"No Legal Mandate That Same Rank Pensioners Must Be Given Same Pension": Supreme Court Upholds Centre's OROP Policy In Defence Forces [Updated With Judgment]

All pensioners who hold the same rank many not form a homogeneous class. Also, a new pensionary benefit can be made applicable from a prospective date, with the only condition that it cannot split up a homogenous class. The bench held that the DS Nakara judgment cannot be read as having mandated OROP.

The Court further held that the the OROP definition in the Centre's policy cannot be held to be arbitrary. The Court also cited the limited scope of judicial review over executive policy decisions.

At the same time, the Court ordered the re-fixation with effect from July 2019.

"We accordingly direct that a refixation exercise must be conducted by the Govt. for a period of 5 years with regard to pension payable to Army Personnel as stated in the OROP policy in accordance with the November 7, 2015 notification. Refixation exercise to be carried out from July 1, 2019 and arrears to be paid to Army personnel within 3 months", the bench ordered while disposing of the petition.

The Court passed this direction noting that in terms of the 2015 police OROP was to be effected from 1 July 2014. Para 3 (v) of the communication states that "in future, the pension would be re-fixed every five years". Such an exercise has remained to be carried out after the expiry of five years possibly because of the pendency of the present proceedings, the Court noted.

Reasons cited by the Court :

The Court observed as follows

"We find no constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015 for the following reasons:

(i) The definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement. It is not the case of the petitioners that the pension is reviewed 'automatically' to a class of the pensioners and 'periodically' to another class of the pensioners;

(ii) The cut-off date is used only for the purpose of determining the base salary for the calculation of pension. While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used. Since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage, the Union Government has taken a policy decision to enhance the base salary for the calculation of pension. Undoubtedly, the Union Government had a range of policy choices including taking the minimum, the maximum or the mean or average. The Union government decided to adopt the average. Persons below the average were brought up to the average mark while those drawing above the average were protected. Such a decision lies within the ambit of policy choices;

(iii)While no legal or constitutional mandate of OROP can be read into the decisions in Nakara (supra) and SPS Vains (supra), varying pension payable to officers of the same rank retiring before and after 1 July 2014 either due to MACP or the different base salary used for the calculation of pension cannot be held arbitrary; and

(iv) Since the OROP definition is not arbitrary, it is not necessary for us to undertake the exercise of determining if the financial implications of the scheme is negligible or enormous".

Principles governing pensions and cut-off dates summarised

The principles governing pensions and cut-off dates were summarised by the Court as follows :

(i) All pensioners who hold the same rank may not for all purposes form a homogenous class. For example, amongst Sepoys differences do exist in view of the MACP and ACP schemes. Certain Sepoys receive the pay of the higher ranked personnel;

(ii) The benefit of a new element in a pensionary scheme can be prospectively applied. However, the scheme cannot bifurcate a homogenous group based on a cut-off date;

(iii) The judgment of the Constitution Bench in Nakara (supra) cannot be interpreted to read the one rank one pension rule into it. It was only held that the same principle of computation of pensions must be applied uniformly to a homogenous class; and

(iv) It is not a legal mandate that pensioners who held the same rank must be given the same amount of pension. The varying benefits that may be applicable to certain personnel which would also impact the pension payable need not be equalised with the rest of the personnel.

The petitioners had questioned the notification dated November 7, 2015, issued by the Union Government wherein while implementing OROP, it had adopted a modified definition of the expression under which the gap between the rates of pension of current and past pensioners were to be bridged at "periodic intervals".

The petitioners seek annual revision of pension under OROP and for calculating the pension based on 2014 salary of ex-servicemen. As per 2015 notification, the periodic review of pension was fixed at five years and the pension was fixed based on 2013 salaries.

It was averred in the plea that despite the assurance on floor of Parliament, what was being implemented is "different pensions for same rank depending on when the person retired".

Submission Of Counsels

We Have Not Discriminated Any Of The Retirees In Any Form; Heart Of Policy Maker Is As Wide As Citizen But When We Work At The Table & Ultimately Arrive At Policy, Concerns Are Always Baring: ASG Venkataraman

With regards to the Finance Minister's speech which was made on February 17, 2014, ASG submitted that the Finance Minister's speech wherein the Koshiyari Committee's recommendation was endorsed was not based on any decision or recommendation by the then Union Cabinet.

On the aspect of petitioner's contention that one should go only by the same rank and not the same length of service and still grant or extend OROP benefits, ASG while referring to the affidavit submitted that the threshold condition to qualify for MACP is completion of the required length of service.

Emphasizing on the 3 era's with regards to MACP and non MACP, ASG said that for the purpose of computation of OROP, the Union has taken MACP as the base and has applied it across the board for all the retirees having the same length of service.

He also submitted that matching Non MACP with MACP would result in financial implication of INR 42,776.38 crores.

"If we do something, that'll be walking an extra mile. Anything you create that is a fundamental aspect. Heart of a policy maker is as wide as a citizen but when we work at the table & ultimately arrive at a policy, concerns are always baring. This concern you do it for 1 year today, make it for this case but what would be its repercussions in other areas," ASG had submitted.

ASG Venkataraman submitted that when the Union had drawn the concept of OROP in 2013, it did not want to leave anyone post independence.

"When we drew it in 2013- we didn't want to leave anyone post independence. Now my friend is saying you've traveled in the past. ACP, MACP everything is bridged. When we wanted the scheme to travel into the future and the policy makers instead of 10 years decided for 5 years. Court has to understand. When we framed it we covered the entire past of 60/70 years," ASG submitted.

He further added that, "To amend it through courts directions- implications of this are not known to all of us. Anything with finance, economics has to be considered with "caution". Period of 5 years is reasonable in whole affairs of things & it has financial implications."

By Introducing Concept Of Periodic Intervals, Period Cannot Be So Large So As To Make Concept Of OROP Illusory & In Effect Decree One Rank Different Pension; It Would Be Purile To Contend That Minutes Of Meeting Chaired By Raksha Mantri Did Not Constitute An Executive Decision Taken By The Union: Senior Counsel Huzefa Ahmadi

Appearing for the petitioners, Senior Advocate Huzefa Ahmadi in his rejoinder submissions contended that application of OROP by the Center has resulted in 1 rank different pension.

"It has never been my contention that any personnel who has not been under the different length of service should get the same OROP. To suggest that this would be a financial burden if my contention is accepted- that's totally incorrect. Application by OROP by them has resulted in 1 rank diff pension as even acc to them fig of 6665 was of person who had put in same years of service when compared to person who retired later after same years of service. Therefore where does the concept of uniform pension go? That is the elephant in the room. After a period of 5 years, we will go back to 1.5 years even for the purpose of equalization. This difference will keep on escalating further," submitted the Senior Counsel.

With regards to the Union's stand that the Finance Minister's speech wherein the Koshiyari Committee's recommendation was endorsed was not based on any decision or recommendation by the then Union Cabinet, Senior Counsel while referring to the documents and the executive decisions submitted that it would be purile to contend that the minutes of the meeting chaired by the Raksha Mantri did not constitute an executive decision taken by the Union.

He further added that the hiatus which was practically of 1.5 years would only result in increasing the gaps. It was also Senior Counsel's contention that "The Union has been shifting its stand right from the time when the statement was made on the floor of the house. The first statement was made by the Finance Minister. Then in the Budget Speech- it's made after the minister of PM & entire cabinet's approval. Mr Jaitley's speech categorically adopts the def of OROP. It's arbitrary not to factor in MACP for the simple reason that even going by the 2015 decision, the OROP component will eschew the MACP."

"By introducing the concept of periodic intervals, the period cannot be so large so as to make the concept of OROP illusory and in effect decree one rank different pensions. This would be the practical effect of equalizing the pension after a period of 5 years," Senior Counsel further added.

"Older soldiers when they fought didn't have the arms that the soldiers have now. Upto the 3rd Pay Commission, this was exactly what you were giving," Senior Counsel submitted while concluding.

Case Title: Indian Ex Servicemen Movement (An All India Federation Of Military Veterans Organisation Represented Vs. Union Of India Department Of Exservicemen Welfare Ministry Of Defence Secretary| Writ Petition (Civil) 419/2016

Citation : 2022 LiveLaw (SC) 289

Headnotes from the judgment

One Rank One Pension - No constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015 - The definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement - The cut-off date is used only for the purpose of determining the base salary for the calculation of pension- Varying pension payable to officers of the same rank retiring before and after 1 July 2014 either due to MACP or the different base salary used for the calculation of pension cannot be held arbitrary. (Para 49)

Service Law - Pension - principles governing pensions and cut-off dates summarized - All pensioners who hold the same rank may not for all purposes form a homogenous class - The benefit of a new element in a pensionary scheme can be prospectively applied. However, the scheme cannot bifurcate a homogenous group based on a cut-off date- Same principle of computation of pensions must be applied uniformly to a homogenous class - It is not a legal mandate that pensioners who held the same rank must be given the same amount of pension. The varying benefits that may be applicable to certain personnel which would also impact the pension payable need not be equalized with the rest of the personnel. (Para 48)

Legitimate Expectation - A facet of Article 14 of the Constitution - 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. [Referred to State of Jharkhand v. Brahmputra Metallics Ltd., Ranchi 2020 SCC OnLine SC 968 ] (Para 26)

Service Law - The manner in which and the period over which revisions should take place of pensions, salaries and other financial benefits is a pure question of policy. (Para 37)

Constitution of India, 1950 ; Article 32, 226 - Judicial Review in policy matters - Most questions of policy involve complex considerations of not only technical and economic factors but also require balancing competing interests for which democratic reconciliation rather than adjudication is the best remedy. Further, an increased reliance on judges to solve matters of pure policy diminishes the role of other political organs in resolving contested issues of social and political policy, which require a democratic dialogue. This is not to say that this Court will shy away from setting aside policies that impinge on constitutional rights. Rather it is to provide a clear-eyed role of the function that a court serves in a democracy. (Para 46)

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