Pension Shall Be Determined On Rules Existing At The Time Of Retirement: Supreme Court

The Supreme Court has observed that the pension payable to an employee on retirement shall be determined on the rules existing at the time of retirement. The Court also observed that the law did not allow the employer to apply the rules differently in relation to persons who are similarly situated.

The bench of Justices MR Shah and BV Nagarathna in the present matter was considering a civil appeal against an order dated August 29, 2019 passed by the Division Bench of the Kerala High Court wherein the High Court had dismissed an appeal.

While allowing the appeal the bench in Dr. G. Sadasivan Nair V. Cochin University Of Science And Technology Represented By Its Registrar, & Ors observed that,

"While we accept the settled position of law that the rule applicable in matters of determination of pension is that which exists at the time of retirement, we are unable to find any legal basis in the action of the respondent University of selectively allowing the benefit of Rule 25 (a). The law, as recognized by this Court in Deoki Nandan Prasad and Syed Yousuddin Ahmed (supra) unequivocally states that the pension payable to an employee on retirement shall be determined on the rules existing at the time of retirement. However, the law does not allow the employer to apply the rules differently in relation to persons who are similarly situated."

Factual Background

The appellant, Dr G Sadasivan Nair was appointed as a lecturer in the School of Legal Studies of Cochin University Of Science And Technology ("University") with effect from 7th September 1984. Prior to such appointment, the appellant was a lawyer practising in the District Court and Subordinate Courts Kerala for the period between 11th March 1972 and 2nd February 1980. During the period between March 1980 and February 1984, he pursued his PhD programme on availing a University Grants Commission Fellowship and resumed practice as an advocate in the Kerala High Court and Subordinate Courts after obtaining his PhD, upto the date of his appointment as a lecturer in the University.

On 10th November 2004, he made a representation before the Registrar of the University, requesting to reckon his practice of eight years at the Bar for the purpose of determining his pensionary benefits payable to him on his superannuation by relying on Rule 25 (a), Part III, Kerala Service Rules ("KSR").

The appellant received a letter on 7th January 2006, from the Registrar of the University declining his request to reckon his tenure of practice at the Bar for the purpose of determining appellant's superannuation pension. While rejecting the Registrar relied on the proviso to Rule 25 (a), Part III.

Aggrieved, the appellant approached the Chancellor of the University contending that the Registrar had rejected his request for reckoning his tenure of practice at the Bar for the purpose of determining his superannuation pension, without following the relevant rules in their proper perspective.

Since the appellant received no response to his representation, he preferred a writ before the Kerala High Court on the same ground. The High Court on April 3, 2006 directed the Chancellor to decide within a period of four months from the date of receipt of the judgment of the High Court, the question, as to, whether the appellant was entitled to get the benefit under Rule 25(a), Part III, KSR.

In accordance with the High Court's judgment dated 3rd April 2006, the Chancellor afforded an opportunity of hearing to the appellant on 12th July 2006 and subsequently dismissed the appeal petition preferred by the appellant on 7th October, 2006 by holding that the Government or any other statutory body had the right to modify the service conditions, even retrospectively.

Aggrieved by the dismissal, the appellant preferred a writ petition before the High Court. The Single judge of the High Court on January 25, 2012 dismissed the writ on the ground that it was open to the Government to unilaterally alter the service conditions of employees during their service. The bench further said that what was applicable was the rule prevailing as on the date of retirement and not that which existed as on the date of entering service.

Aggrieved, by the order of Single Judge the appellant preferred an intra court appeal which was dismissed by the Division Bench.

Contentions Of Counsels

Senior Counsel Dr KP Pillay submitted that Rule 25 (a), Part III, KSR as it stood at the time of appointment of the appellant to the post of lecturer in the School of Legal Studies of the University allowed experience at the Bar to be reckoned as qualifying service for the purpose of determining superannuation pension. It was also his contention that the proviso to Rule 25 (a), Part III, KSR, which limited the scope of the benefit conferred under Rule 25(a) by stating that such benefit would only be available to such employees as are recruited to those posts requiring a qualification in law and experience at the Bar, was introduced with effect from 12th February 1985. In this regard he submitted that said proviso could not have been made applicable to the appellant as it was not in force at the time of his appointment, i.e., on 7th September 1984.

Opposing the submissions, Advocate Malini Poduval contended that the benefit under the said Rule was rightly withheld by the University in light of the proviso. In relation to the appellant's contention that other employees of the University who were similarly situated as the appellant, had been granted the benefit under Rule 25(a), it was submitted that the appellant could not claim such relief relying on an earlier illegal order. She further submitted that such a claim based on negative equality in favour of the appellant was untenable.

Advocate G Prakash appeared for the State.

Supreme Court's Analysis

The bench in the judgement authored by Justice BV Nagarathna observed that the appellant as well as Dr P Leela Krishnan were similarly situated and both were appointed as teaching faculty after practicing as advocates in various courts of Kerala.

In this regards, the Court said that, "We find no valid ground to sustain the application of the proviso in relation to the appellant, thereby denying the benefit of Rule 25(a), when the same was not applied in the case of Dr. P. Leela Krishnan, thereby allowing the benefit of Rule 25(a)."

"We are of the view that if the respondent University sought to deny the benefit of Rule 25 (a), in light of the proviso which was subsequently inserted thereby limiting the benefit of the Rule, it ought to have done so uniformly. However, the action of the respondent University of selectively applying the proviso to Rule 25(a) in relation to the appellant, while not applying the said proviso in relation to similarly situated persons, is arbitrary and therefore illegal. Such discrimination, which is not based on any reasonable classification, is violative of all canons of equality which are enshrined in the Constitution of India," Court further said.

Case Title: Dr. G. Sadasivan Nair V. Cochin University Of Science And Technology Represented By Its Registrar, & Ors.| Civil Appeal No.6994/2021

Coram: Justices MR Shah and BV Nagarathna

Citation : LL 2021 SC 701

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