisages the  establishment of       a socialist  republic.        The

basic framework of socialism is to provide a decent standard

of  life  to  the  working  people  and       especially  provide

security from  cradle to grave. Article 41 enjoins the State

to  secure  public  assistance in  old age,  sickness and

disablement. Every  state  action  whenever  taken  must  be

directed and  must be  so interpreted as to take society one

step towards  the goal of establishing a socialist welfare

society. While examining  the constitutional validity  of

legislative/administrative   action,   the   touchstone        of

Directive Principles  of State Policy in  the light  of the

Preamble provides  a reliable  yardstick to  hold one way or

the other. [190 E,187 F,189 A-B,189 H]

     Randhir Singh v. Union of India & Ors., [1982] I S.C.C.

618 and Minerva Mills Ltd. & Ors. v. Union of India & Ors.,

[1981] I S.C.R. 206, referred to.

     4. Any  member of the public having sufficient interest

can maintain  an action        for  judicial redress for  public

injury arising from breach of public duty or from violation

of some provision of  the Constitution       or the law and seek

enforcement of such public  duty  and observance  of such

constitutional or  legal  provision.  The  locus  standi  of

petitioner No. 3 which seeks to enforce rights that may be

available to  a large  number of  old, infirm  retirees  is

unquestionable as   it is   a non-political, non-profit,

voluntary  organisation          registered  under   the  Societies

Registration Act,  1860 and  its members  consist of  public

spirited citizens who have taken up the cause of ventilating

legitimate public problems. [208 H, 209 A-C]

     S.P.Gupta v.  Union of  India, [1981]  Supp.  S.C.C.87,

referred to.

JUDGMENT: contued... in another blog please.