Pension - Whether Classification Of Pensioners Based On Cut-Off Date Violates Article 14? Supreme Court Refers To Larger Bench

The issue as to whether pension seeking to make any distinction between categories based on a cut-off date is violative to Article 14 of the Constitution of India or not has been referred to a larger bench.

The matter was referred to by the bench of Justices SK Kaul and MM Sundresh while considering a SLP assailing Himachal Pradesh High Court's order wherein the High Court had declared the cut off date of January 1, 2006 for payment of pension as per Sixth Central Pay Commission as arbitrary.

The bench expressed reservations regarding the dictum of a two-judge bench decision in All Manipur Pensioners Association vs State of Manipur(2019) that the classification of pensioners into two categories by providing cut-off date for the purpose of grant of revised pension is unconstitutional. 

Observing that the matter required to be placed before a three judge bench, the bench in their order dated February 15, 2022 in their order said in the case State Of Himachal Pradesh v KP Nayar :

"We, with all respect, have some reservations on the large canvas which the aforesaid paragraphs(in All Manipur Pensioners Association case) seek to place on the principal of pension seeking to make any distinction between categories based on a cut-off date as violative to Article 14 of the Constitution of India, more so in view of certain earlier judicial pronouncements. Judicial discipline would be required and thus this matter should be examined by a bench larger than the one we are constituted at present because this judgment emanates from a two Judges Bench.

We are thus of the view that the matter is required to be placed before a three Judge Bench. The matter be placed before Hon'ble the Chief Justice of India for appropriate orders."

Factual Background

KP Nayar retired on April 20, 1983 from Himachal Pradesh Government Services. However the Sixth Central Pay Commission recommendation which was made in March, 2008 sought to dispense with the linkage of full pension with 33 years of qualifying service, an aspect which was applicable to the respondent.

As per the Commission's recommendation, employees had to render minimum pensionable service of 20 years and thereafter pension was to be paid at 50% of the average emoluments received during the past 10 months or pay last on whichever was more beneficial to the retiring employee. As per the Pay Commission, the recommendations were to have prospective effect for all government employees other than Personnel Below Officer Rank (PBOR) in defense forces.

By issuing an Office Memorandum dated October 14, 2009 the State made it applicable from January 1, 2006. On March 28, 2016 the State Government issued a notification which provided that Central Civil Services Rules would remain applicable to Himachal Pradesh Government employees as the same existed on the date of issuance of the said notification with all State amendments. It however added a proviso that henceforth any amendment in such rules by the Government of India would be applicable to Himachal Pradesh government employees only on its adoption and circulation by the State Government.

On April 6, 2016 the Government of India issued a notification revising the consolidation pension of pre-2006 pensioners to be not lower than 50% even if they had qualified services of less than 33 years at the time of their retirement.

In view of the notification dated March 28, 2016, a notification dated April 6, 2016 did not become ipso facto applicable to the State Government. Thus on May 12, 2016 the State Government issued an addendum making certain additions in the notification dated March 28, 2016.

Nayar approached the High Court assailing the decision claiming to declare cut-off date of retirement i.e. January 1, 2006 as irrational, arbitrary and sought relief for striking the same down which found favor in the High Court's judgment dated September 1, 2020.

Submission Of Counsels

Appearing for the appellant, Additional Advocate General for the State Vikas Mahajan submitted that it was for the State Government to fix the pension of a retired employee and the cut-off date was sought to be justified on the ground that even the Pay Commission recommendation was to apply prospectively.

It was also Additional Advocate General's contention that law prohibited discrimination between pensioners forming a single class and governed by the same rules but that was not the factual situation in the present case.

Stressing on the non applicability of notification dated April 6, 2016 to the State of Himachal Pradesh, AAG submitted that it was not a denial of any upward revision of existing pension scheme but respondent's pension was revised in terms of the Office Memorandum dated October 14, 2009. He further added that respondent had been granted proportionate pension because he was not eligible for full pension as per rules enforced on the date of retirement and that full pension norms could thus not be applied retrospectively.

Referring to the judgements in D.S. Nakara & Others vs Union Of India (1983) 1 SCC 305 and All Manipur Pensioners Association Vs. State of Manipur & Ors., (2020) 14 SCC 625, respondent's counsel submitted that various judgments had interpreted the ambit and effect of the same.

Case Title: The State Of Himachal Pradesh v KP Nayar| Special Leave to Appeal (C) No.572/2021

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