Introduction

“Article 14 forbids class legislation but permits reasonable classification for the purpose of legislation. The classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from those that are left out of the group and that differentia must have a rational nexus to the object sought to be achieved by the statute in question.”

There ought to be a causal connection between the basis of classification and the object of the statute. The doctrine of classification was evolved by the Court for the purpose of sustaining legislation or State action designed to help weaker sections of the society. Legislative and executive action may accordingly be sustained by the court if the State satisfies the twin tests of reasonable classification and the rational principle correlated to the object sought to be achieved. A discriminatory action is liable to be struck down unless it can be shown by the Government that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.

Background of the Case

By a Memorandum dated May 25, 1979 (Exhibit P-1) theGovernment of India liberalised the formula for the computation of pension in respect of employees governed by the CentralCivil Services(Pension) Rules, 1972 and made it applicable to employees retiring on or after March 31, 1979. By another memorandum issued on September23, 1979 (Exhibit P-2) it extended the same, subject to certain limitations, to the armed forces personnel retiring on or after April 1, 1979. In this case, the three petitioners challenged the validity of the above two memoranda on account of being violative of Article 14 of the Constitution of India.

Facts

• Petitioners 1 and 2 who had retired in the year 1972 from the CentralCivil Service and the Armed Forces service respectively, and petitioner No.3, a registered society espousing the cause of pensioners all over the country, challenged the validity of the two memoranda issued on May 25, 1979, and September 23, 1979, in so far as the liberalisation in the computation of pension had been made applicable only to those retiring on or after the date Specifiedand the benefit of liberalisation had been denied to all those who had retired earlier. The first petitioner retired in 1972 and on computation, his pension worked out at Rs. 675/- p.m. and along with the dearness relief granted from time to time, at the relevant time, he was in receipt of monthly pension of Rs. 935/-. The second petitioner retired at or about that time and at the relevant time was in receipt of a pension plus dearness relief of Rs. 981/- p.m. Union of India has been revising and liberalising the pension rules from time to time.

• Counsel for petitioners contended that all pensioners entitled to receive a pension under the relevant rules to form a class irrespective of the dates of their retirement and there can not be a mini-classification within this class; that the differential treatment accorded to those who had retired prior to the specified date is violative of Article 14 of the Constitution of India as the choice of the specified date is wholly arbitrary and the classification based on the fortuitous circumstance of retirement before or subsequent to the specified date is invalid; and that the scheme of liberalisation in the computation of pension must be uniformly enforced with regard to all pensioners.

• Counsel for respondents contended that a classification based on the date of retirement is valid for the purpose of granting pensionary benefits; that the specified date is an integral part of the scheme of liberalisationandtheGovernment would never have enforced the scheme devoid of the date;that the doctrine of severability cannot be invoked to sever the specified date from the scheme as it would have the effect of enlarging the class of pensioners covered by the scheme and when the legislature has expressly defined the class to which the legislation applies it would be outside the judicial function to enlarge the class; that there is not a single case where the court has included some category within the scope of provisions of a law to maintain its constitutionality; that since the scheme of liberalisation has financial implications, the Court cannot make it retroactive;that if more persons divided the available cakethe residue falling to the share of each,especially to the share of those who are not before the court would become far less and therefore no relief could be given to the petitioners that pension is always correlated to the date of retirement and the court cannot change the date of retirement and impose fresh commutation benefit which may burden the exchequer to the tune of Rs.233crores; and that the third petitioner has no locus standi inthe case.

Issues

• Is the date of retirement a relevant consideration for eligibility and computation of pension?
• Would differential treatment to pensioners related to the date of retirement contained the element of discrimination liable to be declared unconstitutional as being violative of Article 14?

Related Provisions

Article 14 of the Constitution of India

This Article states that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. It also prohibits discrimination on grounds of religion, race, caste, sex or place of birth among people.

Related Cases

• Maneka Gandhi v. Union of India[1]

The Court observed–“what is the content and reach of the great equalising principle enunciated in this article? There can be no doubt that it is a founding faith of the Constitution. It is indeed the pillar on which rests securely the foundation of our democratic republic. And, therefore, it must not be subjected to a narrow, pedantic or lexicographic approach. No attempt should be made to truncate its all-embracing scope and meaning for, to do so would be to violate its activist magnitude. Equality is a dynamic concept with many aspects and dimensions and it cannot be imprisoned within traditional and doctrinaire limits. Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. The principle of reasonableness, which legally as well as philosophically, is an essential element of equality or non-arbitrariness pervades Article 14 is like a brooding omnipresence.”

• Shri Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar & Others[2]

The Court observed that the classification may be found on differential basis according to objects sought to be achieved but what is implicit in it is that there ought to be a nexus i.e., causal connection between the basis of classification and object of the statute under consideration. It is equally well settled by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.

• EP. Royappa v. State of Tamil Nadu[3]

It was held that the basic principle which informs both Articles 14 and 16 is equality and inhibition against discrimination. This Court further observed– “From a positivistic point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14, and if it affects any matter relating to public employment, it is also violative of Article 16. Articles 14 and 16 strikes at arbitrariness in State action and ensure fairness and equality of treatment.”

• Ajay Hasia & Others v. Khalid Mujib Sehravardi & Others[4]

It was held that it must, therefore, now be taken to be well settled that what Article 14 strikes at is arbitrariness because any action that is arbitrary must necessarily involve negation of equality. The Court reaffirmed the point that where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of Article 14.

• Air India etc. v. Nargesh Meerza & Others[5]

In this case, after a review of a large number of decisions bearing on the subject, the Court formulated propositions emerging from analysis and examination of earlier decisions. One such proposition held well established is that Article 14 is certainly attracted where equals are treated differently without any reasonable basis.

• Ramana Dayaram Shetty v. The International Airport Authority of India & Others[6]

The Court observed that a discriminatory action of the Government is liable to be struck down unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.

• Deokinandan Prasad v. State of Bihar & Others[7]

This Court authoritatively ruled that pension is a right and the payment of it does not depend upon the discretion of the Government but is governed by the rules and a Government servant coming within those rules is entitled to claim pension. It was further held that the grant of pension does not depend upon any one’s discretion. It is only for the purpose of quantifying the amount having regard to service and other allied matters that it may be necessary for the authority to pass an order to that effect but the right to receive pension flows to the officer not because of any such order but by virtue of the rules. This view was reaffirmed in the case of State of Punjab & Others v. Iqbal Singh[8].

• Randhir Singh v. Union of India & Others[9]

Revealing the scope and content of the facet of equality, Justice Chinnappa Reddyspeaking for the Court observed– “Now, thanks to the rising social and political consciousness and the expectations aroused as a consequence and the forward looking posture of this Court, the under-privileged also are clamouring for the rights and are seeking the intervention of the Court with touching faith and confidence in the Court. The Judges of the Court have a duty to redeem their Constitutional oath and do justice no less to the pavement dweller than to the guest of the Five Star Hotel.”

• Minerva Mills Ltd. & Others v. Union of India & Others[10]

In this Case, Chief Justice Chandrachud observed– “This is not mere semantics. The edifice of our Constitution is built upon the concepts crystallised in the Preamble. We resolved to constitute ourselves into a Socialist State which carried with it the obligation to secure to our people justice-social, economic and political. We, therefore, put Part IV into our Constitution containing directive principles of State policy which specify the socialistic goal to be achieved.”

• D.R. Nim, I.P.S v. Union of India[11]

The Court held that the Central Government cannot pick out a date from a hat and that is what it seems to have done in saying that a period prior to that date would not be deemed to be approved by the Central Government within the second proviso. The Court also said– “In case before us, the eligibility criteria for being eligible for liberalised pension scheme have been picked out from where it is difficult to gather and no rationale is discernible nor one was attempted at the hearing. The ratio of the decision would squarely apply to the facts of this case.”

• Jaila Singh & Another v. State of Rajasthan & Others[12]

The Court struck down as discriminatory the division of pre-1955 and post-1955 tenants for the purpose of allotment of land made by the Rules under the Rajasthan Colonisation Act, 1954 observing that the various provisions indicate that the pre-1955 and post-1955 tenants stand on the same footing and therefore do not form different classes and hence the division was held to be based on wholly irrelevant consideration.

• Union of India & Another v. M/s. Parameswaran Match Works[13]

The Court observed– “The choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the circumstances. When it is seen that a line or a point there must be and there is no mathematical or logical way of fixing it precisely, the decision of the legislature or its delegate must be accepted unless we can say that it is very wide of the reasonable mark.”

• D.C. Gouse & Co.v.State of Kerala & Another[14]

After recalling the various stages through which the Bill passed before being enacted as Act, the Court held that the choice of date April 1, 1973 was not wide of the reasonable mark. The decision proceeds on the facts of the case. But the principle that when a certain date or eligibility criteria is selected with reference to legislative or executive measure which has the pernicious tendency of dividing an otherwise homogeneous class and the choice of beneficiaries of the legislative/executive action becomes selective, the division or classification made by choice of date or eligibility criteria must have some relation to the objects sought to be achieved.

• Louisville Gas Co. v.  Alabama Power Co[15]

The Court held that the object of granting the concessional rate of duty was to protect the smaller units in the industry from the competition by the larger ones and that object would have been frustrated, if, by adopting the device of fragmentation, the larger units could become the ultimate beneficiaries of the bounty. This was the weighty consideration which prompted the court to uphold the date.

• S.P. Gupta v. Union of India[16]

It was held that any member of the public having sufficient interest can maintain an action for judicial redress for public injury arising from breach of public duty or from violation of some provision of the Constitution or the law and seek enforcement of such public duty and observance of such constitutional or legal provision.

Judgment

Justice D.A. Desai delivered the Judgement of the Court. Allowing the petitions, it was held that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It is attracted where equals are treated differently without any reasonable basis. The principle underlying the guarantee is that all persons similarly circumstanced shall be treated alike both in privileges conferred and liabilities imposed. Equal laws would have to be applied to all in the same situation and there should be no discrimination between one person and another if as regards the subject-matter of the legislation their position is substantially the same.

It was stated by the court that in the instant case, looking to the goals for the attainment of which pension is paid and the welfare State proposed to be set up in the light of the directive principles of State Policy and Preamble to the Constitution, it is indisputable that pensioners for payment of pension from a class when the state considered it necessary to liberalise the pension scheme in order to augment social security in old age to government servants, it could not grant the benefits of liberalisation only to that whore tired subsequent to the specified date and deny the same to those who had retired prior to that date.

The division which classified the pensioners into two classes on the basis of the specified date was devoid of any rational principle and was both arbitrary and unprincipled being unrelated to the object sought to be achieved by the grant of liberalised pension and the guarantee of equal treatment contained in article 14 was violated in as much as the pension rules which were statutory in character meted out differential and discriminatory treatment to equals in the matter of computation of pension from the dates specified in the impugned memoranda.

The Court mentioned that both the impugned memoranda do not spell out the raisin d’etre for liberalising the pension formula. In the affidavit in opposition, it is stated that the liberalisation was decided by the government in view of the persistent demand of the employees represented in the scheme of JointConsultative Machinery. This would clearly imply that there-liberalised scheme did not provide adequate protection in old age and that further liberalisation was necessary as a measure of economic security.

The government also took note of the fact that continuous upward movement of the cost of living index and diminishing purchasing power of rupee necessitated upward revision of pension. When the government favourably responded to the demand it thereby ipso facto conceded that there was a larger available national cake, part of which could be utilised for providing higher security to retiring employees. With this underlying intendment of liberalisation, it cannot be asserted that it was good enough only for those who would retire subsequent to the specified date but not for those who had already retired.

The Court observed that if removal of arbitrariness can be brought about by severing the mischievous portion, the discriminatory part ought to be removed retaining the beneficial portion. In the instant case, the petitioners do not challenge but seek the benefit of the liberalised pension scheme. Their grievance is of the denial to them of the same by the arbitrary introduction of words of limitation. There is nothing immutable about the choosing of an event as an eligibility-criteria subsequent to a specified date. If the event is certain but its occurrence at a point of time is considered wholly irrelevant and arbitrarily selected having an undesirable effect of dividing a homogeneous class and of introducing discrimination, the same can be easily severed and set aside.

It is therefore just and proper that the words introducing the arbitrary fortuitous circumstance which are vulnerable as denying equality be severed and struck down. In Exhibit P-1 the words–”That in respect of the Government servants who were in service on the 31st March 1979 and retiring from service on or after that date”, and in Exhibit P-2, the words– “the new rates of pension are effective from 1st April 1979and will be applicable to all service officers who became/become noneffective on or after that date”are unconstitutional and are struck down with the specification that the date mentioned therein will be relevant as being one from which the liberalised pension scheme becomes operative. Omitting the unconstitutional part, it is declared that all pensioners governed by the1972Rules and Army Pension Regulations shall be entitled to pension as computed under the liberalised pension scheme from the specified date, irrespective of the date of retirement. Arrears of pension prior to the specified date as per fresh computation is not admissible.

The Court further stated that the reading down of the impugned memoranda by severing the objectionable portion would not render the liberalised pension scheme vague, unenforceable or unworkable. The Court is not legislating in reading down the memoranda; when the Court strikes down the basis of classification as violative of Article 14 it merely sets at nought the unconstitutional portion retaining the-constitutional portion. There is no difficulty in implementing the scheme omitting the event happening after the specified date, retaining the more human formula for the computation of pension. The pension will have to be recomputed in accordance with the provisions of the liberalised pension scheme as salaries were required to be recomputed in accordance with the recommendation of the Third Pay Commission but becoming operative from the specified date.

The Court is satisfied that the additional financial liability that may be imposed by bringing in pensioners who retired before April 1, 1979, within the fold of the liberalised pension scheme is not too high to be unbearable or such as would have detracted the Government from covering the old pensioners under the scheme. The severance of the nefarious unconstitutional part does not adversely affect future pensioners and their presence in these petitions is irrelevant. To say that by its approach the Court is restructuring the liberalised pension scheme is to ignore the constitutional mandate. The Court is not conferring benefits by its approach; it is only removing the illegitimate classification and after its removal, the law takes its course.

Concepts Highlighted

The discernible purpose underlying the pension scheme must inform the interpretative process and it should receive a liberal construction.

• Pension is a right; not a bounty or gratuitous payment. The payment of pension does not depend upon the discretion of the Government but is governed by the rules and a government servant coming within those rules is entitled to claim pension.
• The pension payable to a government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation for service rendered.
• Pension also has a broader significance in that it is a social-welfare measure rendering socio-economic justice by providing economic security in old age to those who toiled ceaselessly in the hey-day of their life.

Pension as a retirement benefit is in consonance with and in furtherance of the goals of the Constitution. The goals for which pension is paid themselves give a fillip and push to the policy of setting up a welfare state.

References

[1]1978 AIR 597

[2]1958 AIR 538

[3]1974 AIR 555

[4]1981 AIR 487

[5]1981 AIR 1829

[6]1979 AIR 1628

[7]1971 AIR 1409

[8]1991 AIR 1532

[9]1982 AIR 879

[10]1980 AIR 1789

[11]1967 AIR 1301

[12]1975 AIR 1436

[13]1974 AIR 2349

[14]1980 AIR 271

[15]240 U.S. 30[1927]

[16][1981] Supp. S.C.C.87

[17] http://legislative.gov.in/sites/default/files/COI-updated.pdf

[18] http://www.cbroa.co.in/pages/D.S._Nakara_&_Others_vs_Union_Of_India_on_17_December,_1982.PDF