ALL MANIPUR PENSIONERS ASSOCIATION BY ITS SECRETARY versus THE STATE OF MANIPUR AND OTHERS

[2019] 9 S.C.R. 905

ALL MANIPUR PENSIONERS ASSOCIATIONBY ITS SECRETARY

THE STATE OF MANIPUR AND OTHERS

(Civil Appeal No.10857 of 2016)

JULY 11, 2019

[M. R. SHAH AND A.S. BOPANNA, JJ.]

Service Law – Grant of benefit of revised pension – Creationof two classes of pensioners – When discriminatory – Govt. ofManipur issued office memorandum dated 21.04.1999 revising thequantum of pension, however, it provided that those Govt. employeeswho retired on or after 01.01.1996 shall be entitled to the revisedpension at higher percentage and those who retired before01.01.1996 shall be entitled at lower percentage – Challengedbefore the Single Judge of the High Court –Allowed– Set aside byDivision Bench –Held: State of Manipur has adopted the CCS(Pension) Rules to be applicable to the State of Manipur and alsocame out with the 1977 Pension Rules– All the government servantsretired in accordance with the provisions of the Pension Rules andafter completing qualifying service are entitled to the pension/pensionary benefits– Therefore, all the pensioners form only onehomogeneous class – Issue in the present appeal is squarely coveredby the decision of Supreme Court in the case of D.S. Nakara andOthers v. Union of India – Division Bench clearly erred in notfollowing the said decision – On merits also, there is no validjustification to create two classes, viz. one who retired pre-1996and another who retired post-1996, for the purpose of grant ofrevised pension, solely on the ground of financial constraint – Suchclassification has no nexus with the object and purpose of grant ofbenefit of revised pension– All the pensioners form one class whoare entitled to pension as per the pension rules – Art.14 ensures toall equality before law and equal protection of laws – Art.16 permitsa valid classification – valid classification is truly validdiscrimination– Whenever cut-off date, as in the present case isfixed to categorise one set of pensioners for favourableconsideration over others, the twin test for valid classification or

Avalid discrimination therefore must necessarily be satisfied – Objectand purpose for revising the pension was due to the increase in thecost of living – State cannot arbitrarily pick and choose fromamongst similarly situated persons, cut-off date for extension ofbenefits especially pensionary benefits– Such classification has nonexus with the object and purpose of revision of pension, hence isBunreasonable, discriminatory and arbitrary and therefore rightlyset aside by the Single Judge – All the pensioners, irrespective oftheir date of retirement, viz. pre-1996 retirees shall be entitled torevision in pension at par with pensioners who retired post-1996 –Central Civil Services (Pension) Rules, 1972 – Manipur CivilCServices (Pension) Rules, 1977 – r.49 – Constitution of India –Arts.14 and 16.Constitution of India– Arts.14 and 16 – Twin test for validdiscrimination/classification – When not satisfied – Discussed.

Constitution of India– Art.16 – Test for valid classification –DHeld: Test for valid classification may be summarised as adistinction based on classification founded on an intelligibledifferentia, which has rational relationship with the object soughtto be achieved.

Allowing the appeal, the CourtE

HELD:1.1 The State of Manipur has adopted the CentralCivil Services (Pension) Rules to be applicable to the State ofManipur. Therefore, all the government servants retired inaccordance with the provisions of the Pension Rules and aftercompleting qualifying service are entitled to the pension/Fpensionary benefits.While passing the impugned judgment andorder, the Division Bench of the High Court has not followed thedecision of Supreme Court in the case of D.S. Nakara case,considering some of the observations made by this Court in thesubsequent decisions in the cases of R. Veerasamy; Amar NathGGoyal and P.N. Menon to the effect that the decision in the caseof D.S. Nakara is one of the limited application and there is noscope for enlarging the ambit of that decision to cover all schemesmade by the retirees or demand for an identical amount ofpension irrespective of the date of retirement. It is not in dispute

that the State Government has adopted the Central Civil Services(Pension) Rules, to be applicable to the State of Manipur. TheState has also come out with the Manipur Civil Services (Pension)Rules, 1977. It is also not in dispute that subject to completingthe qualifying service the government servants retired inaccordance with the pension rules are entitled to pension.Therefore, as such, all the pensioners form only one homogeneousclass. Therefore, it can be said that all the pensioners form onlyone class as whole. By not following the decision of SupremeCourt in the case of D.S. Nakara, considering some of theobservations made by this Court in the aforesaid decisions,namely P.N.Menon and other decisions, the Division Bench of theHigh Court has not at all considered the distinguishable facts inthe aforesaid decisions. [Paras 6.1, 7.2 and 7.4][916-F-G;917-C-D; 918-B-C; 921-B-C]

1.2 Similarly, the decisions of Supreme Court in the casesof Hari Ram Gupta and Kallakkurichi Taluk Retired OfficialsAssociation, Tamil Nadu also shall not be applicable to the factsof the case on hand. The Division Bench of the High Court hasclearly erred in not appreciating and/or considering thedistinguishable facts in the cases of Hari Ram Gupta; R.Veerasamy; Amar Nath Goyal; P.N. Menon and Amrit Lal Gandhi.[Paras 7.8, 7.9] [922-D-E]

1.3 Even otherwise on merits also, there is no validjustification to create two classes, viz., one who retired pre-1996and another who retired post-1996, for the purpose of grant ofrevised pension. Such classification has no nexus with the objectand purpose of grant of benefit of revised pension. All thepensioners form one class who are entitled to pension as perthe pension rules. Article 14 of the Constitution of India ensuresto all equality before law and equal protection of laws. At thisjuncture it is also necessary to examine the concept of validclassification. valid classification is truly valid discrimination.Article 16 of the Constitution of India permits valid classification.The result to be achieved by the just objective presupposes thechoice of some for differential consideration/treatment overothers. classification to be valid must necessarily satisfy twotests. Firstly, the distinguishing rationale has to be based on

Ajust objective and secondly, the choice of differentiating one setof persons from another, must have reasonable nexus to theobjective sought to be achieved. The test for valid classificationmay be summarised as distinction based on classificationfounded on an intelligible differentia, which has rationalrelationship with the object sought to be achieved. Therefore,Bwhenever cut-off date (as in the present controversy) is fixedto categorise one set of pensioners for favourable considerationover others, the twin test for valid classification or validdiscrimination therefore must necessarily be satisfied. In thepresent case, the classification in question has no reasonableCnexus to the objective sought to be achieved while revising thepension. The object and purpose for revising the pension is dueto the increase in the cost of living. All the pensioners form asingle class and therefore such classification for the purpose ofgrant of revised pension is unreasonable, arbitrary, discriminatory

and violative of Article 14 of the Constitution of India. The StateDcannot arbitrarily pick and choose from amongst similarly situatedpersons, cut-off date for extension of benefits especiallypensionary benefits. There has to be classification founded onsome rational principle when similarly situated class isdifferentiated for grant of any benefit. Increase in the cost of livingEwould affect all the pensioners irrespective of whether they haveretired pre-1996 or post-1996.All the pensioners belong to oneclass. Therefore, by such classification/cut-off date the equalsare treated as unequals and therefore such classification whichhas no nexus with the object and purpose of revision of pensionis unreasonable, discriminatory and arbitrary and therefore theFsaid classification was rightly set aside by the learned Single Judgeof the High Court. At this stage, it is required to be observedthat whenever new benefit is granted and/or new scheme isintroduced, it might be possible for the State to provide cut-offdate taking into consideration its financial resources. But theGsame shall not be applicable with respect to one and single classof persons, the benefit to be given to the one class of persons,who are already otherwise getting the benefits and the questionis with respect to revision. [Paras 8, 8.1] [922-E-H; 923-A-G]

1.4 The controversy/issue in the present appeal is squarelyHcovered by the decision of Supreme Court in the case of D.S.

Nakara. The decision of this Court in the case of D.S. Nakarashall be applicable with full force to the facts of the case on hand.The Division Bench of the High Court has clearly erred in notfollowing the decision of this Court in the case of D.S. Nakaraand has clearly erred in reversing the judgment and order of theSingle Judge. The impugned judgment and order passed by theDivision Bench is quashed and set aside. The judgment and orderpassed by the Single Judge is hereby restored and it is held thatall the pensioners, irrespective of their date of retirement, viz.pre-1996 retirees shall be entitled to revision in pension at parwith those pensioners who retired post-1996. The arrears be paidto the respective pensioners within period of three months fromtoday. [Para 9] [923-H; 924-A-C]

D.S. Nakara and Others v. Union of India

(1983) 1 SCC 305 : [1983] 2 SCR 165 – followed.

Hari Ram Gupta (D) through L.R. Kasturi Devi v. Stateof U.P. (1998) 6 SCC 328 : [1998] 3 SCR 854;Ex-Services League v. Union of India (1991) 2 SCC104 : [1991] 1 SCR 158;Kallakkurichi Taluk RetiredOfficials Association, Tamil Nadu and others v. State ofTamil Nadu (2013) 2 SCC 772 : [2013] 4 SCR 883– held inapplicable.

T.N. Electricity Board v. R. Veerasamy & Others (1999)3 SCC 414 : [1999] 2 SCR 221; State of Punjab andOthers v. Amar Nath Goyal & Others (2005) 6 SCC754 : [2005] 2 Suppl. SCR 549 ; Union of India v. P.N.Menon (1994) 4 SCC 68 ; State of Rajasthan v. AmritLal Gandhi (1997) 2 SCC 342 : [1997] 1 SCR 121

– distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeal No.10857of 2016

From the Judgment and Order dated 01.03.2016 of the High Courtof Manipur, at Imphal in Writ Appeal No. 28 of 2006

R. Balasubramanian, Sr. Adv., Ananga Bhattacharyya, Adv. forCthe Appellant.

Sanjay Hegde, Sr. Adv., Ashutosh Dubey, Abhishek Chauhan,Rajendra, Ms. R. Dubey, Manish Khurana, Sushil Pandy, Ashok KumarSingh, Advs. for the Respondents.

DThe Judgment of the Court was delivered by

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the Division Bench of the High Court of Manipur atImphal dated 01.03.2016 passed in Writ Appeal No. 28 of 2006, by whichEthe Division Bench of the High Court has allowed the said appealpreferred by the respondent – State and has quashed and set aside thejudgment and order dated 24.3.2005 passed by the learned Single Judgein Writ Petition (C) No. 1455 of 2000, by which the learned Single Judgeheld that the method of calculating the revised pension in paragraph 4.1Fof the office memorandum dated 24.4.1999 in respect of pre-1996pensioners is different from the method of calculating the revised pensionfor the Government employees who retired/died in harness on or after1.1.1996 is arbitrary and violative of Article 14 of the Constitution ofIndia, the original writ petitioners have preferred the present appeal.

2. The facts leading to the present appeal in nutshell are as under:

That the State of Manipur adopted the Central Civil Services(Pension) Rules, 1972, as amended from time to time. As per Rule 49 ofthe Central Civil Services Rules, 1972, case of government employeeretired in accordance with the provisions of the rules after completingqualifying service of not less than 30 years, the amount of pension shall

be calculated at 50% of the average emoluments subject to maximumof Rs.4500/- per month. It appears that considering the increase in thecost of living, the Government of Manipur decided to increase the quantumof pension as well as the pay of the employees. That the Government ofManipur issued an office memorandum dated 21.4.1999 revising thequantum of pension. However, provided that those Manipur Governmentemployees who retired on or after 1.1.1996 shall be entitled to the revisedpension at higher percentage and those who retired before 1.1.1996shall be entitled at lower percentage.2.1 Feeling aggrieved by office memorandum dated 21.4.1999providing two different revised pensions, viz, the higher percentage ofrevised pension to the government employees who retired on or after1.1.1996 and the lower percentage of revised pension to those who retiredon or before 1.1.1996, the appellant herein – All Manipur PensionersAssociation approached the learned Single Judge of the High Court ofManipur by way of Writ Petition (C) No.1455 of 2000. It was the caseon behalf of the original writ petitioners that all the pensioners who retiredon or after 1.1.1996 and those who retired before 1.1.1996 form onlyone class as whole and therefore the classification between those whoretired on or after 1.1.1996 and those who retired on or before 1.1.1996for the purpose of granting the benefit of revised pension is arbitrary,unreasonable and violative of Article 14 of the Constitution of India. Itwas submitted that the date of retirement cannot form the very criterionfor classification. Before the learned Single Judge, heavily reliance wasplaced on the decision of this Court in the case of D.S. Nakara andothers vs. Union of India, reported in (1983) 1 SCC 305. The writpetition before the learned Single Judge was opposed by the StateGovernment and the aforesaid classification was sought to be justifiedsolely on the ground that considering the financial constraints of theState, the State was justified in granting revised pension differently tothose who retired after 1.1.1996 and those who retired before 1.1.1996.It was the case on behalf of the State that considering the financialconstraints of the State, the State was not in position to extend thebenefit of pension making the percentage given by the Government ofIndia in its memorandum dated 17.12.1998 to the pre-1996 pensionersand accordingly decision was taken to extend the benefit of revisedpension at certain percentage for the pre-1996 pensioners and higherpercentage for the post 1996 pensioners. Relying upon the decision of

Athis Court in D.S. Nakara’s case (supra), by the judgment and orderdated 24.3.2005, the learned Single Judge allowed the writ petition andheld the classification between those pensioners who retired prior to1996 and those who retired after 1996 as arbitrary and violative of Article14 of the Constitution of India and consequently directed the StateGovernment to pay the revised pension uniformly to all the pensionersBirrespective of any cut-off date, i.e., those who retired pre-1996 or thosewho retired post-1996.

2.2. Feeling aggrieved and dissatisfied with the judgment and orderdated 24.3.2005 passed by the learned Single Judge in Writ Petition (C)No. 1455 of 2000, the State preferred appeal before the Division BenchCof the High Court. By the impugned judgment and order dated 1.3.2016,the Division Bench of the High Court has allowed the said appeal andhas quashed and set aside the judgment and order passed by the learnedSingle Judge by observing that classification is permissible and cut-offdate can be pressed into service depending on financial resources ofDthe State. The Division Bench has held that the cut-off date fixed by theState government as 1.1.1996 for payment of revised pension to pre-1996 retirees and post-1996 retirees cannot be termed to be unreasonableor irrational in the light of Article 14 of the Constitution of India andtherefore need not be held to be invalid.

E3. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the Division Bench of the High Court, the originalwrit petitioners have preferred the present appeal.

4. Shri R. Balasubramanian, learned Senior Advocate hasappeared for the appellant herein and Shri Sanjay Hegde, learned SeniorFAdvocate has appeared for the State.

4.1 Shri R. Balasubramanian, learned Senior Advocate appearingon behalf of the appellant – Pensioners Association has vehementlysubmitted that in the facts and circumstances of the case, the DivisionBench of the High Court has materially erred in allowing the appeal andGquashing and setting aside the judgment and order passed by the learnedSingle Judge of the High Court and approving the creation of two classesof pensioners, viz., pre-1996 and post-1996 for the purpose of revisionin pension, which is contrary to catena of decisions of this Court includingthe decision of this Court in the case of D.S. Nakara (supra).

4.2 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that the Division Bench of the High Court has materiallyerred in not following the decision of this Court in the case of D.S.Nakara (supra). It is submitted that the Division Bench of the HighCourt has not properly appreciated the fact that the decision of thisCourt in the case of D.S. Nakara (supra) has not been diluted at all inany of the subsequent decisions and still holds the field. It is submittedthat the decisions of this Court in the cases of Hari Ram Gupta (D)through L.R. Kasturi Devi v. State of U.P., reported in (1998) 6 SCC328; T.N. Electricity Board v. R. Veerasamy & others, reported in(1999) 3 SCC 414; State of Punjab and others v. Amar Nath Goyal& others, reported in (2005) 6 SCC 754, which came to be consideredby the Division Bench of the High Court while not following the decisionof this Court in the case of D.S. Nakara (supra) shall not be applicableto the facts of the case on hand and all the aforesaid decisions areclearly distinguishable.

4.3 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that the Division Bench of the High Court has erred in notproperly appreciating the fact that all the pensioners form only one classas whole and therefore they cannot be divided in two/classified intotwo groups for the purpose of giving more financial benefits to one groupthan the other. It is submitted that the State’s financial difficulty/constraintcannot be ground to discriminate and/or create two classes who assuch belong to one class only.

4.4 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that the High Court has not properly appreciated the factthat all the pensioners, whether they have retired pre-1996 or post-1996are governed by the pension rules and are entitled to pension and thereforeas such they form only one class as whole and therefore all thepensioners are entitled to the same pensionary benefitsirrespective oftheir date of retirement.

4.5 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that as held by this Court in the case of D.S. Nakara (supra)(para 42), the classification has to be based on some rational principle

Aand the rational principle must have nexus to the objects sought to beachieved. It is submitted that if the State Government considered itnecessary to revise the pension due to the escalation in the cost of livingand other things, there is no rational principle behind it for granting therevised pension only to those who retired post-1996 and simultaneouslydenying the same to those who retired pre-1996. It is vehementlyBsubmitted that if the revision of pension was necessitated due to theescalation in the cost of living etc., there is no reason to deny the benefitof revised pension to those who retired pre-1996. It is submitted thattherefore this revision which classified pension into two classes is notbased on any rational principle. It is submitted that as held by this CourtCin the case of D.S. Nakara (supra) if the rational principle is the one ofdividing pensioners with view to giving something more to personsotherwise equally placed, it would be discriminatory. It is submitted thatthis arbitrary division has not only no nexus to the revision in pensionbutit is counterproductive and runs counter to the whole gamut of pensionscheme, more particularly the revision in pension.D

4.6 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that the only justification by the State to create two classesfor the purposes of payment of revision in pension, viz., those who retiredpre-1996 and those who retired post-1996 was the financial constraint.EIt is submitted that the aforesaid has no nexus with the object and purposeof revision in pension. It is submitted therefore that such classificationis absolutely arbitrary and therefore violative of Articles 14 & 16 of theConstitution of India. It is submitted that as such the learned SingleJudge of the High Court was justified in holding creation of two classesFfor the purpose of revision in pension as arbitrary and violative of Article14 of the Constitution of India.

4.7 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that looking to the object and purpose of the revision inGpension, namely, increase in the cost of living, the Division Bench of theHigh Court has materially erred in observing and holding that as theState does not have the financial resources to pay uniform pension to allthe retired employees and therefore cut-off date fixed by the StateGovernment as 1.1.1996 for payment of revised pension to pre-1996retirees and post-1996 retirees cannot be termed to be unreasonable orH

irrational in the light of Article 14 of the Constitution of India. It issubmitted that the aforesaid finding recorded by the Division Bench ofthe High Court is just contrary to the decision of this Court in the case ofD.S. Nakara (supra) and other subsequent decisions in which thedecision of this Court in the case of D.S. Nakara(supra) has beenfollowed.

4.8 It is further submitted by Shri R. Balasubramanian, learnedSenior Advocate appearing on behalf of the appellant – PensionersAssociation that in the present case the decision of this Court in the caseof D.S. Nakara (supra) is squarely applicable to the facts of the case.It is submitted therefore that the Division Bench of the High Court hasmaterially erred in quashing and setting aside the judgment and orderpassed by the learned Single Judge in holding the decision of the StateGovernment creating two groups for the purpose of revision in pensionas arbitrary, unreasonable and violative of Article 14 of the Constitutionof India.4.9 Making the above submissions and heavily relying upon thedecision of this Court in the case of D.S. Nakara(supra), it is prayed toallow the present appeal.

5. The present appeal is vehemently opposed by Shri Sanjay Hegde,learned Senior Advocate appearing on behalf of the respondent – State.

5.1 It is vehemently submitted by Shri Sanjay Hegde, learned SeniorAdvocate appearing on behalf of the respondent – State that in the factsand circumstances of the case and after considering the observationsmade by this Court in the cases of Hari Ram Gupta (supra), R.Veerasamy (supra) and Amar Nath Goyal (supra), the Division Benchof the High Court has rightly held that the cut-off date fixed by the StateGovernment for the purpose of revised pension cannot be said to beunreasonable or irrational in the light of Article 14 of the Constitution ofIndia.

5.2 It is further submitted by Shri Sanjay Hegde, learned SeniorAdvocate appearing on behalf of the respondent – State that the decisionof this Court in the case of D.S. Nakara (supra), which has been heavilyrelied upon by the learned Senior Advocate appearing on behalf of theappellant – Pensioners Association, subsequently came to be consideredby this Court and it has been observed that the decision of this Court inthe case of D.S. Nakara (supra) is one of the limited application and

Athere is no scope for enlarging the ambit of that decision to cover allschemes made by the retirees or demand for an identical amount ofpension irrespective of the date of retirement. In support of his abovesubmission, Shri Sanjay Hegde, learned Senior Advocate appearing onbehalf of the respondent – State has heavily relied upon the decisions ofthis Court in the cases of Indian Ex-Services League v. Union ofBIndia, reported in (1991) 2 SCC 104, Union of India v. P.N. Menon,reported in (1994) 4 SCC 68 and State of Rajasthan v. Amrit LalGandhi, reported in (1997) 2 SCC 342.

5.3 Shri Sanjay Hegde, learned Senior Advocate appearing onbehalf of the respondent – State has also heavily relied upon some of theCobservations made by this Court in the case of Kallakkurichi TalukRetired Officials Association, Tamil Nadu and others v. State of TamilNadu, reported in (2013) 2 SCC 772in support of his submission thatfinancial constraint can be valid ground to grant the benefit of revisedpension to some of the pensioners and it is always open to the StateDGovernment looking to its own financial constraint to grant the benefit ofrevised pension by providing the cut-off date. It is submitted thereforethat such classification and/or creation of two groups for the purposeof granting the benefit of revised pension cannot be said to beunreasonable, irrational and violative of Article 14 of the Constitution ofIndia as sought to be contended on behalf of the Pensioners Association.E

5.4 Making the above submissions and relying upon the aforesaiddecisions, it is prayed to dismiss the present appeal.

6. We have heard the learned Senior Advocates for the respectiveparties at length.F

6.1 It is not in dispute that the State of Manipur has adopted theCentral Civil Services (Pension) Rules to be applicable to the State ofManipur. Therefore, all the government servants retired in accordancewith the provisions of the Pension Rules and after completing qualifyingservice are entitled to the pension/pensionary benefits. It appears thatGconsidering the increase in the cost of living, the State Governmentenhanced/revised the pension of its employees with effect from 1.1.1996as in the case of Central Government employees. However, this revisionin pension was done differently, viz., for employees who retired prior to1.1.1996 and for employees who retired after 1.1.1996. Consequently,the State provided lower percentage of increase to those who retired

pre-1996 and provided higher percentage of increase to those who retiredpost-1996. The learned Single Judge of the High Court held that such aclassification is not permissible in law keeping in mind the equality clauseof the Constitution. However, on an appeal, by the impugned judgmentand order, the Division Bench of the High Court has reversed the decisionof the learned Single Judge and has observed and held that as in thepresent case the State does not have the financial resources to payuniform pension to all the retired employees, the cut-off date fixed bythe State Government as 1.1.1996 for payment of revised pension topre-1996 retirees and post-1996 retirees cannot be termed to beunreasonable and irrational in the light of Article 14 of the Constitutionof India. While passing the impugned judgment and order, the DivisionBench of the High Court has not followed the decision of this Court inthe case of D.S. Nakara (supra), considering some of the observationsmade by this Court in the subsequent decisions in the cases of R.Veerasamy (supra); Amar Nath Goyal(supra) and P.N. Menon (supra)to the effect that the decision in the case of D.S. Nakara (supra) is oneof the limited application and there is no scope for enlarging the ambit ofthat decision to cover all schemes made by the retirees or demand foran identical amount of pension irrespective of the date of retirement.

6.2 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the Division Bench of the High Court, the originalwrit petitioners – All Manipur Pensioners Association – employees/pensioners who retired pre-1996 have preferred the present appeal.

7. The short question which is posed for consideration before thisCourt is, whether in the facts and circumstances of the case, the decisionof this Court in the case of D.S. Nakara (supra) shall be applicable ornot, and in the facts and circumstances of the case and solely on theground of financial constraint, the State Government would be justifiedin creating two classes of pensioners, viz., pre-1996 retirees and post-1996 retirees for the purpose of payment of revised pension and whethersuch classification is arbitrary, unreasonable and violative of Article 14of the Constitution of India or not?

7.1 At the outset, it is required to be noted that in the present case,the State Government has justified the cut-off date for payment of revisedpension solely on the ground of financial constraint. On no other ground,the State tried to justify the classification. In the backdrop of the aforesaid

Afacts, the aforesaid question posed for consideration before this Court isrequired to be considered.

7.2 It is not in dispute that the State Government has adopted theCentral Civil Services (Pension) Rules, to be applicable to the State ofManipur. The State has also come out with the Manipur Civil ServicesB(Pension) Rules, 1977. It is also not in dispute that subject to completingthe qualifying service the government servants retired in accordancewith the pension rules are entitled to pension. Therefore, as such, all thepensioners form only one homogeneous class. Therefore, it can be saidthat all the pensioners form only one class as whole. Keeping in mindthe increase in the cost of living, the State Government increased theCquantum of pension and even pay for its employees. The StateGovernment also enhanced the scales of pension/quantum of pensionwith effect from 1.1.1996 keeping in mind the increase in the cost ofliving. However, the State Government provided the cut-off date for thepurpose of grant of benefit of revised pension with effect from 1.1.1996Dto those who retired post-1996 and denied the revision in pension tothose who retired pre-1996. The aforesaid classification between thesepensioners who retired pre-1996 and post-1996 for the purpose of grantof benefit of revision in pension is the subject matter of this appeal. Asobserved hereinabove, the aforesaid classification is sought to be justifiedby the State Government solely on the ground of financial constraint.E

7.3 At the outset, it is required to be noted that in the case ofD.S.Nakara (supra), such classification is held to be arbitrary,unreasonable, irrational and violative of Article 14 of the Constitution ofIndia. In paragraphs 42 and 65, this Court in the case of D.S. Nakara(supra) has observed and held as under:

“42. If it appears to be undisputable, as it does to us that thepensioners for the purpose of pension benefits form class, wouldits upward revision permit homogeneous class to be divided byarbitrarily fixing an eligibility criteria unrelated to purpose ofrevision, and would such classification be founded on some rationalprinciple? The classification has to be based, as is well settled, onsome rational principle and the rational principle must have nexusto the objects sought to be achieved. We have set out the objectsunderlying the payment of pension. If the State considered itnecessary to liberalise the pension scheme, we find no rational

principle behind it for granting these benefits only to those whoretired subsequent to that date simultaneously denying the sameto those who retired prior to that date. If the liberalisation wasconsidered necessary for augmenting social security in old age togovernment servants then those who, retired earlier cannot beworst off than those who retire later. Therefore, this division whichclassified pensioners into two classes is not based on any rationalprinciple and if the rational principle is the one of dividing pensionerswith view to giving something more to persons otherwise equallyplaced, it would be discriminatory. To illustrate, take two persons,one retired just day prior and another day just succeeding thespecified date. Both were in the same pay bracket, the averageemolument was the same and both had put in equal number ofyears of service. How does fortuitous circumstance of retiringa day earlier or day later will permit totally unequal treatment inthe matter of pension? One retiring day earlier will have to besubject to ceiling of Rs 8100 p.a. and average emolument to beworked out on 36 months’ salary while the other will have ceilingof Rs 12,000 p.a. and average emolument will be computed onthe basis of last 10 months’ average. The artificial division staresinto face and is unrelated to any principle and whatever principle,if there be any, has absolutely no nexus to the objects sought to beachieved by liberalising the pension scheme. In fact this arbitrarydivision has not only no nexus to the liberalised pension schemebut it is counter-productive and runs counter to the whole gamutof pension scheme. The equal treatment guaranteed in Article 14is wholly violated inasmuch as the pension rules being statutory incharacter, since the specified date, the rules accord differentialand discriminatory treatment to equals in the matter of commutationof pension. 48 hours’ difference in matter of retirement wouldhave traumatic effect. Division is thus both arbitrary andunprincipled. Therefore, the classification does not stand the testof Article 14.

65. That is the end of the journey. With the expanding horizons ofsocio-economic justice, the Socialist Republic and welfare Statewhich we endeavour to set up and largely influenced by the factthat the old men who retired when emoluments were comparativelylow and are exposed to vagaries of continuously rising prices, the

falling value of the rupee consequent upon inflationary inputs, weare satisfied that by introducing an arbitrary eligibility criterion:“being in service and retiring subsequent to the specified date”for being eligible for the liberalised pension scheme and therebydividing homogeneous class, the classification being not basedon any discernible rational principle and having been found whollyunrelated to the objects sought to be achieved by grant of liberalisedpension and the eligibility criteria devised being thoroughly arbitrary,we are of the view that the eligibility for liberalised pension schemeof “being in service on the specified date and retiring subsequentto that date” in impugned memoranda, Exs. P-1 & P-2, violatesArticle 14 and is unconstitutional and is struck down. Both thememoranda shall be enforced and implemented as read down asunder: In other words, in Ex. P-1, the words:

“that in respect of the government servants who were in serviceon March 31, 1979 and retiring from service on or after that date”

and in Ex. P-2, the words:

“the new rates of pension are effective from April 1, 1979 andwill be applicable to all service officers who became/become non-effective on or after that date”

are unconstitutional and are struck down with this specificationthat the date mentioned therein will be relevant as being one fromwhich the liberalised pension scheme becomes operative to allpensioners governed by 1972 Rules irrespective of the date ofretirement. Omitting the unconstitutional part it is declared that allpensioners governed by the 1972 Rules and Army PensionRegulations shall be entitled to pension as computed under theliberalised pension scheme from the specified date, irrespectiveof the date of retirement. Arrears of pension prior to the specifieddate as per fresh computation is not admissible. Let writ to thateffect be issued. But in the circumstances of the case, there willbe no order as to costs.”

7.4 While the aforesaid decision of this Court in the case of D.S.Nakara (supra) was relied upon by the appellant herein and as suchwhich came to be considered and followed by the learned Single Judge,

the Division Bench considering some of the observations made in thecases of Hari Ram Gupta (supra); R. Veerasamy (supra); AmarNath Goyal(supra) and P.N. Menon (supra), has observed and heldthat the decision of this Court in the case of D.S. Nakara(supra) is oneof the limited application and there is no scope for enlarging the ambit ofthat decision to cover all schemes made by the retirees or demand foran identical amount of pension irrespective of the date of retirement.However, by not following the decision of this Court in the case ofD.S. Nakara (supra), considering some of the observations made bythis Court in the aforesaid decisions, namely P.N.Menon(supra) andother decisions, the Division Bench of the High Court has not at allconsidered the distinguishable facts in the aforesaid decisions.7.5 In the case of P.N. Menon(supra), the controversy wasaltogether different one. The factual position that needs to be highlightedinsofar as P.N. Menon (supra) is concerned, is that the retiredemployees had never been in receipt of “dearness pay” when they retiredfrom service and therefore the O.M. in question could not have beenapplied to them. This is how this Court examined the matter. This Courtalso noticed that prior to the O.M. in question, the pension scheme wascontributory and only with effect from 22.9.1977, the pension schemewas made non-contributory. Since the respondent employees in the firstcited case were not in service at the time of introducing the same theywere held not eligible for the said benefit. Therefore, the said decisionshall not be applicable to the facts of the case on hand, more particularlywhile considering and/or applying the decision of this Court in the caseof D.S. Nakara (supra).

7.6 In the case of Amrit Lal Gandhi (supra), pension wasintroduced for the first time for the University teachers based on theresolution passed by the Senate and Syndicate of Jodhpur

University. The same was approved by the State Governmentwith effect from 1.1.1990. Therefore, the controversy was not betweenone set of pensioners alleging discriminatory treatment as against anotherset of pensioners. There were no pensioners to begin with. The retireeswere entitled to provident fund under the existing provident fund scheme.The question of discrimination between one set of pensioners from anotherset of pensioners did not arise in the said decision. With the aforesaidfacts, this Court observed that financial viability is relevant issue.

A7.7 Similarly, the decision of this Court in the case of Indian Ex-Services League (supra) also shall not be applicable to the facts of thecase on hand. The facts in this case and the facts in the case of D.S.Nakara (supra) are clearly distinguishable. In the case of Indian Ex-Services League (supra), the dispute was with respect to PF retireesand Pension retirees and to that it was held that PF retirees and PensionBretirees constitute different classes and therefore this Court distinguishedthe decision of this Court in the case of D.S. Nakara (supra). Therefore,the aforesaid decision shall not be applicable to the facts of the case onhand at all.

7.8 Similarly, the decisions of this Court in the cases of Hari RamCGupta (supra) and Kallakkurichi Taluk Retired OfficialsAssociation, Tamil Nadu (supra) also shall not be applicable to thefacts of the case on hand.

7.9 In view of the above, we are satisfied that none of thejudgments, relied upon by the learned Senior Advocate for the respondentD– State, has any bearing to the controversy in hand. The Division Benchof the High Court has clearly erred in not appreciating and/or consideringthe distinguishable facts in the cases of Hari Ram Gupta (supra); R.Veerasamy (supra); Amar Nath Goyal (supra); P.N. Menon (supra)and Amrit Lal Gandhi (supra).

8. Even otherwise on merits also, we are of the firm opinion thatthere is no valid justification to create two classes, viz., one who retiredpre-1996 and another who retired post-1996, for the purpose of grant ofrevised pension, In our view, such classification has no nexus with theobject and purpose of grant of benefit of revised pension. All theFpensioners form one class who are entitled to pension as per the pensionrules. Article 14 of the Constitution of India ensures to all equality beforelaw and equal protection of laws. At this juncture it is also necessary toexamine the concept of valid classification. valid classification is trulya valid discrimination. It is true that Article 16 of the Constitution ofIndia permits valid classification. However, very classification mustGbe based on just objective. The result to be achieved by the justobjective presupposes the choice of some for differential consideration/treatment over others. classification to be valid must necessarily satisfytwo tests. Firstly, the distinguishing rationale has to be based on justobjective and secondly, the choice of differentiating one set of personsHfrom another, must have reasonable nexus to the objective sought to

be achieved. The test for valid classification may be summarised as adistinction based on classification founded on an intelligible differentia,which has rational relationship with the object sought to be achieved.Therefore, whenever cut-off date (as in the present controversy) isfixed to categorise one set of pensioners for favourable considerationover others, the twin test for valid classification or valid discriminationtherefore must necessarily be satisfied. In the present case, theclassification in question has no reasonable nexus to the objective soughtto be achieved while revising the pension. As observed hereinabove, theobject and purpose for revising the pension is due to the increase in thecost of living. All the pensioners form single class and therefore sucha classification for the purpose of grant of revised pension is unreasonable,arbitrary, discriminatory and violative of Article 14 of the Constitution ofIndia. The State cannot arbitrarily pick and choose from amongstsimilarly situated persons, cut-off date for extension of benefitsespecially pensionary benefits.There has to be classification foundedon some rational principle when similarly situated class is differentiatedfor grant of any benefit.

8.1 As observed hereinabove, and even it is not in dispute that assuch decision has been taken by the State Government to revise thepension keeping in mind the increase in the cost of living. Increase inthe cost of living would affect all the pensioners irrespective of whetherthey have retired pre-1996 or post-1996. As observed hereinabove, allthe pensioners belong to one class. Therefore, by such classification/cut-off date the equals are treated as unequals and therefore such aclassification which has no nexus with the object and purpose of revisionof pension is unreasonable, discriminatory and arbitrary and thereforethe said classification was rightly set aside by the learned Single Judgeof the High Court. At this stage, it is required to be observed that whenevera new benefit is granted and/or new scheme is introduced, it might bepossible for the State to provide cut-off date taking into considerationits financial resources. But the same shall not be applicable with respectto one and single class of persons, the benefit to be given to the oneclass of persons, who are already otherwise getting the benefits and thequestion is with respect to revision.

9. In view of the above and for the reasons stated above, we areof the opinion that the controversy/issue in the present appeal is squarelycovered by the decision of this Court in the case of D.S. Nakara (supra).

AThe decision of this Court in the case of D.S. Nakara (supra) shall beapplicable with full force to the facts of the case on hand. The DivisionBench of the High Court has clearly erred in not following the decisionof this Court in the case of D.S. Nakara (supra) and has clearly erredin reversing the judgment and order of the learned Single Judge. Theimpugned judgment and order passed by the Division Bench is notBsustainable and the same deserves to be quashed and set aside and isaccordingly quashed and set aside. The judgment and order passed bythe learned Single Judge is hereby restored and it is held that all thepensioners, irrespective of their date of retirement, viz. pre-1996 retireesshall be entitled to revision in pension at par with those pensioners whoCretired post-1996. The arrears be paid to the respective pensionerswithin period of three months from today.

10. The instant appeal is allowed accordingly. However, in thefacts and circumstances of the case, there shall be no order as to costs.

Divya Pandey

Appeal allowed.