OROP Case : Doctrine Of Legitimate Expectation Can't Be Invoked Based On Minister's Statement & Parliamentary Committee Report - Supreme Court

The petitioners sought 'annual revision of pension' under OROP. They had contended that the 2011 Report of the Rajya Sabha Committee on Pensions dated; subsequent speeches of Ministers and intra departmental communication indicated that as per the initial definition of OROP future enhancement in the rate of pension was to be "automatically passed on to the past pensioners". The final definition in the communication dated 07.11.2015, altered the definition to indicate that the revision would be at "periodic intervals", which is in the teeth of the prior assurances of the Union Government. The petitioners vehemently argued that revised definition would deprive the past pensioners of equal monetary benefits, which goes against the very principle of OROP.

A Bench comprising Justices D.Y. Chandrachud, Surya Kant and Vikram Nath were of the view that the doctrine of legitimate expectation cannot be invoked in the present case as the Union Government cannot be said to have taken a policy decision before the letter dated 07.11.2015. It stated that in the said communication it was made abundantly clear that the current pension rates would be revised at periodic intervals which was finally decided to be at an interval of 5 years.

The Court held that the statements made by the then Union Finance Minister in 2014 in the Parliament or the Rajya Sabha Committee report cannot constitute legitimate expectation.

Factual Background

On 19.12.2011, the Rajya Sabha Committee on Pensions, the Koshyari Committee submitted its Report recommending the implementation of OROP. In the said report, the future enhancements in the rate of pension were to be passed on to the past pensioners automatically. On 17.02.2014, the Finance Minister in his Budget Speech stated that the Union Government in principle had accepted OROP. He also announced that it would be implemented prospectively from the financial year 2014-2015. In view of the same, he claimed Rs. 500 crores had been transferred to the Defence Pension Account. On 26.02.2014, the Defence Minister chaired a meeting to discuss the implementation of the OROP, wherein it was agreed upon that the enhanced interest rate would be automatically passed on to the past pensioners. On 26.02.2014, the Union Government asked the Controller General of Defence Accounts to work out the execution of OROP. On 10.07.2014 in his Budget Speech, the Finance Minister reaffirmed the commitment to implement OROP. Again, on 02.12.2014, in a written response to a Member of Parliament, the Minister for Defence announced that the enhanced pension rates would be automatically passed on to the past pensioners. In a letter dated 07.11.2015 sent to the Chiefs of the three defence forces, the Joint Secretary of the Union Government for the first time introduced that revision between the past and the current rate of pension would take place at periodic intervals. The Union Government adopted the said definition in its notification issued on 14.11.20215. A Committee headed by Justice L. Narasimha Reddy was constituted on measures to remove anomalies to arise at the implementation stage. On 25.01.2016, the first petitioner, wrote a letter to the Defence Minister objecting to the revised definition and requesting reversion to the original definition wherein the revised rates of interest was to be automatically passed on. The petitioner had also written to Justice L. Narasimha Rao and the Chiefs of the defence forces pointing out the anomaly. The Union Cabinet gave ex-post facto approval to the notification on 06.04.2016. The petitioners filed the present Writ Petition before the Supreme Court. Subsequently, it directed the Centre to look into the grievances raised. On 05.12.2019, the Centre filed an affidavit stating that after consultation with experts and ex-servicemen it had decided to revise pension under OROP at periodic intervals of five years.

Contentions raised by the parties

Senior Advocate, Mr. Huzefa Ahmadi, appearing on behalf of the petitioner, inter alia, submitted that the definition of OROP was altered for the first time in the letter dated 07.11.2015 sent to the Chiefs of the defence forces by the Joint Secretary of the Union Government. The same was contrary to the initial definition agreed upon in the meeting dated 26.02.2014 and on several subsequent occasions.

Additional Solicitor General, Mr. Venkataramanan argued that minutes, statements and inter-ministerial discussion within the Ministry cannot be enforced by the petitioner to assert their rights. It was also submitted that the Koshyari Committee Report was not accepted by the Centre and has no binding force.

Decision of the Supreme Court

According to the Bench, the government policy formulated in terms of Article 73 by the Union or Article 162 by the State is to be gauged from the policy documents and in the present case the communication dated 7 November 2015 is to be considered as the policy decision of the Union Government.

It was of the view that the Koshyari Committee Report cannot be enforced as a statement of government policy. It noted that when the OROP scheme was accepted in-principle by the Union Government, the modalities were not chalked out. The terms of implementation of OROP was specified in the letter dated 07.11.2015. The Bench stated that OROP being a policy decision, the Union Government was free to determine its terms of implementation. It was noted that though not argued explicitly, the petitioners had relied on the doctrine of legitimate expectation. The petitioners had asserted that assurances given by the State functionaries did not translate into the final OROP scheme. The Bench observed -

"The doctrine of legitimate expectations can be invoked if a representation made by a public body leads an individual to believe that they would be a recipient of a substantive benefit.

doctrine of legitimate expectations, a public law concept, is premised on the principles of fairness and non-arbitrariness in state action. The doctrine of legitimate expectations emerges as a facet of Article 14 of the Constitution."

The Bench referred to State of Jharkhand v. Brahmaputra Metallics Ltd., Ranchi 2020 SCC OnLine SC 968 wherein the Court had opined that doctrine of legitimate expectation is applicable when State makes a representation in discharge of its public functions. In the present case, the Bench stated, there being no policy decision till the communication dated 07.11.2015, the doctrine of legitimate expectation cannot be invoked.

Moreover, relying on the judgment in State of Arunachal Pradesh v. Nezone Law House (2008) 5 SCC 609, the Bench noted that in cases where opinions of various departments are involved, an oral promise by a Minister does not bind the government. It held -

"...The communication dated 7 November 2015 cannot, therefore, be assailed on the ground that it is contrary to the original intent of the policy formulated by the Union Government. The policy of the Union Government is what is embodied in the communication dated 7 November 2015. The statements made on the Floor of the House and minutes of ministerial committees are pointers to the fact that the Union Government had in principle decided to implement OROP but the precise framework of its implementation was a matter of evolving discussion within Government. The formulation of modalities which took place in the communication dated 7 November 2015 represents the policy choices adopted by the Government."

[Case Title: Indian Ex-Servicemen Movement And Ors. v. Union of India And Ors. WP (C) No. 419 of 2016]

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