Himachal Road Transport Corporation & Anr. vs Himachal Road Transport Corporation Retired Employees Union

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7230 OF 2012

Himachal Road Transport Corporation & Anr. …Appellant(s)

vs

Himachal Road Transport Corporation Retired Employees Union ..Respondent(s)

J U D G M E N T

R.SUBHASH REDDY,J.

1. This appeal is filed by the Himachal Road

Transport Corporation and another, aggrieved by the

judgment and Order dated 08.01.2009, passed by the

High Court of Himachal Pradesh, at Shimla in CWP No.

1362 of 2001.

2. The Himachal Road Transport Corporation is Signature Not Verified MEENAKSHI KOHLI Date: 2021.02.22 established under The Road Transport Corporations Act, Digitally signed by

16:16:29 IST Reason:

1950. The employees of the Corporation were governed

1 C.A.No.7230/2012

by the Contributory Provident Fund Scheme (CPF). The

appellant-Corporation introduced a Pension Scheme in

the year 1995, by issuing a Notification dated

06.10.1995 and adopted Central Civil Service (Pension)

Rules, 1972. The second appellant has approved the

Scheme formulated by the Corporation. The Pension

Scheme was given effect to from 05.06.1995, that is

from the date on which Scheme was approved by the

Cabinet/ Government. For the employees who retired

from 05.06.1995, till the date of notification, i.e,

06.10.1995 and for the employees in service, an option

was given either to opt for Pension Scheme, or to

continue under the Contributory Provident Fund. Clause

5 of the Scheme, stipulates eligibility criteria to

opt for Pension Scheme.

3. The respondent-Union, consisting of the employees

who retired prior to 05.06.1995, approached the

Administrative Tribunal by filing Original Application

in OA (D) No. 237/1996, for grant of following

reliefs:

“i) That the cut off date for grant of pension to those employees who were in service of the Corporation as on June 5, 1995 be quashed and set aside;

2 C.A.No.7230/2012

ii) That the applicants i.e. pre June 5, 1995 employees, may be held entitled for pension as the other similarly situated employees between June 5, 1995 to October 6, 1995 have been given the benefit as per Clause 5 of the said Scheme;

iii) That the action of the respondents Corporation in denying pension to the applicants may be declared illegal, unjust, unreasonable, arbitrary and violative of Article 14, 16, 21.”

The respondent-union, relying on a judgment of this

Court in the case of D.S. Nakara & Ors. v. Union of

India1 and several other judgments, pleaded that the

fixation of cut-off date was arbitrary and

discriminatory.

4. The appellants have contested the Original

Application, filed by the respondent-Union, inter alia

pleading that they have introduced a Pension Scheme to

the employees of the Corporation, with effect from

05.06.1995, on which date Cabinet has approved the

Scheme. It was the plea of the appellants that all the

employees of the Corporation, who retired prior to

05.06.1995, were already paid all the retiral benefits

including the benefit of Contributory Provident Fund,

as such the cut-off date fixed, i.e, 05.06.1995, for

1 AIR 1983 SC 130 = (1983) 1 SCC 305

3 C.A.No.7230/2012

implementing the Pension Scheme, was not

discriminatory.

5. The Himachal Pradesh Administrative Tribunal, by

judgment dated 19.06.2001, dismissed the Original

Application filed by the respondent-Union, by holding

that the appellants are entitled to fix the cut-off

date for introducing the Pension Scheme for its

employees and such fixation is not discriminatory. It

was held that all the employees of the Union, who were

governed by the Contributory Provident Fund, on their

retirement, have already availed the benefit of such

fund. It was further noticed by the Tribunal that, as

the Cabinet has approved the Scheme in its meeting

held on 05.06.1995 as such, the Scheme was given

effect to from such date. By recording a finding that

the employees who were already retired prior to

05.06.1995, constitute a different category and are

not similarly placed as those employees who were in

service of the appellant-Corporation as on 05.06.1995,

dismissed the Original Application.

6. The respondent-Union, aggrieved by the judgment

and Order of the Administrative Tribunal, approached

the High Court of Himachal Pradesh, at Shimla, by way

4 C.A.No.7230/2012

of Civil Writ Petition No. 1362 of 2001. In the Writ

Petition filed, mainly it was the case of the

respondent-Union that, the cut-off date, i.e,

05.06.1995, fixed by the Corporation for

implementation of Pension Scheme is discriminatory and

has no reasonable nexus with the object sought to be

achieved. It was the plea of Union that all the

employees of the Corporation, constitute a homogeneous

class and there cannot be a classification within the

class. By impugned judgment and Order dated

08.01.2009, the High Court has allowed the Writ

Petition, by quashing the cut-off date, on the ground

that no reasons were forthcoming from the appellant-

Corporation, for picking up the cut-off date, i.e,

05.06.1995, for implementation of Pension Scheme.

Further, High Court has declared that the Scheme

which was notified on 06.10.1995, shall apply to the

members of the respondent-Union and other similarly

situated persons, with a condition that they will have

to deposit the amount received by them under the

Contributory Provident Fund Scheme, within a

reasonable time. The High Court has set aside the

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Order of the Administrative Tribunal dated 19.06.2001,

passed in OA (D) 237/1996.

7. Aggrieved by the said judgment and order passed by

the High Court, the Road Transport Corporation is

before us, by way of this civil appeal.

8. We have heard Sri Himanshu Tyagi, learned counsel

appearing for the appellant-Corporation and Sri M.C.

Dhingra, learned counsel appearing for the respondent-

applicant.

9. It is contended by Sri Himanshu Tyagi, learned

counsel for the appellant-Corporation that, though

there is no discrimination in fixing the cut-off date,

i.e, 05.06.1995, by way of Notification dated

06.10.1995, the High Court has allowed the writ

petition, without assigning valid reasons. It is

submitted that the employees who retired prior to

05.06.1995, by availing the benefit of Contributory

Provident Fund Scheme, constitute a separate class.

After availing the benefit of Contributory Provident

Fund Scheme, on their retirement, it is not open to

plead that Pension Scheme, as notified for the

existing employees and the employees retired between

05.06.1995 and 06.10.1995 is discriminatory. The

6 C.A.No.7230/2012

employees who retired prior to 05.06.1995, and the

employees presently in service, cannot be treated as a

homogeneous class. It is submitted that, it is always

open for the employer to extend further benefits to

the employees prospectively. When such Scheme is

introduced with effect from the date of its approval,

i.e, 05.06.1995, same is rightly not extended to the

employees who retired prior to 05.06.1995. The Pension

Scheme was approved by the Cabinet on 05.06.1995, as

such it cannot be said that such a fixation is either

arbitrary or illegal.

10. On the other hand, Sri M.C. Dhingra, learned

counsel appearing for the respondent-applicant, has

submitted that there is absolutely no reason or

justification for fixing the cut-off date, i.e,

05.06.1995, for implementation of Pension Scheme. It

is submitted that all the employees of the Corporation

constitute one homogeneous class and the appellant-

Corporation should not have made any distinction among

such class of employees. It is submitted that, as no

valid reasons have been assigned by the appellant-

Corporation, for fixing the cut-off date, as such the

High Court has rightly allowed the Writ Petition and

7 C.A.No.7230/2012

there are no grounds to interfere with the same.

Further submissions of learned counsel for the

respondent is that, though the Pension Scheme was

notified vide Notification dated 06.10.1995, same was

given effect to retrospectively from 05.06.1995, as

such there is no reason for not extending such benefit

to the employees who retired prior to 05.06.1995 also.

With the contentions, as referred above, learned

counsel prayed for dismissal of the civil appeal.

11. Having heard the learned counsels on both sides,

we have perused the impugned order of the High Court,

the order passed by the Tribunal and other material

placed on record.

12. Before entering into the contentious issue of

fixation of cut-off date, for extending the benefit of

Pension Scheme by the Corporation, we need to notice

certain factual aspects emerging from the pleadings of

the parties and other material on record.

13. The members of the respondent-Union were initially

employed by the Mandi- Kullu Road Transport

Corporation. By Order dated 24.09.1974, the said

Corporation was re-named as “Himachal Road Transport

Corporation” and vide notification dated 01.10.1974,

8 C.A.No.7230/2012

the Himachal Pradesh State Government has taken over

the services of such employees with effect from

02.10.1974. All the members of the respondent-Union,

who were retired, were governed by the Contributory

Provident Fund Scheme, after their services were taken

over by the Corporation with effect from 02.10.1974.

The State Government has notified the Pension Scheme

on 06.10.1995, however, the same was made applicable

with effect from 05.06.1995. The Administrative

Tribunal, by drawing a distinction on the facts from

the case of D.S. Nakara1 and other judgments relied on,

on behalf of the respondent, has held that the point

which arises in the instant case is different from the

cases relied upon. The Tribunal has held that the

members of the respondent-Union were governed by the

Contributory Provident Fund and had, on their

retirement, availed such benefit whereas the Scheme of

pension was made applicable with effect from

05.06.1995, as per the Notification dated 06.10.1995.

The Tribunal, by recording a finding that the

employees who already retired by availing the benefit

under the Contributory Provident Fund Scheme,

constitute a different category and are not similarly

9 C.A.No.7230/2012

placed as those employees who were in service of the

Corporation on 05.06.1995, on which date the Scheme

was approved, has dismissed the Original Application.

14. When the order of the Tribunal, rejecting the

claim of the respondent-Union was challenged, by way

of Civil Writ Petition, the High Court, by referring

to certain cases decided by this Court, without any

independent assessment on the issue in question, has

allowed the writ petition, by impugned order.

15. In the case of D.S. Nakara1, this Court had

treated the pension retirees only, as a homogeneous

class and all the pensioners governed by The 1972

Rules, were treated as a class, because payment of

pension was a continuing obligation on the part of the

State, till life long to the pensioners, unlike the

beneficiaries of the Contributory Provident Fund. In

the said case, it was never held that the pension

retirees and the employees in service, constitute a

homogeneous class. In the case of R.L Marwaha v. Union

of India and others2, this Court has held that fixing

of a date for grant of benefit, must have nexus with

the object sought to be achieved. There cannot be any

2 1987(4) SCC 31

10 C.A.No.7230/2012

dispute on the proposition. Further, the case of Union

of India and another v. Deoki Nandan Aggarwal3, relates

to fixation of cut-off date, for grant of liberalized

Pension Scheme. Even in the case of Subrata Sen and

others v. Union of India and others4, where a cut-off

date was fixed for the purpose of applicability of

revised pension scheme this Court has held that all

retired employees constitute one homogeneous class and

there cannot be cut-off date fixed to extend such

benefits. All the above said cases which are referred

to and relied on by the High Court are not relevant

and cannot be pressed into service, to decide the

issue which arises on the facts of this case.

16. Though there are long line of cases, where

validity of fixation of cut-off date is considered by

this Court, we confine and refer to the case law which

is relevant to the facts of the case on hand. In the

case of State of Punjab v. Amar Nath Goyal5, while

examining the validity of cut-off date fixed for grant

of benefit of increased quantum of death-cum-

3 1992 Supp. (1) SCC 323

4 (2001)8 SCC 71

5 (2005)6 SCC 754

11 C.A.No.7230/2012

retirement gratuity, this Court has held that the

financial constraint pleaded by the Government, was a

valid ground for fixation of cut-off date and such

fixation was not arbitrary, irrational or violative of

Article 14 of the Constitution. While differentiating

the facts with the case of D.S. Nakara1, this Court

held in para 29 of the judgment, which reads as under:

“29. D.S. Nakara1 which is the mainstay of the case of the employees arose under special

circumstances, quite different from the present case. It was a case of revision of pensionary benefits and classification of pensioners into two groups by drawing a cut-off line and granting the revised pensionary benefits to employees retiring on or after the cut-off date. The criterion made applicable was “being in service and retiring subsequent to the specified date”. This Court held that for being eligible for liberalised Pension Scheme, application of such a criterion is violative of Article 14 of the Constitution, as it was both arbitrary and discriminatory in nature. The reason given by the Court was that the employees who retired prior to a specified date, and those who retired thereafter formed one class of pensioners. The attempt to classify them into separate classes/groups for the purpose of pensionary benefits was not founded on any intelligible dirrerentia, which had a rational nexus with the object sought to be

12 C.A.No.7230/2012

achieved. However, it must be noted that even in cases of pension, subsequent judgments of this Court have considerably watered down the rigid view taken in D.S. Nakara1 as we shall see later in T.N. Electricity Board v. R.Veerasamy (“Veerasamy”). In any event, this is not a case of a continuing benefit like pension; it is a one-time benefit like gratuity.”

17. In the case of Govt. of Andhra Pradesh

& others v. N. Subbarayudu & others6, by noticing that

a rigid view was taken in the case of D.S. Nakara1,

this Court has considerably watered down the same and

has held that fixing the cut-off date is an executive

function based on several factors like economic

conditions, financial constraints, administrative and

other circumstances. This Court further held that even

if no reason is forthcoming from executive, for

fixation of a particular date, it should not be

interfered by Court, unless cut-off date leads to some

blatantly capricious or outrageous result.

18. In the case of Suchet Singh Yadav and others v.

Union of India and others7, of which one of us is a

party, (Hon’ble Ashok Bhushan,J.), while examining the

6 (2008)14, SCC 702

7 (2019)11 SCC 520

13 C.A.No.7230/2012

claim of commissioned officers of defence forces, i.e,

Army, Air force and Navy, who retired prior to

01.01.1996, for grant of next higher pay scale, on the

strength of Order of Government of India dated

21.11.1997, which was issued in consequence of

implementation of Fifth Pay Commission Report, this

Court has not accepted the plea of discrimination. In

the said judgment, it is held that pensioners, for

purposes of pension, constitute one class and schemes

which classify pensioners on basis of cut-off date are

impermissible unless such classification is founded on

some rational principle. On the facts of the case, in

the aforesaid judgment it is held that the Order which

was issued by the Government of India on 21.11.1997,

is applicable only to existing officers and not

retirees. Further in the case of All Manipur

Pensioners Association by its Secretary v. The State

of Manipur and others8, of which, one of us is a party,

(Hon’ble M.R.Shah,J.), when validity of Office

Memorandum dated 21.04.1999, issued for revising the

quantum of pension by fixing the cut-off date on

01.01.1996 is questioned, this Court has held that all

8 (2019)9 Scale, 282

14 C.A.No.7230/2012

pensioners form only one homogeneous class and held

that such a fixation of date for extending the

benefits of revised benefits to the pensioners, is

arbitrary and violates Article 14 of the Constitution.

19. Coming back to the facts of the case on hand, by

applying the case law which is referred above, it is

clear that all the members of the respondent-Union,

while in service, were governed by Contributory

Provident Fund Scheme. All those employees who retired

before 05.06.1995, were paid all retiral benefits,

applicable to them. As the Pension Scheme was not in

existence during the relevant time, it was not the

case of violation of any service conditions either.

The Pension Scheme is introduced by way of

notification dated 06.10.1995, by giving effect from

05.06.1995, on which date the Cabinet has approved the

Scheme. The employees who were governed by the

Contributory Provident Fund Scheme and retired prior

to 05.06.1995 and the employees who were in service

and continued after 05.06.1995, of the appellant-

Corporation, cannot be treated as a homogeneous class.

The retired employees, who were governed by the

Contributory Provident Fund Scheme, on their

15 C.A.No.7230/2012

retirement had already received the benefits of such

Scheme, constitute different class than those

employees who were in service as on 05.06.1995. There

is a valid reason for giving effect to the Pension

Scheme from 05.06.1995, though the notification was

issued on 06.10.1995. The cut-off date, i.e,

05.06.1995 is fixed on the ground that the Cabinet has

approved the Scheme from such date. As already noticed

above, it is always open for the employer to introduce

new Schemes and benefits, having regard to financial

health of the employer. Whenever such new benefit is

extended for the existing employees, retired employees

cannot seek such benefit, merely on the ground that

they too were the former employees of the Corporation.

In spite of specific plea of the appellant-Corporation

that the benefit of the Scheme was extended from

05.06.1995, in view of approval granted by the Cabinet

to the Scheme, the High Court has erroneously recorded

a finding that no reason has been assigned to choose

such cut-off date. It is true that all pensioners

constitute one class and whenever, revision is

effected, ordinarily such benefit is to be extended to

all the pensioners but at the same time, the scenario

16 C.A.No.7230/2012

in the case on hand, is totally different. On the

facts of this case, it is to be noticed that when the

members of the respondent-Union retired, there was no

Pension Scheme at all. They were merely governed by

the Contributory Provident Fund Scheme and, on

retirement, they were already granted the benefit of

such Scheme. In that view of the matter, only on the

spacious plea that all the employees of the

Corporation constitute homogeneous class, cannot

question the cut-off date fixed for grant of Pension

Scheme.

20. It is profitable to refer a judgment of this

Court, in the case of State of Rajasthan and Another

v. Amrit Lal Gandhi and others9. The ratio decided in

the said case is identical to the issue on hand in the

present case. In the aforesaid case, pursuant to

recommendations made in the year 1986, by a committee

appointed by University Grants Commission, the

Syndicate and Senate of the University has recommended

for introducing a Pension Scheme for the employees of

the University. The State Government’s approval was

sought, which was given for introducing the Scheme

9 (1997) 2 SCC 342

17 C.A.No.7230/2012

with effect from 01.01.1990. When such fixation of

cut-off date from 01.01.90 was found fault with, by

the High Court and the High Court issued directions to

give effect from 01.01.1986, while reversing the

judgment of the High Court, this Court has held that

fixation of cut-off date from 01.01.1990 cannot be

said to be arbitrary or discriminatory. Relevant

paragraph Nos. 16 and 17 of the judgment, read as

under:

“16. Applying the ratio of the aforesaid decisions to the present case, we find no justification for the High Court having substituted the date of 1-1-1986 in lieu of 1-1-1990. It is evident that for introducing a pension scheme, which envisaged financial implications, approval of the Rajasthan Government was required. In the letter of 16-4-1991, written to the Vice-Chancellors of different universities of Rajasthan, it was stated as follows:

“As per the direction in regard to the aforesaid subject, the State Government has decided to introduce Pension Scheme in the Universities of the State w.e.f. 1-1-1990. In this regard the State Legislature has passed University Pension Rules and General Provident Fund Rules. Therefore, by enclosing a copy of University Pension Regulations and General Provident Fund Regulations with this letter, it is requested that by obtaining approval of the competent body or Syndicate of the University, these Regulations be implemented in the University together and necessary information regarding implementation be intimated.”

18 C.A.No.7230/2012

17. The Syndicate and Senate of the University, when they had forwarded their recommendations in 1986, did not contain a specific date with effect from which the pension scheme was to be made applicable.

Their recommendations were subject to approval. The approval was granted by the Government, after the State Legislature had passed the University Pension Rules and General Provident Fund Rules. The Government had stated in its affidavit before the High Court that the justification of the cut-off date of 1-1-1990 was “wholly economic”. It cannot be said that the paying capacity is not a relevant or valid consideration while fixing the cut-off date. The University could, in 1991, validly frame Pension Regulations to be made applicable prospectively. It, however, chose to give them limited retrospectively so as to cover a larger number of employees by taking into account the financial impact of giving retrospective operation to the Pension Regulations. It was decided that employees retiring on or after 1-1-1990 would be able to exercise the option of getting either pension or provident fund. Financial impact of making the Regulations retrospective can be the sole consideration while fixing a cut-off date. In our opinion, it cannot be said that this cut-off date was fixed arbitrarily or without any reason. The High Court was clearly in error in allowing the writ petitions and substituting the date of 1-1-1986 for 1-1-1990.”

21. The High Court, without noticing the difference of

factual background, in the cases relied on by the

respondent-writ petitioner and without independently

considering the issue in question, has allowed the

19 C.A.No.7230/2012

writ petition. In view of the same, we are of the view

that judgment of the High Court deserves to be set

aside.

22. Accordingly, this civil appeal is allowed.

Judgment of the High Court dated 08.01.2009, passed in

Civil Writ Petition No. 1362 of 2001 is set aside,

consequently said writ petition stands dismissed, with

no order as to costs.

.........................J. (ASHOK BHUSHAN)

.........................J. (R. SUBHASH REDDY)

.........................J. (M.R. SHAH)

NEW DELHI;

February 22,2021

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