Pensioners Of Same Rank May Not Form Homogeneous Class; New Benefits Can Be Prospectively Applied : Supreme Court Summarizes Principles On Pension & Cut-Off Dates

In the judgment in the OROP case (Indian Ex-Servicemen Movement And Ors. v. Union of India And Ors), the Supreme Court has summarized the principles relating to pension and cut-off dates 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 Supreme Court has upheld the "One Rank One Pension" ("OROP") Scheme in Defence Forces introduced by the Union Government to bridge the gap between the rate of pension of current and past pensioners at periodic intervals. While hearing the plea of the petitioner to calculate the pension based on the salary drawn by the ex-servicemen in 2014, a Bench comprising Justices DY Chandrachud, Surya Kant and Vikram Nath stated that Union Government's decision to calculate pension based on last drawn salary for those who retired on or after 2014, and for all those who retired prior to 2014 based on the average salary drawn in 2013 is a policy choice to enhance the base salary and cannot be interfered with. Senior Advocate, Mr. Huzefa Ahmadi, appearing for the petitioner, had argued that the method of calculation to be adopted in disbursing pension devised by the Centre creates a class within a class where ex-servicemen who retired with same rank and same length of service would receive different pension. Additional Solicitor General, Mr. Venkataramanan stated that the OROP scheme attempts to bring up those who are drawing below average pension to the average and to protect those who are getting higher pension. It was pointed out that one of the qualifying conditions for the OROP scheme is that the personnels must have the same length of service. The Bench noted that the Assured Career Progression ("ACP") which was introduced in 2013 extended the benefit of upgradation by applying the norms of 10:20:30 years of service. It was applied retrospectively. The Modified Assured Career Progression ("MACP") was introduced on 11.10.2008 and made operational on 01.01.2006. In MACP, the timeline of 10:20:30 for upgradation of service was modified to 8:16:24. The Union Government had decided to take MACP as the base and apply it to retired personnels having the same length of service. The Bench was of the view that the periodic review of pension was a pure question of policy and not violative of Article 14 of the Constitution. Noting that salaries and pension accounted for 63% of the total defence budget for 2020-2021, it stated that the Union Government was entitled to balance distinct priorities keeping in view the financial implications. The Union Government had decided to take the average of the minimum and maximum pension in calendar year 2013 as the revised pension of all pensioners retiring in the same rank and with the same length of service. On perusal of the affidavits submitted by the Union, the Bench observed that if maximum salary drawn is used as the base value instead of the average salary an additional outlay of Rs. 1,45,339.34 crores would be incurred. The Bench held that the executive is free to take policy decisions based on financial implications. Referring to the judgment in D.S. Nakara v. Union of India 1983 AIR 130, the Bench stated that therein the Apex Court had held that all pensioners formed a homogeneous class and where an existing scheme of pension was liberalised, a distinction could not be made on the basis of a specified cut-off date. At the same time, it was emphasised that the Court had also noted that the financial implication in such matters has some relevance. The Bench was of the view that the cut-off date was used only for the purpose of determining the salary for calculation of pension. The nitty-gritty of the calculation of pension being a policy decision ought to be worked out by the executive. It further added that the varying pension payable to officers of the same rank retiring before and after 01.07.2014 either due to MACP or the different base salary used for the calculation of pension cannot be held to be arbitrary.Case Title: Indian Ex Servicemen Movement (An All India Federation Of Military Veterans...

Pensioners Of Same Rank May Not Form Homogeneous Class; New Benefits Can Be Prospectively Applied : Supreme Court Summarizes Principles On Pension & Cut-Off Dates

Sohini Chowdhury

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