Indian Ex Servicemen Movement Vs Union of India

Indian Ex Servicemen Movement Vs Union of India - Supreme Court Case Judgment delivered on 16th March 2022 - upholding the OROP policy of union government.

1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
Writ Petition (Civil) No. 419 of 2016
Indian Ex Servicemen Movement & Ors. … Petitioners
Versus
Union of India & Ors. … Respondents


2
J U D G M E N T
Dr Dhananjaya Y Chandrachud, J
This judgment has been divided into the following sections to facilitate analysis:
A. Factual Background...................................................................................3
B. Submissions of Counsel .........................................................................11
C. Analysis.....................................................................................................24
C. 1 Concept and genesis of OROP.........................................................................26
C. 2. Plea of Discrimination........................................................................................38
C.2.1 ACP-MACP ...........................................................................................................44
C.2.2 Financial Implications......................................................................................46
C.2.3 Average to Maximum.........................................................................................48
C.2.4 Periodic revision every five years .................................................................49
PART A
3
A. Factual Background
1 The petition under Article 32 of the Constitution addresses a challenge to
the manner in which the “One Rank One Pension”1 policy for ex-servicemen of
defence forces has been implemented by the first respondent2 through a letter
dated 7 November 2015 issued to the Chiefs of three defence forces. The letter
defines OROP as the payment of uniform pension to armed services personnel
retiring in the same rank with the same length of service, irrespective of the date
of retirement. OROP, in terms of the letter, aims to bridge the gap between the
rate of pension of current and past pensioners at periodic intervals. The
petitioners contend that in the course of implementation, the principle of OROP
has been replaced by ‘one rank multiple pensions’ for persons with the same
length of service. The petitioners contend that the initial definition of OROP was
altered by the first respondent and, instead of an automatic revision of the rates
of pension, the revision now would take place at periodic intervals. The
petitioners submit that the deviation from the principle of automatic revision of
rates of pension, where any future enhancement to the rates of pension are
automatically passed on to the past pensioners, is arbitrary and unconstitutional
under Articles 14 and 21 of the Constitution.
2 The salient facts giving rise to the proceedings need to be stated. The
demand for OROP by ex-servicemen of the defence forces was initially examined
by Parliament in 2010-11. On 19 December 2011, the Rajya Sabha Committee
on Petitions3 presented its 142nd Report on the Petition Praying for Grant of
 1 “OROP” 2 Also referred as the “Union Government” 3 “Koshyari Committee”
PART A
4
OROP to Armed Forces Personnel4
. The Committee recommended the
implementation of OROP. The Committee defined OROP as a uniform pension
to be paid to armed forces personnel retiring in the same rank with the same
length of service, irrespective of their date of retirement, where any future
enhancements in the rates of pension were to be automatically passed on to the
past pensioners. The Committee noted that OROP was being implemented till
1973 when the Third Central Pay Commission took a decision to revoke it. The
relevant observations/recommendations of the Koshyari Committee are extracted
below:
“11.The Committee takes note of the fact that a sum of Rs
1300 crores is the total financial liability for the year 2011-12
in case OROP is implemented fully for all the defence
personnel in the country across the board. The Committee is
informed that out of this, 1065 crores would go to retirees
belonging Post Below Officer Ranks (PBOR) while the
Commissioned Officers would be getting the remaining i.e.
235 crores. The Committee feels that 1300 crores is not a
very big amount for a country of our size and economy for
meeting the long pending demand of the armed forces of the
country. The Committee understands that this ·1300 crores is
the expenditure for one year which might increase at the rate
of 10 percent annually. Even if it is so, the Committee does
not consider this amount to be high, keeping in view the
objective for which it would be spent. Needless for the
Committee to point out here that our defence personnel were
getting their pension and family pension on an entirely
different criteria before the Third Central Pay Commission
came into force. Till the recommendations of the Third Central
Pay Commission were implemented for the defence
personnel of the country, they were satisfied and happy with
dispensation meant for their pension/family pension.
….
11.4 …the Committee feels that the decision of the
Government to bring our defence personnel on the pattern of
the civilians with regard to their pay, pension, etc. (from Third
Central Pay Commission onwards) is not a considered
decision which has caused hardship to the defence personnel
and has given birth to their demand for OROP. The
Committee understands that before the Third Central Pay
Commission, the defence personnel were getting their pay/
pension on the basis of a separate criteria unconnected with
 4 “Koshyari Committee Report”
PART A
5
the criteria devised for the civilian work force. That criteria
acknowledged and covered the concept of OROP which has
been given up after the Third Central Pay Commission.
11.5 The Committee is not convinced with the hurdles
projected by the Ministry of Defence (D/o Ex-Servicemen
Welfare) in implementing of OROP for defence personnel.
They have categorized the hurdles into administrative, legal
and financial. The financial aspect has already been dealt
with by the Committee. So far as the administrative angle is
concerned, the Committee is given to understand that all the
existing pensioners/ family pensioners are still drawing their
pension/family pension based upon the lawfully determined
pension/family pension. In that case, revision of their
pension/family pension, prospectively, as a one time measure
should not pose any administrative hurdle. So far as the legal
aspect is concerned, the Committee is not convinced by the
argument put forth against the implementation of OROP
because the pension/family pension is based upon the
service rendered by personnel while in service and
comparison of services rendered during two sets of periods
does not seem to be of much relevance. If seen from a strict
angle, in each set of periods, the army officer performed the
duties attached to his post and it may not be proper to infer
that the officers who served at a later period performed more
compared to the officers of earlier period. On the contrary,
facts tilt towards treating past pensioners/family pensioners at
par with the more recent ones.”
3 On 17 February 2014, the Finance Minister announced in his Budget
Speech that the Union Government had in principle accepted OROP and it would
be implemented prospectively from financial year 2014-15. The Finance Minister
stated that an amount of Rs 500 crores has been transferred to the Defence
Pension Account to meet the budgetary expense. On 26 February 2014, the
Defence Minister chaired a meeting to discuss the implementation of OROP. The
Defence Secretary, the Secretary to the Department of Ex-Servicemen Welfare,
the Controller General of Defence Accounts5
, the three Vice Chiefs of Staff, and
senior officers of the Service Headquarters along with the concerned Joint
Secretaries attended the meeting. The minutes of the meeting refer to OROP as
a uniform pension to be paid to armed forces personnel that are retiring in the
 5 “CGDA”
PART A
6
same rank with the same length of service, irrespective of the date of retirement,
where any future enhancements in the rates of pension are to be automatically
passed on to the past pensioners. The fourth respondent, CGDA, was directed to
take necessary steps to give effect to the decision of implementing OROP in
consultation with the three defence forces, and the first and second respondents.
4 By its letter dated 26 February 2014 the first respondent directed CGDA to
work out the modalities of executing OROP. However, OROP was not
implemented at the time. On 10 July 2014 in his Budget Speech for the year
2014-2015, the Finance Minister reaffirmed the Union Government’s commitment
to implement OROP and a further sum of Rs 1000 crores was set apart to meet
the requirement. In a written reply to a Member of Parliament on 2 December
2014, the Minister of State for Defence stated that OROP implies that a uniform
pension is paid to retired servicemen having the same rank with the same length
of service, irrespective of the date of retirement, with any future enhancement in
the rates being passed on to the past pensioners automatically.
5 The above sequence of events has been emphasised by the petitioners to
highlight that OROP always entailed an automatic revision of the rates of pension
to bridge the gap in the pension being received by past and current pensioners.
However, according to the petitioners, a letter dated 7 November 2015 of the
Joint Secretary of the first respondent to the Chiefs of three defence forces
introduced a revised definition of OROP, where the revision between the past
and current rates of pension was to take place at periodic intervals. Besides
stating that OROP would take effect from 1 July 2014, the letter also highlighted
the salient features of OROP:
PART A
7
“3. Salient features of the OROP are as follows:
i. To begin with, pension of the past pensioners would be refixed on the basis of pension of retirees of calendar year 2013
and the benefit will be effective with effect from 1.7.2014.
ii. Pension will be re-fixed for all pensioners on the basis of
the average of minimum and maximum pension of personnel
retired in 2013 in the same rank and with the same length of
service.
iii. Pension for these drawing above the average shall be
protected.
iv. Arrears will be paid in four equal half yearly instalments.
However, all the family pensioners including those in receipts
of Special/Liberalized family pension and Gallantry award
winner shall be paid arrears in one instalment.
v. In future, the pension would be re-fixed every 5 years.”
6 The above definition of OROP was also adopted by the first respondent
while implementing OROP by its notification dated 14 November 2015. The rates
of pension were now to be revised every five years. The notification also
constituted a Committee headed by Justice L. Narasimha Reddy to examine and
make recommendations on the terms of reference received by the Union
Government on measures to remove anomalies that may arise in the
implementation of the letter dated 7 November 2015.
7 By its letter dated 25 January 2016 to the Defence Minister the first
petitioner objected to the revision of the definition of OROP highlighting that the
deviation from the automatic revision of rates of pension to a revision at periodic
intervals changed the accepted meaning of OROP. It was submitted that the
revised definition would deprive the past pensioners of equal monetary benefits,
which militated against the principle of OROP. The letter urged that the
Committee headed by Justice L. Narasimha Reddy would be ‘inapt’ in making
recommendations on the issue of OROP since the terms of reference took into
PART A
8
account the revised definition of OROP. The letter urged the Defence Minister to
revert to the original definition of OROP where the pension of past pensioners
would be automatically revised pursuant to any future enhancements. The first
petitioner also wrote to Justice L. Narasimha Reddy on 25 March 2016
highlighting the anomalies that will result from the implementation of the revised
definition of OROP.
8 Meanwhile, the first respondent issued a letter to the Chiefs of the three
defence forces on 3 February 2016 regarding the implementation of OROP. On
29 October 2016, the first respondent issued a letter to the Chiefs of the three
defence forces revising the pension of pre-2016 defence forces’ pensioners and
family pensioners. The existing pension was to be revised upwards by
implementing the basic pension drawn on 31 December 2015 by a multiplication
factor of 2.57. The petitioners have highlighted that owing to the periodic revision
of the pension rate according to the revised definition, the pension of many exservicemen would not be updated to the 31 December 2015 level.
9 A post-facto approval of the Union Cabinet for implementation of OROP
was received on 6 April 2016 and was conveyed by the Cabinet Secretariat on 7
April 2016. The proposal, which was approved by the Union Cabinet is as follows:
“9.1. Ex-post facto approval of the Cabinet is solicited for
implementation of One Rank One Pension as under.
9.1.1 The benefit will be given with effect 1st July, 2014.
9.1.2 Pension will be re-fixed for pre 01.07.2014 pensioners
retiring in the same rank and with the same length of service
as the average minimum and maximum pension drawn by the
retirees in the year 2013. Those drawing pensions above the
average will be protected.
9.1.3 The benefit would also be extended to family
pensioners including war widows and disabled pensioners.
PART A
9
9.1.4 Personnel who opt to get discharged henceforth on their
own request under Rule 13(3)1(i)(b), Rules 13(3)1(iv) or Rule
16B of the Army Rule 1954 or equivalent Navy or Air Force
Rules will not be entitled to the benefits of OROP. It will be
effective prospectively.
9.1.5. Arrears will be paid in four half-yearly instalments.
However, all the family pensioners including those in receipt
of Special/Liberalized family pension and Gallantry award
winners shall be paid arrears in one instalment.
9.1.6 In future, the pension would be re-fixed every 5 years.
9.1.7. Constitution of Judicial Committee headed by Justice L
Narasimha Reddy, Retd. Chief Justice of Patna High Court on
14.12.2015 which will give its report in six months on
references made by the Government of India.”
10 Aggrieved by what the petitioners contend is a revision in the definition of
OROP, the petition under Article 32 was instituted before this Court on 9 June
2016. On 1 May 2019, this Court took note of the anomalies which were
highlighted on behalf of the petitioners:
“Fixation of pension as per calendar year 2013 instead of FY
2014: Fixation of pension as per calendar year 2013 would
result in past retirees (pre 2014) getting less pension of one
increment than the soldier retiring after 2014.
Fixation of pension as mean of Min and Max pension: Fixing
pension as mean of Min and Max pension of 2013 would
result different pensions for the same ranks and same length
of service and the past retiree would get 1.5 increment lesser
on account of such fixation.
For example, if 8(i) and (ii) are implemented, two soldiers who
have served for same length of years, holding the same rank
will draw different pension. A Sepoy (Group Y) who retired
prior to 31 Dec 2013 will get Rs.6665 p.m. and another Sepoy
(Group Y) who retired on and after 1 Jan 2014 would get Rs
7605 p.m. Further, on account of such implementation, a
higher rank Naik soldier who retired before 31 Dec 2013
would draw a lesser pension of rs.7170 p.m., than a junior
rank Sepoy who retired after 1 Jan 2014 as his pension would
be Rs.7605. This fact is illustrated by a tabular chart which is
enclosed. (See Pg.1, CC).
Therefore, implementation of this new definition of OROP
defeats the very principle of OPOP by creating a class within
a class of the same officers, which in practice tantamounts to
one rank different pensions. This is also contrary to the
judgment by this Hon'ble Court in Union of India v SPS Vains,
{2008) 9 SCC 125.
PART A
10
Another fallacy in the new definition of OROP which detracts
from the principle of OROP is:
(iii) Pension Equalization every five years
It is submitted that Pension equalization every five years
would result in the grave disadvantage to the past retirees."
This Court directed the first respondent to scrutinise the grievances raised by
the petitioners. Pursuant to the order, the first respondent filed an affidavit on 5
December 2019 submitting that after extensive consultations with experts and
ex-servicemen, the Union Government decided that it is practical and feasible to
revise the pension under OROP every five years. The average of the minimum
and maximum pension in calendar year 2013 was decided to be taken as the
revised pension of all pensioners retiring in the same rank and with the same
length of service. At the same time, the first respondent chose to protect the
pensioners who were drawing pension above the average. Thus, it was
submitted, that the implementation of OROP has benefitted the past pensioners,
though the amount of financial benefit varies. It was urged on behalf of the first
respondent that revising the rate of pension every year would cause
administrative difficulty and is impracticable to implement.
11 Since the grievance of the petitioners remained unaddressed, it falls on
this Court to adjudicate upon whether the revision of the definition of OROP and
its implementation in the present form, is arbitrary and violative of Articles 14 and
21 of the Constitution. Before we analyse the rival contentions, we advert to the
submissions of the counsel.
PART B
11
B. Submissions of Counsel
12 Mr Huzefa Ahmadi, Senior Counsel, appeared for the petitioners. The
following submissions have been made on behalf of the petitioners during the
course of the proceedings:
(i) The letter issued by the Joint Secretary of the first respondent to the
Chief of Air Staff on 7 November 2015 arbitrarily alters the definition
of OROP6 by bridging the gap between the rates of pension of the
current and the past pensioners at ‘periodic intervals’ and not
‘automatically’. This definition is contrary to the definition arrived at
in the meeting held on 26 February 2014 and the subsequent
executive order issued on the same day;
(ii) The implementation of the scheme with the new definition would
lead to a situation where the pension drawn by an ex-serviceman
who retired on an earlier date would be less than the pension drawn
by an ex-serviceman who retired in 2014, until such time that a
‘periodic’ review is conducted to correct the anomaly;
(iii) The new definition creates a class within a class where exservicemen who retired with the same rank and same length of
service would receive different pensions. In Union of India v. SPS
Vains7
, this Court has held that the creation of a class within a class
is unconstitutional;
(iv) Even if the differential pay is rectified by a periodic review, it would
cause injustice;
 6 “new definition”
7 (2008) 9 SCC 125
PART B
12
(v) The effective date of implementation of OROP was already fixed as
1 April 2014 and this date has been arbitrary re-fixed to 1 July 2014
by the letter issued by the first respondent on 7 November 2015;
(vi) According to the letter dated 7 November 2015, the pension of the
personnel retiring on or after 1 April 2014 will be fixed based on the
last pay drawn on retirement. However, the pension of soldiers who
retired earlier than 2013 would be fixed on the basis of the pension
of the retirees of the calendar year 2013. This would lead to a
situation of one rank different pension;
Figure 1
(vii) The pension of the past pensioners is further lowered by the refixation of pension based on the average of the minimum and
maximum pension of personnel retiring in the calendar year 2013,
as compared to personnel retiring on or after 1 April 2014. In some
cases, a past pensioner who retired before 2014 receives pension
lower than personnel of a lower rank retiring on or after 2014. For
instance, if the new definition is followed then a Sepoy who retired
prior to 31 December 2013 will get a pension of Rs. 6665 per month
while another Sepoy who retired on or after 1 January 2014 would
Rank: Sepoy (Group Y)
I II III
Length of Service Pension of sepoys who
retired between 1965-
2013 (as per
Notification dated 3
February 2016 which
applies to this category
with effect from
1.07.2014
Pension of sepoys
who retired in 2014
(as per Pension
Payment Order of
2014 which applies to
this category)
Difference between I
and II multiplied by
2.57 as per report of
the Seventh Pay
Commission
15 years Rs. 6665 (as on
01/07/2013)
Rs. 7605 Rs. 940 x 2.5= Rs.
2415
PART B
13
get a pension of 7605 per month. Extracted below is a chart
depicting the anomaly:
Figure 2
Rank: Group Captain
I II III
Length of service Pension of ones who
retired between 1965-
2013
(as per notification
dated 03.02.2016
which applies to this
category w.e.f.
01.07.2014 leaving a
hiatus of one year)
(Page 8)
Pension of ones who
retired in 2014
(as per Pension
Payment Order of
2014 which applies to
this category) (Page
6)
Difference between I
and II multiplied by 7
CPC multiplication
factor of 2.57
32 years Rs. 36130 Rs. 37110 Rs. 980 x 2.57= Rs.
2518
This has been given by
Govt whereas as per 7
CPC, their pension is to
be fixed with a
multiplication factor of
2.67 given in the table
below
Figure 3
Rank: Naik (Group Y)
I II III
Length of Service Pension of Naiks who
retired between 1965-
2013
(as per notification
dated 03.02.2016
which applies to this
category w.e.f.
01.07.2014 leaving a
hiatus of one year)
(Page 4)
Pension of Naiks who
retired in 2014
(as per Pension
Payment Order of
2014 which applies to
this category) (Page
6)
Difference between I
and II multiplied by 7
CPC multiplication
factor of 2.57
20 years Rs. 7170 (as on
01/07/2013)
Rs. 8295 Rs. 1125 x 2.57= Rs.
2891
PART B
14
(viii) The difference in the pension as provided in the chart is not due to
the Modified Assured Career Progression8
. Even according to the
new definition, all personnel with the same rank and same length of
service must receive the same pension;
(ix) The notification issued on 14 December 2015 adheres to the
arbitrary definition of OROP as provided by the letter issued on 7
November 2015. The terms of reference of the Committee
appointed under the notification are also restricted to the arbitrary
new definition of OROP. The letter issued by the first respondent to
the Chief of Army Staff, the Chief of Naval Staff, and the Chief of Air
Staff on 3 February 2016 also defined OROP in new and arbitrary
terms;
(x) As noted by the Koshyari Committee, after the Sixth Central Pay
Commission, officers from the grade of Lt. Colonel and above fall
within one pay band of Rs 37400 to Rs 67000. Therefore, defence
retirees before 2014 would get pension with reference to the
minimum of the pay bracket, irrespective of the fact that they held
higher posts such as Major General and Lt. General;
(xi) All Havildars were granted the honorary rank of Naib Subedar. They
must thus be given the pension of Naib Subedar;
(xii) All personnel who retired as Major after thirteen years of service as
Commissioned Officers should be given the pension of Lt. Colonel
 8 “MACP”
PART B
15
since Commissioned Officers now automatically become Lt.
Colonels after thirteen years of service;
(xiii) All veterans who retired before 2004 as Lt. Colonel should be given
the pension of Colonel since all Commissioned Officers now
automatically retire as Colonel;
(xiv) While the Government defines OROP as a “uniform pension to be
paid to the defence personnel retiring in the same rank, with the
same length of service regardless of the date of retirement”, it
creates a class within a class based on the date of retirement;
(xv) The decision to define OROP in narrow terms is an executive act
which can be judicially reviewed and is not a policy decision;
(xvi) According to the letter of the Union Government dated 7 November
2015, the pension of past pensioners would be fixed one and a half
year behind even if equalization is done once in five years;
(xvii) Under the Seventh Pay Commission, the basic pension of all
pensioners is to be arrived at by multiplying basic pension as on 31
December 2015 by a factor of 2.57. Since the basic pension of
those who retired before 31 December 2013-14 has not been
updated to 31 December 2015 (that is Rs. 7605 per month) but has
only been fixed based on the mean of the 2013 pension, that is Rs.
6665 per month, a past pensioner will get Rs. 2415 less than an
officer with the same rank and same length of service but who
retired later;
PART B
16
(xviii) The Union Government has stated that after the Seventh Pay
Commission, the basic pension of personnel in the Colonel and
Brigadier ranks will be arrived at by increasing the multiplication
factor from 2.57 to 2.67. However, this increase has been denied to
the past pensioners on the ground that the benefit will only be given
in 2019 after the periodic equalization as per the new definition;
(xix) The ex-servicemen received the benefit of OROP till the Third
Central Pay Commission. Subsequently, it was recommended that
the pension of ex-servicemen be reduced and to compensate them
for such reduction, they were to be absorbed in paramilitary forces,
police forces or public sector organisations. However, though the
pension was reduced, the recommendation relating to their
absorption was not implemented. The army personnel then
demanded that OROP must be implemented;
(xx) The reliance placed by the respondents on DS Nakara v. Union of
India9 is incorrect since it only deals with the general law applicable
to civil servants. The decision in SPS Vains (supra) deals with the
special law applicable to ex-servicemen of the defence forces;
(xxi) The one man Committee headed by Justice L Narasimha Reddy
submitted its report to the Union Government on 26 December
2016. Even after two years, the Government is still ‘studying’ the
report and has not yet released the report;
 9 1983 AIR 130
PART B
17
(xxii) If the respondents can calculate the enhancement of pension for
every five years, there is no reason that it cannot be done every
year;
(xxiii) The rule of reduction in the pension if the service of the armed
personnel is less than twenty six years was introduced in 1973. If a
soldier has served for less than twenty six years then his pension
would be reduced pro rata of X (number of years served) % 26. The
Government has not updated the basic pay of soldiers and did not
bring it at par with the 31 December 2015 pay before multiplying it
with the factor of 2.57. At the same time, the pension was altered
from being rank based to 50 percent of the last drawn pay. This
resulted in double loss to ex-servicemen. This Court has also struck
down the rule of reducing pension if an employee has served less
than twenty six years;
(xxiv) While the respondents have submitted that an amount of Rs 10,795
crores has been paid as arrears for OROP in two years, it only
amounts to an average increase of Rs 2131 per month per soldier.
The Union Government is spending a higher amount of funds for
Central Government employees and pensioners;
(xxv) The Union Government has spent Rs 32,385 crores for OROP in six
years which is less than its spending of Rs 27,800 crores per year
for the scheme of Non-Functional Upgradation. The Union
Government consistently has been spending less on the armed
forces. For instance, the “High Altitude Siachen Allowance” for Army
PART B
18
personnel is Rs 31,500, while it is Rs 50,000 to 70,000 for all
Central Cadre for serving in ‘hard areas’ like Shillong;
(xxvi) MACP Scheme should be given to all past retirees to comply with
the judgment of this Court in SPS Vains (supra). Even if MACP has
been given to the 2013 retirees, the comparison made in the chart
still holds correct;
(xxvii) While the Union Government states that the benefit of OROP is to
be given to ‘past retirees’, it has created a confusion by stating that
the scheme must be given prospective effect; and
(xxviii)The MACP Scheme came into effect from 1 January 2016.
Therefore, the figure of Rs. 6665 referring to the pension receivable
by a Sepoy should include the benefits of the MACP scheme.
13 We have heard Mr Venkataramanan, the learned Additional Solicitor
General of India, for the respondents. The respondents have made the following
submissions during the course of the proceedings:
(i) The budget for pension has been increased after the implementation
of OROP with effect from 1 July 2014. The disbursement of arrears
with respect to OROP is approximately Rs 10795.04 crores. The
yearly recurring expenditure on account of OROP is Rs 7123.38
crores. For the six years from 1 July 2014, the total recurring
expenditure is approximately Rs 42740.28 crores;
(ii) OROP seeks to bridge the gap by taking the maximum and
minimum pension within the rank of pensioners holding the same
rank and same length of service to determine the average. Those
PART B
19
who are below the average pension are brought to the average and
those who are drawing a higher pension are protected;
(iii) The OROP scheme has been implemented prospectively with effect
from 1 July 2014. The benefits arising out of the scheme are to be
paid after 1 July 2014 to those who retired prior to 1 July 2014;
(iv) The OROP scheme envisages revision of pension once in five
years, unlike civilian pension schemes which are revised once in ten
years. The plea of the petitioners to provide ‘automatic’ adjustment
cannot be acceded to as it is impossible to implement it;
(v) It is a settled principle of law that minutes, statements and interministerial discussions with the Ministry and within the Ministry do
not have the force of law. Therefore the reference made by the
petitioners to the minutes of the meeting to argue that the definition
of OROP has been altered is unsustainable;
(vi) The scheme/policy can be challenged on the grounds of
arbitrariness but a demand to substitute the policy cannot be made;
(vii) The disparity alleged by the petitioners in the pensions of the
defence personnel with the same rank and same length of service
has been wrongly depicted on account of the OROP scheme. An
artificial disparity has been shown by equating different classes of
pensioners;
(viii) In Figure 1 of the chart produced by the petitioners, they have
compared the pension payable to a Sepoy with 15 years of service
under the OROP Scheme and the pension of a Sepoy who retired
PART B
20
before 2014 (before the application of OROP) after fifteen years of
service who is drawing pay in the rank of Naik due to the MACP
Scheme introduced pursuant to Circular No. 555 dated 4 February
2016;
(ix) The pension figure of Rs 6,665 is arrived at by taking the average
pension of the maximum and minimum pension of 2013. However,
the figure of Rs 7,605 is calculated on the basis of 50 percent of the
last pay drawn before retirement;
(x) Under the MACP Scheme, a Sepoy who was originally getting Rs
2000 as grade pay would after eight years of service receive a next
grade pay of Rs 2400. The grade pay of Rs 2400 corresponds to the
grade pay of Naik. Similarly after sixteen years of service, he would
receive the higher grade pay of Rs. 2800, which corresponds to the
grade pay of Havildar;
(xi) Similarly, the disparity shown in Figure 2 by the petitioners is due to
the implementation of the MACP Scheme rather than OROP. Figure
3 which pertains to the rank of Group Captain quotes the pension
amount of Group Captain Daniel Victor who retired on 28 February
2015. The OROP scheme is not applicable to Group Captain Victor;
(xii) The comparison drawn by the petitioners is a comparison between
non-comparables. The pension calculated based on the average
pension in 2013 cannot be compared with the actual pension
received based on the pension rules;
PART B
21
(xiii) The MACP regime warranted a service of 6, 16 and 24 years of
service by the Sepoy for grouping with the rank of Naik, Havildar
and Naib Subedar. On the other hand, under the earlier Assured
Career Progression10 regime, the required service is of 10, 20 and
30 years;
(xiv) For computation of OROP, the Union Government has taken MACP
as the base and has applied it across the board to all retirees having
the same length of service. OROP is not calculated based on MACP
and ACP regime. No such differentiation is made;
(xv) An executive decision of the Union Government on the OROP can
only be challenged on legal principles. However, the petitioners are
seeking the most beneficial interpretation of OROP to be
implemented. It cannot be contended that the most beneficial
interpretation of OROP is the only ‘true’ interpretation and that it
must be implemented as a right;
(xvi) In SPS Vain (supra), this Court held that pre and post 1996 retired
Major Generals must be treated at par to remove an anomaly in the
pension of pre-1996 retired Major generals. The principle in that
case was about the removal of anomaly between the ranks of Major
General and Brigadier which had arisen due to the implementation
of the fifth and the sixth Central Pay Commission;
(xvii) In Indian Ex-Services League v. Union of India11, this Court has
held that unless the claim of OROP can be treated to be flowing
 10 “ACP” 11 AIR 1991 SC 1182
PART B
22
from the reliefs provided in Nakara (supra), the reliefs claimed
cannot be granted. It was also observed that the decision in Nakara
(supra) cannot be enlarged to cover within it all the claims made by
the pension retirees since the purpose of computation of the
pension is different. The decisions in KL Rathee v. Union of
India12 and Suchet Singh Yadav v. Union of India13 support this
submission;
(xviii) The Committee headed by Justice L Narasimha Reddy submitted its
report to the Union Government. The Internal Committee is
examining the feasibility of the recommendations;
(xix) The recommendations of the Koshyari Committee were not
accepted by the Union Government and are thus not binding upon it.
The recommendations of the Committee cannot be termed as the
decision of the Union Government;
(xx) Since the Sixth Pay Commission, the length of service is no longer a
criterion for calculating pension. The pension is now determined by
50 percent of the last pay drawn. However, due to demands, OROP
rates have been prepared based on the average pension of retirees
in 2013;
(xxi) It is not feasible to undertake an automatic revision. Though the
government has accepted the principle of uniformity, it is not
unreasonable to define periodicity for ensuring uniformity;
 12 SLJ 1997 (30 207) 13 (2019) 11 SCC 520
PART B
23
(xxii) The argument that OROP should be approved with effect from 1
April 2014 because it was announced in the Budget of 2014 is
erroneous. The scheme was proposed by the Ministry of Defence
through the letters dated 7 November 2015 and 3 February 2016;
(xxiii) The pension of OROP beneficiaries who retired before 1 July 2014
was revised by the multiplication factor of 2.57 according to the
recommendations of the Seventh Central Pay Commission.
However, those who retired after 1 January 2016 received the
benefit of only revision in emoluments in terms of the
recommendations of the Seventh Central Pay Commission;
(xxiv) The statement made by the Finance Minister on 17 February 2014
was not based on the decision of the Union Cabinet. The Cabinet
Secretariat conveyed the approval of the Prime Minister to the
OROP scheme on 7 November 2015. The Ministry of Defence
communicated this policy by a notification dated 7 November 2015.
A post facto approval was conveyed by the Union Cabinet on 6 April
2016;
(xxv) One of the qualifying conditions for the OROP scheme is that the
personnel must have the ‘same length of service’. One who had not
put in the same length of service is not eligible for an MACP. The
total financial outflow that is likely to be incurred by the Union
Government for non-MACP to be linked with MACP personnel would
be in the range of Rs 42,776.38 crores; and
PART C
24
(xxvi) The expression ‘automatically’ used in the Koshyari Committee
report, the minutes of the meeting held on 26 February 2014 and the
executive order dated 26 February 2014 defining the OROP scheme
follow the expression ‘in the rates of pension to be automatically
passed on to the past pensioners’. It must, thus, be read as
meaning that the rates of pension will be passed to the past
pensioners without any difficulties. The phrase ‘automatically’ does
not mean the time period.
C. Analysis
14 Though, a significant number of factual and detailed issues were raised in
the course of the pleadings. Mr Huzefa Ahmadi, learned Senior Counsel
appearing on behalf of the petitioners brought focus upon and urged the following
specific submissions during the course of the hearing:
(i) The Union government took an executive decision to implement
OROP as understood by the Koshyari Committee. This is evidenced
by:
a. The statement of the Minister of Finance in the Lok Sabha on 17
February 2014;
b. The decision taken on 26 February 2014 in the meeting convened
by the Union Minister for Defence;
c. The letter dated 26 February 2014 of the Union government to the
CGDA;
d. The Budget speech of the Minister of Finance on 10 July 2014; and
PART C
25
e. The reply of 2 December 2014 of the Minister of State for Finance to
Member of Parliament.
(ii) The essential elements underlying the concept of OROP are:
a. Those retiring from the same rank with the same length of service
must receive the same pension irrespective of the date of
retirement;
b. Future enhancements of pension must be automatically passed on
to past pensioners; and
c. Bridging of the gap between the rate of pension of present and past
pensioners.
(iii) In substitution of the above principle underlying OROP, the
communication dated 7 November 2015 of the Ministry of Defence
modified the executive decision by stipulating that:
i. The pension of past pensioners would be refixed on the basis
of the pension of the retirees of calendar year 2013, with the
benefit being effective from 1 July 2014;
ii. Pension is to be revisited for all pensioners on the basis of
the average of the minimum and maximum pension of
persons who retired in 2013 in the same rank and with the
same length of service;
iii. In the future pension would be revisited every five years and
not automatically; and
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26
iv. Hence, the actual decision which was taken on 7 November
2015 deviates from the principle of equality which OROP
adopts.
15 The submissions which have been urged by the pensioners are sought to
be buttressed by referring to the charts set out in the earlier part of this judgment
and marked as figures 1, 2 and 3 by which an attempt has been made to show
the disparity in the pension payable to persons of the same rank with the same
length of service, based on the date of retirement.
C. 1 Concept and genesis of OROP
16 The adoption of OROP as a guiding statement of policy on 7 November
2015 was preceded by discussions both within and outside Parliament. The
Koshyari Committee submitted its report on 10 December 2011. The Committee
formulated an understanding of the concept of OROP. According to the report of
the Committee, OROP implies that a “uniform pension be paid to the armed
forces personnel retiring in the same rank with the same length of service
irrespective of their date of retirement and any future enhancements in the rate of
pension to be automatically passed on to the past pensioners”. The concept,
according to the report implied “bridging the gap between the rate of pension of
the current pensioners and the past pensioners”. This understanding of the
concept of OROP in the Koshyari Committee Report was based on the norm that
hierarchy in the armed forces comprises of two elements namely rank and
length of service. Ranks are conferred by the President and signify command,
control and responsibility. Ranks are allowed to be retained even after retirement.
Hence OROP, according to the Koshyari Committee postulates that two
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27
personnel from the armed forces in the same rank and with the equal length of
service should get the same pension irrespective of their dates of retirement and
any future enhancement in the rates of pension must be automatically passed on
to past pensioners. While proposing the adoption of OROP in principle, the
Koshyari Committee highlighted that:
(i) OROP was in vogue till 1973 when the Third Central Pay
Commission decided otherwise;
(ii) Unlike civilian employees who retire by age, armed forces personnel
retire by rank; and
(iii) The conditions of service of personnel from the armed forces are
harsher than those of civilian employees and armed forces
personnel cannot be equated with civilian employees of the
government.
17 Now it needs to be understood that the Koshyari Committee Report is a
report submitted to the Rajya Sabha by the Committee on Petitions. The report
cannot be enforced as a statement of government policy. In Kalpana Mehta v.
Union of India14, a Constitution Bench of this Court dealt, on the reference under
Article 145(3), with two issues namely:
“9…73.1. (i) Whether in a litigation filed before this Court
either under Article 32 or Article 136 of the Constitution of
India, the Court can refer to and place reliance upon the
report of the Parliamentary Standing Committee?
73.2. (ii) Whether such a report can be looked at for the
purpose of reference and, if so, can there be restrictions for
the purpose of reference regard being had to the concept of
parliamentary privilege and the delicate balance between the
 14 (2018) 7 SCC 1
PART C
28
constitutional institutions that Articles 105, 121 and 122 of the
Constitution conceive?”
Chief Justice Dipak Misra (speaking for himself and Justice AM Khanwilkar) held
thus:
“Q. Conclusions
159.1. Parliamentary Standing Committee report can be
taken aid of for the purpose of interpretation of a statutory
provision wherever it is so necessary and also it can be taken
note of as existence of a historical fact.
159.3. In a litigation filed either under Article 32 or Article 136
of the Constitution of India, this Court can take on record the
report of the Parliamentary Standing Committee. However,
the report cannot be impugned or challenged in a court of
law.
159.4. Where the fact is contentious, the petitioner can
always collect the facts from many a source and produce
such facts by way of affidavits, and the court can render its
verdict by way of independent adjudication.
159.5. The Parliamentary Standing Committee report being in
the public domain can invite fair comments and criticism from
the citizens as in such a situation, the citizens do not really
comment upon any Member of Parliament to invite the hazard
of violation of parliamentary privilege.”
18 One of us (DY Chandrachud, J) speaking for himself and Justice Dr AK
Sikri held that a report of a Parliamentary Committee may have a bearing upon
diverse perspectives some of which were formulated thus:
“259.1. The report of a Parliamentary Committee may contain
a statement of position by Government on matters of policy;
259.2. The report may allude to statements made by persons
who have deposed before the Committee;
259.3. The report may contain inferences of fact including on
the performance of Government in implementing policies and
legislation;
259.4. The report may contain findings of misdemeanour
implicating a breach of duty by public officials or private
individuals or an evasion of law; or
259.5. The report may shed light on the purpose of a law, the
social problem which the legislature had in view and the
manner in which it was sought to be remedied.”
PART C
29
The judgment elaborates that:
“264. Committees of Parliament attached to
ministries/departments of the Government perform the
function of holding the Government accountable to implement
its policies and its duties under legislation. The performance
of governmental agencies may form the subject-matter of
such a report. In other cases, the deficiencies of the
legislative framework in remedying social wrongs may be the
subject of an evaluation by a Parliamentary Committee. The
work of a Parliamentary Committee may traverse the area of
social welfare either in terms of the extent to which existing
legislation is being effectively implemented or in highlighting
the lacunae in its framework. There is no reason in principle
why the wide jurisdiction of the High Courts under Article 226
or of this Court under Article 32 should be exercised in a
manner oblivious to the enormous work which is carried out
by Parliamentary Committees in the field. The work of the
committee is to secure alacrity on the part of the Government
in alleviating deprivations of social justice and in securing
efficient and accountable governance. When courts enter
upon issues of public interest and adjudicate upon them, they
do not discharge a function which is adversarial. The
constitutional function of adjudication in matters of public
interest is in step with the role of Parliamentary Committees
which is to secure accountability, transparency and
responsiveness in the Government. In such areas, the
doctrine of separation does not militate against the court
relying upon the report of a Parliamentary Committee. The
court does not adjudge the validity of the report nor for that
matter does it embark upon a scrutiny into its correctness.
There is a functional complementarity between the purpose of
the investigation by the Parliamentary Committee and the
adjudication by the court. To deprive the court of the valuable
insight of a Parliamentary Committee would amount to
excluding an important source of information from the purview
of the court. To do so on the supposed hypothesis that it
would amount to a breach of parliamentary privilege would be
to miss the wood for the trees. Once the report of the
Parliamentary Committee has been published it lies in the
public domain. Once Parliament has placed it in the public
domain, there is an irony about the executive relying on
parliamentary privilege. There is no reason or justification to
exclude it from the purview of the material to which the court
seeks recourse to understand the problem with which it is
required to deal. The court must look at the report with a
robust common sense, conscious of the fact that it is not
called upon to determine the validity of the report which
constitutes advice tendered to Parliament. The extent to
which the court would rely upon a report must necessarily
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30
vary from case to case and no absolute rule can be laid down
in that regard.”
19 In a concurring judgment, Justice Ashok Bhushan observed:
“449.7. Both the parties have not disputed that parliamentary
reports can be used for the purposes of legislative history of a
statute as well as for considering the statement made by a
minister. When there is no breach of privilege in considering
the parliamentary materials and reports of the Committee by
the Court for the above two purposes, we fail to see any valid
reason for not accepting the submission of the petitioner that
courts are not debarred from accepting the parliamentary
materials and reports, on record, before it, provided the court
does not proceed to permit the parties to question and
impeach the reports.”
20 The Koshyari Committee Report can be relied upon to indicate the
background of the adoption of OROP. The report furnishes the historical
background, the reason for the demand, and the view of the Parliamentary
Committee which proposed the adoption of OROP for personnel belonging to the
armed forces. Beyond this, the Koshyari Committee Report cannot be construed
as embodying a statement of governmental policy. Governmental policy
formulated in terms of Article 73 by the Union or Article 162 by the State has to
be authoritatively gauged from the policy documents of the government, which in
present case is the communication dated 7 November 2015. Prior to it , on 17
February 2014, a statement was made by the Union Minister of Finance in the
Lok Sabha while presenting the interim budget for 2014-15 stating that the
government had accepted the principle of OROP for the defence forces and that
the decision would be implemented from financial year 2014-15. The statement of
the Union Minister of Finance reflects an in-principle decision to adopt OROP for
all personnel belonging to the armed forces. Evidently, the modalities of
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31
implementing OROP were yet to be chalked out and were adopted later. On 26
February 2014, a meeting was held by the Minister of Defence to discuss the
modalities for implementing the decision to adopt OROP. Paragraph 3 of the
minutes of the meeting elaborate that OROP implies that:
(i) Uniform pension be paid to armed forces personnel retiring in the
same rank with the same length of service irrespective of the date of
retirement;
(ii) Any future enhancement in the rates of pension should be passed
on to past pensioners;
(iii) The gap between the rates of pension of current and past
pensioners should be bridged; and
(iv) Future enhancements in the rates of pension should be
automatically based on to the past pensioners at that stage.
21 The CGDA was directed to initiate steps in consultation with the Finance
and Ex-servicemen Welfare departments of the Ministry of Defence to give effect
to the decision. The meeting which was held on 26 February 2014 was part of the
decision-making process of the Union Government for determining the modalities
for implementing OROP. On 26 February 2014, a communication was addressed
by the Department of Ex-Servicemen Welfare to CGDA noting that at the meeting
chaired by the Minister of Defence, it had been decided to implement OROP for
all ranks of the defence forces prospectively from the financial year of 2014-15.
Para 2 of the communication reads as follows:
“Accordingly, CGDA may work out the modalities in
consultation with Service Hqrs, (who in turn may
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32
appropriately consult ex-servicemen), Department
ESW and MoD (Fin) and take necessary to implement
the same.”
22 On 10 July 2014, the Minister of Finance in the course of his speech while
presenting the annual budget stated that the Union Government had adopted the
policy of OROP to address pension disparity and a further sum of Rs 1,000
crores was set aside to meet the requirement of the year. On 2 December 2014,
information on OROP was furnished by the Minister of State for Defence in a
reply to a Member of the Rajya Sabha.
23 The adoption in principle of OROP followed by the discussion on the
modalities for implementing it eventually led to the communication dated 7
November 2015 of the Ministry of Defence to the Chiefs of Army Staff, Air Force
Staff and Naval staff. The communication indicates that :
“2. It has now been decided to implement “One Rank One
Pension” (OROP) for the Ex-Servicemen with effect from
1.07.2014. OROP implies that uniform pension be paid to the
Defence Forces Personnel retiring in the same rank with the
same length of service, regardless of their date of retirement,
which, implies bridging the gap between the rates of pension
of current and past pensioners at periodic intervals. [sic]”
Paragraph 3 of the communication adverts to the salient features:
“3. Salient features of the OROP as follows:
i. To begin with, pension of the past pensioner would be refixed on the basis of pension of retirees of calendar year 2013
and the benefit will be effective with effect from 1.7.2014.
ii. Pension will be re-fixed for all pensioners on the basis of
the average of minimum and maximum pension of personnel
retired in 2013 in the same rank with the same length of
service.
iii. Pension for those drawing above the average shall be
protected.
iv. Arrears will be paid in four equal half yearly instalments.
However, all the family pensioners including those in receipt
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33
of Special/Liberalized family pension and Gallantry award
winners shall be paid arrears in one instalment.
v. In future, the pension would be re-fixed every 5 years. ”
The communication also indicated that personnel who opt to get discharged
henceforth would not be entitled to the benefit of OROP. Moreover, the Union
Government had decided to appoint a committee to look into the anomaly in the
implementation of OROP and its report was to be submitted within six months.
The features of the policy communication of 7 November 2015 need to be
noticed. First, it contains the decision of the Indian government to implement
OROP for ex-servicemen. Second, it specifies the date with effect from which
the decision would be implemented, namely, 1 July 2014. Third, it embodies the
understanding that OROP implies the payment of uniform pension to defence
personnel retiring in the same rank with the same length of service regardless of
the date of retirement. Fourth, it emphasises the need to bridge the gap
between the rates of pension of current and past pensioners at “periodic
intervals”.
24 A considerable amount of debate has taken place in these proceedings on
whether the expression “at periodic intervals” was in breach of the original
understanding that enhancements in the rates of pension would be automatically
passed on. While dealing with the submission, it is important to note at the outset
that right from the Koshyari Committee Report, it was envisaged that “any future
enhancement in the rates of pension is to be automatically passed on to the past
pensioners”. The statement made by the Union Minister of Finance in the Lok
Sabha on 17 February 2014 propounded in principle the decision to implement
OROP. At the meeting chaired by the Defence Minister on 26 February 2014, it
PART C
34
was again envisaged that “any future enhancement in the rates of pension to be
automatically passed on to the past pensioners”. The reply furnished in writing
by the Minister of State for Defence to a Member of the Rajya Sabha also
similarly indicates that “future enhancement in the rate of pension to be
automatically passed on to the past pensioners”. The legislative and other
material prior to 7 November 2015 proposed that future enhancements in the
rates of pension would be automatically passed on. The expression
“automatically” was clearly not linked to a time period for the revision of pensions.
None of the documents on the record prior to the communication dated 7
November 2015 suggests that the process of revising pensions was to be
continued on an ongoing basis as opposed to revision at periodic intervals.
25 The fallacy in the submission of the petitioners is in the argument that the
policy communication dated 7 November 2015 is contrary to the original decision
which was taken by the Union Government to implement OROP. Implicit in the
submission of the petitioners is the premise that the original decision was based
on the Koshyari Committee Report followed by the statement on the floor of the
House by the Minister of Finance (17 February 2014 and 10 July 2014) and the
minutes of the meeting convened by the Defence Minister (26 February 2014).
Our analysis of the underlying document indicates that while a decision to
implement OROP was taken in principle, the modalities for implementation were
yet to be chalked out. Thus, there was no conscious policy decision on the part of
the Union Government on the modalities for implementing OROP until the
communication dated 7 November 2015 came into being. The communication of
7 November 2015 cannot be invalidated on the ground that it infringed the
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35
‘original understanding’ of OROP. A hierarchy in law exists between statutes and
rules – a statutory provision will have precedence over delegated legislation if the
latter conflicts with the former. Similarly, executive instructions cannot override a
statute or rules made in pursuance of a statute. But in the present case the entire
canvas is governed by a policy. The terms for implementing the policy were
specified on 7 November 2015. Hence, that element of the policy cannot be
challenged on the notion that there is an inflexible notion of OROP couched in an
original understanding. OROP is itself a matter of policy and it was open to the
makers of the policy to determine the terms of implementation. The policy is of
course subject to judicial review on constitutional parameters, which is a distinct
issue.
26 While the petitioners have not adverted to the doctrine of legitimate
expectations, they have implicitly relied on this principle. The doctrine of
legitimate expectations can be invoked if a representation made by a public body
leads an individual to believe that they would be a recipient of a substantive
benefit. A part of the petitioners’ grievance stems from the belief that an
assurance made by State functionaries, the Ministers of the Union Government,
did not translate into a conscious policy decision, which is embodied in the
communication dated 7 November 2015. We have stated above that the
expression “automatically” was clearly not linked to a time period for the revision
of pensions. But if it is to be assumed that the expression “automatically” meant
that the revision in the rates of pension would take place on an ongoing basis
rather than at periodic intervals, the question arises whether the doctrine of
legitimate expectations can be invoked in the present case. In the State of
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36
Jharkhand v. Brahmputra Metallics Ltd., Ranchi15, a two-judge Bench of this
Court, of which one of us (DY Chandrachud, J) was a part, clarified the doctrinal
difference between the concepts of promissory estoppel and legitimate
expectations. The Bench observed that the doctrine of legitimate expectations, a
public law concept, is premised on the principles of fairness and non-arbitrariness
in state action. The doctrine of legitimate expectations emerges as a facet of
Article 14 of the Constitution. On the other hand, promissory estoppel, being a
private law concept, can be invoked if the State has entered into a private
contract with another entity but is inapplicable where a representation has been
made by the State in the discharge of its public functions. The doctrine of
legitimate expectations is applicable in the latter situation. Noting that in India, the
two doctrines have been conflated, this Court went on to analyse if the change in
an existing government policy violates the legitimate expectations of those who
were previously covered by such policy. However, in the present case, there was
no concrete government policy in existence prior to 7 November 2015. There
existed only certain assurances that were made by the Ministers, or which could
be deduced from the minutes of a meeting that was chaired by the Minister of
Defence. These assurances were also to the effect that OROP has been
accepted in principle. The implementation was yet to be worked out. In State of
Arunachal Pradesh v. Nezone Law House16, a two-judge Bench of this Court
held that when the views of various departments/Ministries are involved, an oral
promise by a Minister does not bind the government. In that case, a law publisher
had contended that the then Law Minister had assured the publisher that certain
 15 2020 SCC OnLine SC 968 16 (2008) 5 SCC 609
PART C
37
books will be purchased from it. The document that was relied upon by the
publisher was a departmental note which indicated that the decision regarding
the purchase was subject to the concurrence of other departments and Ministries.
This Court observed:
“8. As noted above the factual scenario is interesting. The
document relied upon by the respondent and the High Court
refers to some oral expression of desire by the then Law
Minister. When the views of several departments were
involved the question of any oral view being expressed
by a Minister is really not relevant. Further, the document
relied upon was nothing but a departmental note which
itself clearly indicated that the views of various
departments/Ministries were to be taken and their
concurrence was to be obtained. Apart from that,
undisputedly there was some factual dispute as to whether
the intended purchase was of volumes or of sets. There is
conceptual difference between the two. The books were not
even printed at the relevant point of time. The High Court has
noticed only one volume had been printed. Further the need
for the purchase of the books for the judicial officers was to
be assessed in consultation with the High Court. The Law
Minister could not have, without taking the view of the High
Court, placed orders. In any event the dispute as to the
volumes or the sets and the interpolation in the documents
were of considerable relevance. Unfortunately the High Court
has lightly brushed aside this aspect. The doctrines of
promissory estoppel and legitimate expectation were not
applicable to the facts of the case.”
 (emphasis supplied)
27 In the present case, discussions took place within the Government and
even as of 26 February 2014, the meeting chaired by the Minister of Defence set
out broad parameters of the decision, while leaving it to the CGDA to ensure
necessary steps in consultation with the three services and the Finance and ESW
wings of MOD “to give effect to this decision”. The meeting envisaged that family
pensioners and disabled pensioners would be included and that ex-servicemen
may also be properly consulted as required by the service. All this is clearly
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38
suggestive of the fact that in the evolving decisions which were taking place
within the Government, a formulation of the precise modalities which were to be
adopted was yet to take place. This eventually took place on 7 November 2015.
The communication dated 7 November 2015 cannot, therefore, be assailed on
the ground that it is contrary to the original intent of the policy formulated by the
Union Government. The policy of the Union Government is what is embodied in
the communication dated 7 November 2015. The statements made on the Floor
of the House and minutes of ministerial committees are pointers to the fact that
the Union Government had in principle decided to implement OROP but the
precise framework of its implementation was a matter of evolving discussion
within Government. The formulation of modalities which took place in the
communication dated 7 November 2015 represents the policy choices adopted
by the Government.
28 While the communication dated 7 November 2015 is undoubtedly open to
be scrutinised on constitutional parameters, there is no substance in the plea that
the decision which was taken on 7 November 2015 is somehow contrary to an
original policy decision of the Union Government. The policy and its modalities
for implementation are those which have been embodied in the communication
dated 7 November 2015.
C. 2. Plea of Discrimination
29 The submission of the petitioners on the violation of Article 14 is premised
essentially on three aspects:
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39
(i) Fixation of the pension as of calendar year 2013 would result in pre
2014 retirees getting less pension of one increment than a soldier
retiring after 2014;
(ii) Fixing the pension based on the mean of minimum and maximum
pension of 2013 would result in different pensions for the same
ranks and same length of service depending on whether the
personnel retired before or after 31 December 2013. In effect, a
higher ranked soldier would receive lesser pension on comparison
to a lower ranked soldier; and
(iii) As a result of the process of equalisation every five years, persons
who have retired prior in point of time would be placed at a
disadvantage as their unequalised pension would be multiplied by a
factor of 2.57 while those who have retired after 1 January 2014
would get the benefit of higher pension which would be multiplied by
2.57.
30 In the course of its comprehensive affidavit, the Union Government
attempted to explain the disparity in the pension payable to a Sepoy with 15
years of qualifying service under OROP and the actual pension of a Sepoy with
15 years of qualifying service who retired in 2014 before the application of
OROP. The following explanation was offered to the three tabular charts
appended as fixtures 1, 2 and 3 above:
“A. Tabular Chart 1:
(a) In this table, the comparison made by the Petitioner is
between pension payable to a Sepoy with 15 years of
qualifying service under OROP and the actual pension of a
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40
Sepoy who retired in 2014 (before application of OROP) after
15 years qualifying service who is drawing pension in the rank
of Naik, due to operation of the Modified Assured Career
Progression Scheme [hereinafter referred to as ‘MACP
Scheme’]
(b) The figure of Rs. 6,666 is derived from the Table at Pg. 3 of
the Note. The figure of Rs. 6665 denotes the weighted
average pension of the minimum and maximum pension of
2013 of Sepoys who retired in 2013 with 15 years of
qualifying service.
(c) The figure of Rs. 7,605 is derived from the Pension Payment
Order annexed at Pg. 5 of the Note. Pension is calculated on
the basis of 50% of the last pay drawn before retirement. This
can be arrived at by the following:-
S.No. Particulars Amount
1. Last Pay 10,510
2. Grade
Pay
2,400
3. MSP 2,000
4. Class
Allowance
300
5. TOTAL 15,210
6. Pension
(50% of
last pay)
7,605
*figures from Pg. 5 of the Note
(d) The difference in pension between the two pensions in
Tabular Chart 1 is due to the applicability of the MACP
Scheme (implemented based on the recommendations of
the6th Central Pay Commission). Under the MACP Scheme,
a defence personnel who has not been promoted for 8/16/24
years of regular service, would be eligible for grant of next
higher grade pay after completion of 8/16/14 years of regular
service. In other words, a Sepoy who was originally getting
Rs 2,000 as grade pay would after 8 years of service (without
promotion) be granted the next higher grade pay of Rs. 2,400.
The grade pay of Rs. 2,400 ordinarily corresponds to the
grade pay of Naik.
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(e) Similarly, after 16 years of service (without promotion),
such Sepoy would get the next higher grade pay of Rs. 2,800.
The grade pay of Rs 2,800 ordinarily corresponds to the
grade pay of Havildar.
(f) As a logical corollary, the pay (and consequently pension)
of different Sepoys would differ/vary depending on whether
benefit of the MACP Scheme has been granted to such
Sepoy or not.
(g) The applicability of the MACP Scheme on the pension of a
retired defense personnel has been dealt by the Circular No.
555 dated 04.02.2016, wherein at Para 11(C), it has been
stated:-
“…11. The provisions of this circular shall be applicable to all
Pre-01.07.2014 pensioners /family pensioners and their
pension/family pension shall be stepped up with reference to
rank, group and qualifying service in which they were
pensioned.
Note:
a)…
b)…
c) A JCOs/ORs pensioner, who has retired with a particular
rank and granted ACP-I will be eligible for revision of pension
of a next higher rank; if ACP-II has been granted, he will be
eligible for revision of pension of next higher rank of ACP-I;
and if ACP-III has been granted, he will be eligible for revision
of pension of next higher rank of ACP-II w.e.f. 01.07.2014.
For example- a Sepoy granted ACP-I will be eligible for
revision of pension of Naik rank, Sepoy granted ACP-II will be
eligible for revision of pension of Havildar rank and sepoy
granted ACP-III will be eligible for revision of pension of Naib
Subedar rank […]”
Therefore, the example of two Sepoys drawing different
pension amount is due to operation of MACP and is not due
to operation of the OROP Scheme.
(h) It is also important to point out that the MACP Scheme is
only one such factor which influences the pay drawn by a
Sepoy. The other factors include promotion, disciplinary
proceedings etc.
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42
B. Tabular Chart 2:
(a) In this Chart, the pension of a Naik has been compared
with a person drawing pension of Havildar by virtue of the
MACP Scheme.
(b) The figure of Rs. 7,170 is derived from the Table at Pg. 4
of the Note. The figure of Rs. 7,170 denotes the weighted
average pension of the minimum and maximum pension of
2013.
(c) The figure of Rs. 8,295 is derived from the pension
payment order annexed at Pg. 6 of the Note Pension is
calculated on the basis of 50% of the last pay drawn before
retirement. This can be arrived at by the following:-
S.No. Particulars Amount
1. Last Pay 11,490
2. Grade Pay 2,800
3. MSP 2,000
4. Class
Allowance
300
5. TOTAL 16,590
6. Pension(50%
of last pay)
8,295
(d) Now, due to the operation of the MACP Scheme, the Naik
(grade pay of Rs. 2,400) is actually drawing the next higher
grade pay of Rs.2,800, which corresponds to the grade pay of
Havildar. This is the same principle, which was the basis for
difference in pension in Tabular Chart 1.
C. Tabular Chart III
(a) The Tabular Chart III pertains to the rank of Group
Captain. As per Column II of this Chart, the example quoted
is that of a 2014 retiree. However, the pension amount quoted
is of Group Captain Daniel Victor, who retired on 28.02.2015.
It is important to state that the OROP Scheme was not
applicable to Group Captain Daniel Victor.
(e) Therefore, the Petitioner has misled this Hon’ble Court by
relying on the pension of a recent retiree who has not been
covered under the OROP Scheme. The PPO Number of
Group Captain Daniel Victor is 08/14/1/114/2015
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43
18. It is further submitted that the flaw in pointing out the
alleged disparities by referring to the Tables at Pg. 1 of the
Note are due to the following reasons, interalia:-
(i) The comparison as mentioned in the Table is a comparison
between non-comparables. The weighted average pension of
the minimum and maximum pension of 2013 can never be
compared with the actual amount being received by a
defence personnel as pension fixed under the rules
applicable for retiring pension in the normal course.
(ii) The weighted average pension signifies the
lowest/minimum amount that a defence personnel retiring
upto 2013 is entitled to get as OROP pension. Whereas, the
actual pension of the retired defense personnel in 2014
(without effect of OROP) is based on pay last drawn. This
amount of actual pension may be higher (due to various
factors), but cannot be lower than the weighted average
pension, as in that case, pension would be raised (protected)
to the level of the weighted average pension (OROP)
(iii) In other words, the pension amount of Rs. 6,665 is the
minimum prescribed benchmark amount that any Sepoy (with
15 years qualifying service) would get under OROP as per
Table No. 7 at Page 3 of the Note. Therefore, no Sepoy with
the same pay and same length of service will get an amount
less than Rs. 6,665 under OROP. The minimum prescribed
benchmark is fixed to ensure that all defense personnel
retiring pre-2013 are pulled up to receive at least the
minimum prescribed pension. The benchmarking to the
average of the minimum and maximum ensures upliftment of
those receiving below the benchmark rate, whereas,
protection of those who are receiving a higher pension than
the benchmark rate.
(iv) The Petitioner’s interpretation is an attempt to equalize
the pension of every defense personnel with the highest
pension drawn by a defense personnel in the same rank with
the same length of service. Such an interpretation is
completely arbitrary definition of how OROP should be
implemented.”
31 During the course of the hearing, the Union Government placed on record
a further affidavit. The affidavit places on record the status of the grant of MACP
benefits to defence personnel across the three services. The sample data for
2013 which was the base year for the calculation has been placed on the record
and is reproduced below: -
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44
“….(v) Likewise, a Sepoy who gets promoted at the first
instance as Naik in its natural course but does not get
promoted for the subsequent ranks (which may happen due
to non-availability of vacancies or stagnation) would be
entitled to the MACP upgradations of those ranks.
(vi) It is also respectfully submitted that the threshold
condition to qualify for MACP is the completion of the required
length of service. Consequently, one who completed the
required length of service would qualify for MACP
automatically unless otherwise barred due to disciplinary
proceedings or performance.
(vii) It is also respectfully submitted that the threshold
condition to qualify for MACP is the completion of the
required length of service. Consequently, one who
completes the required length of service would qualify for
MACP automatically unless otherwise barred due to
disciplinary proceedings or performance.
(viii) It is therefore self-evident that a Sepoy who does not
complete the required length of service of 8 years and
one who completed it, cannot be benchmarked together
under any circumstances.
(ix) A Sepoy of 3 years and a Sepoy who had crossed 8 years
qualifying for MACP is not equated even for OROP purpose
since they do not qualify the criteria of “same length of
service.”
 (emphasis supplied)
While explaining the difference in pensions of the two Sepoys, the Union
Government stated that this was due to the applicability of the MACP scheme. In
the subsequent affidavit, some of the issues which remained to be explained in
the comprehensive affidavit have been attempted to be clarified.
C.2.1 ACP-MACP
32 In 2013, the ACP regime was put into place. In terms of the scheme, a
Sepoy upon completion of ten years of service would be upgraded to a Naik for
the purpose of pay, pension and other special benefits. After completion of 20
years’ service, there would be a further upgradation to the pay of a Havildar and
after 30 years’ service, as a Naib Subedar. Though the scheme was
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45
implemented from 2014, the benefit was extended retrospectively by applying the
norms of 10:20:30 years of service respectively. Hence, a Sepoy in 2013 with
thirty years of service was grouped with a Naib Subedar for pay, pension and
other financial benefits. The ACP scheme thus covered defence personnel
tracing back in time to 1973.
33 On 11 October 2008, by Army instruction No 1/S/2008, the MACP Scheme
was implemented. In terms of the scheme, the earlier time line of 10:20:30 years
of service for upgradation was modified to 8:16:24 years for conferment of
benefits in terms of pay, pension and other financial benefits. In view of the
decision of this Court in Union of India v. Balbir Singh Turn17, the MACP
scheme was made operational with effect from 1 January 2006. Though the
MACP scheme was made operational from 1 January 2006, it had retrospective
effect as a result of which any person who was in service and qualified with the
threshold requirement of 8:16:24 years of service came to be grouped with the
corresponding rank upgradations for the purpose of pay, pension and other
benefits. In the above backdrop, the Union Government has stated before this
Court on affidavit that for the purpose of computing the OROP benefit, it has
taken MACP as the base and applied it across the board for all retirees having
the same length of service. In other words, OROP was not calculated in two
parts comprising of the ACP regime and MACP regime. In this context, reliance
has been placed on Note VI appended to the table for working out OROP
calculations. Note VI reads as follows: -
 17 (2018) 11 SCC 99
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46
“Pension of JCO/ORS granted upgradation under
ACP/MACP scheme shall be revised with reference to
the rank for which ACP/MACP was granted.”
34 On the above premises, it has been submitted that no disparity on the
ground of MACP/ACP has been introduced and the core value of uniform pension
for a person retiring in the same rank with the same length of service is
maintained without disparity.
C.2.2 Financial Implications
35 The Union Government has stated on affidavit that at the time when OROP
was implemented, the annual financial implication was in the amount of Rs
7,123.38 crores. The actual arrears which had to be paid for the period of 1 July
2014 to 31 December 2015 stood in the amount of Rs 10,392.35 crores. The
table on the status of the grant of MACP benefits to defence personnel (2013)
indicates that 96.4% Sepoys, 72.3% Naiks, 48.9% Havildars and 90.9% Art III-I
(Navy only) represent the percentage of retirees getting MACP benefits. This
indicates that MACP benefit forms a significant portion of the retiring personnel in
the above four ranks, the last one being relevant only for the Navy. The MACP
factor is not of much impact in the case of Naib Subedar, Subedar and Subedar
Major, among whom 1.6%, 2.2% and 0.2% of all retiring personnel are receiving
MACP benefits. This is because they would have reached those ranks by regular
promotion. When a Sepoy with eight years of service is upgraded as a Naik and
thereafter as a Havildar and Naib Subedar after sixteen and twenty-four years of
service, other financial benefits attached to the higher ranks accrue automatically
to an MACP beneficiary. However, if a Sepoy is promoted to the rank of Naik in
the natural course before eight years of service, such a person does not qualify
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47
for MACP and the same principle applies to the further upgradation. Where a
Sepoy is promoted as a Naik in the usual course, but does not get promoted
thereafter to subsequent ranks for non-availability of vacancies, such a Sepoy
would be entitled to MACP upgradation only for those ranks. The threshold
requirement for the grant of MACP is completion of a specified length of service.
A Sepoy who does not complete the required length of service cannot hence be
benchmarked with someone who completes the stipulated length of service for
the grant of MACP benefits. In other words, a Sepoy with three years of service
and a Sepoy who has acquired eight years of service thereby qualifying for
MACP are not equated even after OROP purposes since they did not both have
the same length of service from the past rank of Naib Subedar. According to the
Union Government, if non MACP personnel are grouped with MACP personnel
for the payment of OROP, the total financial outflow from 2014 would be in the
range of Rs 42,776.38 crores. If non MACP persons were required to be
matched with MACP, the financial implication for the period from 1 July 2014 to
31 December 2015 would stand at Rs 13,731.03 crores. If such a benefit is
given, the financial implication for 2021 under the Seventh Pay Commission
would require a conversion factor of 2.57 besides which 31% DR would be
payable. As noted earlier, it has been stated that when OROP is implemented,
the annual financial implication was in the amount of Rs 7,123.38 crores. If non
MACP personnel had to be matched with MACP personnel, this figure would
stand increased to Rs 9,411.71 crores. Based on this, the following tabulation
has been submitted by the Union Government on affidavit indicating a total
outflow if non MACP were to be matched with MACP:
PART C
48
Difference of
financial implication
per annum
9,411.71-7123.38 Crores 2288.33 Crores
Further arrears from
1.07.2014 to
31.12.2015
2288.33 Cr x 1.5 years 3432.49 Crores
Conversion in 7th CPC 2288.33 Cr x. 2.57 times 5881.00 Crores
Further arrears from
01.01.2016
5881.00 Cr x 6 years 35,286 Crores
DR arrears from
01.01.2016 to
31.12.2021
5881 Cr/12 x 8.28 4057.89 Crores
Total Additional arrears 3432.49+35286.00+4057.89 42,776.38 Crores
C.2. 3 Average to Maximum
36 The Court has been apprised of the fact that the CGDA working committee
considered four options for OROP in the year 2013. Of the four options, the
fourth option was on the basis of the maximum pension of current retirees, which
was proposed by the services. The Committee noted that the financial
implication of the fourth option (maximum pension of current retirees) was Rs
14,898.34 crores per annum and the total arrears which would be payable on
PART C
49
this basis would have been in the amount of Rs 1,45,339.34 crores, as is
tabulated below:
Difference of financial
implication per annum:
14898.34 Cr -7123.38
Cr
7774.96 Cr
Further arrears from
01.07.2014 to
31.12.2015
7774.96 Cr x 1.5. years 11662.44 Cr
Conversion in 7th CPC: 7774.96 Cr x 2.57 times 19981.60 Cr
Further arrears from
01.01.2016 to
31.12.2021
19981.60 Cr x 6 years 119889.60 Cr
DR arrears from
01.01.2016 to
31.12.2021
19981.60 Cr/12x8.28 13787.30 Cr
Thus total additional
arrears
11662.44 Cr+119889.60
Cr+ 13787.30
INR 145339.34 Cr
C.2.4 Periodic revision every five years
37 The central limb of the submission of the petitioners is that a revision of
OROP should be automatic. The Union government has submitted that besides
lacking any prior precedent, in terms of the practice governing pay scales,
pensions and other financial emoluments of government servants, automatic
revision would be impossible to implement. Quite apart from the above
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50
consideration, it is evident that the three documents which have been relied upon
by the petitioners namely (i) the Koshyari Committee Report; (ii) the minutes of
the meeting chaired by the Defence Minister on 26 February 2014; and (iii) the
communication dated 26 February 2014 to CGDA underscore that “any future
enhancement in the rates of pension to be automatically passed on to the past
pensioners”. The expression “to be automatically passed on” immediately follows
upon the words “any future enhancement in the rates of pension”. When read
together contextually, it signifies that the rates of pension would be passed on to
past pensioners without any administrative impediments. The expression
‘automatically passed on’ cannot be construed as a commitment with reference to
any period of time for the computation of benefits. The manner in which and the
period over which revisions should take place of pensions, salaries and other
financial benefits is a pure question of policy. The decision of the Central
Government to revise the pension every five years cannot be held to violate the
precepts underlying Article 14.
38 The policy choices which have been made by the Union Government must
also be understood in the context that the estimated budget allocation for defence
pensions is Rs 1,33,825 crores representing 28.39 per cent of the total defence
budget estimate of Rs 4,71,378 crores for 2020-2021. This does not include
budget on salaries which is of the order of 34.89 per cent of the total defence
budget estimates for 2020-2021. Salaries and pensions thus account for nearly
63 per cent of the total defence budget estimates for 2020-2021. In making policy
choices, the Union Government is entitled to take into account priorities towards
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51
modernization of the armed forces and to modulate the grant of financial benefits
so as to sub-serve and balance distinct priorities.
39 In the decision of this Court in Nakara (supra), the Constitution Bench was
deciding on the issue of whether the date of retirement would be a relevant
consideration for determining the application of a revised formula for the
computation of pension. The liberalised pension scheme was made applicable
prospectively to those employees who retired on or after March 31, 1979 in the
case of government servants covered by the 1972 Rules and in respect of
defence personnel, those who became non-effective on or after April 1, 1979.
Consequently, those who retired prior to the date were not entitled to the benefits
of the liberalised pension scheme. It was held that payment of pension
constitutes a compensation for the service rendered in the past and as a
measure of social welfare for providing socio-economic justice to those who have
rendered service to the State. The Court noted that earlier, the measure of
pension was related to the average emoluments during a period of thirty-six
months prior to retirement. By a liberalized scheme, the period was reduced to an
average of ten months preceding the date of retirement coupled with the above
aspects. A slab system for computation was introduced and the ceiling was
raised. This Court held that there was no justification for arbitrarily selecting the
criteria for eligibility for the grant of benefits under the scheme based on the date
of retirement. Hence, this Court held that all pensioners formed a homogeneous
class and where an existing scheme of pension was liberalized, a distinction
could not be made on the basis of a specified cut-off date. At the same time, it
must also be noted that the decision in Nakara (supra) noted that “the financial
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52
implication in such matters has some relevance.” This Court struck down the
portion of the Memoranda by which the benefit of the liberalised pension scheme
was only confined to persons retiring on or after the specified date which resulted
in the benefit being extended to all retirees, irrespective of the date of retirement.
It was observed as follows:
“63. The financial implication in such matters has some
relevance. However in this connection, we want to steer clear
of a misconception. There is no pension fund as it is found
either in contributory pension schemes administered in
foreign countries or as in insurance-linked pensions. Noncontributory pensions under 1972 Rules is a State obligation.
It is an item of expenditure voted year to year depending
upon the number of pensioners and the estimated
expenditure. Now when the liberalised pension scheme was
introduced, we would justifiably assume that the government
servants would retire from the next day of the coming into
operation of the scheme and the burden will have to be
computed as imposed by the liberalised scheme. Further
Government has been granting since nearly a decade
temporary increases from time to time to pensioners.
Therefore, the difference will be marginal. Further, let it not
be forgotten that the old pensioners are on the way out and
their number is fast decreasing. While examining the financial
implication, this Court is only concerned with the additional
liability that may be imposed by bringing in pensioners who
retired prior to April 1, 1979 within the fold of liberalised
pension scheme but effective subsequent to the specified
date. That it is a dwindling number is indisputable. And again
the large bulk comprises pensioners from lower echelons of
service such as Peons, L.D.C., U.D.C., Assistant etc. In a
chart submitted to us, the Union of India has worked out
the pension to the pensioners who have retired prior to
the specified date and the comparative advantage, if they
are brought within the purview of the liberalised pension
scheme. The difference up to the level of Assistant or
even Section Officer is marginal keeping in view that the
old pensioners are getting temporary increases.
Amongst the higher officers, there will be some
difference because the ceiling is raised and that would
introduce the difference. It is however necessary to refer to
one figure relied upon by respondents. It was said that if
pensioners who retired prior to March 31, 1979 are brought
within the purview of the liberalised pension scheme, Rs 233
crores would be required for fresh commutation. The
apparent fallacy in the submission is that if the benefit of
commutation is already availed of, it cannot and need not be
reopened. And availability of other benefits is hardly a
relevant factor because pension is admissible to all retirees.
The figures submitted are thus neither frightening nor the
liability is supposed to be staggering which would deflect
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53
us from going to the logical and of constitutional
mandate. Even according to the most liberal estimate, the
average yearly increase is worked out to be Rs 51 crores
but that assumes that every pensioner has survived till
date and will continue to survive. Therefore, we are
satisfied that the increase liability consequent upon this
judgment is not too high to be unbearable or such as
would have detracted the Government from covering the
old pensioners under the Scheme.”
 (emphasis supplied)
40 As opposed to the factual matrix in Nakara (supra), where the liberalised
pension scheme was not made applicable to employees who had retired prior to
the cut-off date, in this case the OROP principle is applicable to all retired army
personnel, irrespective of the date of retirement. The cut-off date is only
prescribed for determining the base salary used for computing the pension. While
for those who retired on or after 2014, the last drawn salary is used for computing
the pension; for those who retired prior to 2014, the average of the salary drawn
in 2013 is used. This policy only seeks to protect those who retired before 2014
since the last drawn salary of the prior retirees might be too low and
incomparable to the pay of the 2014 retirees. Moreover, if the maximum salary
drawn is to be used as the base value instead of taking the average salary, an
additional outlay of Rs 1,45,339.34 crores would be incurred. The executive is
therefore, well within its limits to prescribe a policy keeping in view the financial
implications.
41 In Krishena Kumar (supra), a Constitution Bench of this Court decided on
the issue of whether the prescription of a cut-off date for the eligibility to a
pension scheme was arbitrary and violative of Article 14. Before 1957, the only
scheme for retirement benefits in the Railways was the Provident Fund Scheme.
This scheme was replaced in 1957 by the Pension Scheme. All the employees
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54
who served in the Railways on or after 1 April 1957 were automatically covered
by the Pension Scheme. Those who were in service before 1 April 1957 were
given the option to switch over to the Pensionary Benefits. It was the contention
of the appellants that till 1 April 1957, there was no difference between the
benefits receivable under the provident fund scheme and the pension scheme.
However, it was contended that between 1957 and 1987, the pensionary benefits
were increased by various methods while the benefits under the provident fund
scheme were not enhanced. Dismissing the petitions, this Court held that neither
the prescription of a cut-off date nor the creation of two classes of retirees
(pensioners and provident fund holders) was contrary to the decision of the
Constitution Bench in Nakara (supra). It was observed thus:
“32. In Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 :
(1983) 2 SCR 165] it was never held that both the pension
retirees and the PF retirees formed a homogeneous class
and that any further classification among them would be
violative of Article 14. On the other hand the court clearly
observed that it was not dealing with the problem of a “fund”.
The Railway Contributory Provident Fund is by definition a
fund. Besides, the government's obligation towards an
employee under CPF Scheme to give the matching
contribution begins as soon as his account is opened
and ends with his retirement when his rights qua the
government in respect of the Provident Fund is finally
crystallized and thereafter no statutory obligation
continues. Whether there still remained a moral
obligation is a different matter. On the other hand under
the Pension Scheme the government's obligation does not
begin until the employee retires when only it begins and it
continues till the death of the employee. Thus, on the
retirement of an employee government's legal obligation
under the Provident Fund account ends while under the
Pension Scheme it begins. The rules governing the
Provident Fund and its contribution are entirely different
from the rules governing pension. It would not, therefore,
be reasonable to argue that what is applicable to the
pension retirees must also equally be applicable to PF
retirees. This being the legal position the rights of each
individual PF retiree finally crystallized on his retirement
PART C
55
whereafter no continuing obligation remained while, on the
other hand, as regard Pension retirees, the obligation
continued till their death. The continuing obligation of the
State in respect of pension retirees is adversely affected by
fall in rupee value and rising prices which, considering the
corpus already received by the PF retirees they would not be
so adversely affected ipso facto. It cannot, therefore, be
said that it was the ratio decidendi in Nakara [(1983) 1
SCC 305 : 1983 SCC (L&S) 145 : (1983) 2 SCR 165] that
the State's obligation towards its PF retirees must be the
same as that towards the pension retirees. An imaginary
definition of obligation to include all the government
retirees in a class was not decided and could not form
the basis for any classification for the purpose of this
case. Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145 :
(1983) 2 SCR 165] cannot, therefore, be an authority for
this case.
34. The next argument of the petitioners is that the option
given to the PF employees to switch over to the pension
scheme with effect from a specified cut-off date is bad as
violative of Article 14 of the Constitution for the same reasons
for which in Nakara [(1983) 1 SCC 305 : 1983 SCC (L&S) 145
: (1983) 2 SCR 165] the notification were read down. We
have extracted the 12th option letter. This argument is
fallacious in view of the fact that while in case of pension
retirees who are alive the government has a continuing
obligation and if one is affected by dearness the others may
also be similarly affected. In case of PF retirees each one's
rights having finally crystallized on the date of retirement and
receipt of PF benefits and there being no continuing
obligation thereafter they could not be treated at par with the
living pensioners. How the corpus after retirement of a PF
retiree was affected or benefitted by prices and interest rise
was not kept any tack of by the Railways. It appears in each
of the cases of option the specified date bore a definite nexus
to the objects sought to be achieved by giving of the option.
Option once exercised was told to have been final. Options
were exercisable vice versa.”
 (emphasis supplied)
42 In Indian Ex-Services League (supra), it was contended that in view of
the decision in Nakara (supra), all retirees who held the same rank irrespective of
the date of retirement must receive the same amount of pension. This Court
observed that there was nothing in Nakara (supra) that backed the claim of the
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56
appellants that the same pension must be given to all retirees of the same rank.
The Court observed that it was held in Nakara (supra) that only the same formula
for calculation of pension was to be used and nowhere was the emoluments of
the retirees revised. The ratio decidendi in Nakara (supra) was explained in the
following words:
“12. The liberalised pension scheme in the context of which
the decision was rendered in Nakara [(1983) 1 SCC 305 :
1983 SCC (L&S) 145 : (1983) 2 SCR 165] provided for
computation of pension according to a more liberal formula
under which “average emoluments” were determined with
reference to the last ten months' salary instead of 36 months'
salary provided earlier yielding a higher average, coupled with
a slab system and raising the ceiling limit for pension. This
Court held that where the mode of computation of pension is
liberalised from a specified date, its benefit must be given not
merely to retirees subsequent to that date but also to earlier
existing retirees irrespective of their date of retirement even
though the earlier retirees would not be entitled to any arrears
prior to the specified date on the basis of the revised
computation made according to the liberalised formula. For
the purpose of such a scheme all existing retirees irrespective
of the date of their retirement, were held to constitute one
class, any further division within that class being
impermissible. According to that decision, the pension of
all earlier retirees was to be recomputed as on the
specified date in accordance with the liberalised formula
of computation on the basis of the average emoluments
of each retiree payable on his date of retirement. For this
purpose there was no revision of the emoluments of the
earlier retirees under the scheme. It was clearly stated that
‘if the pensioners form a class, their computation cannot be
by different formula affording unequal treatment solely on the
ground that some retired earlier and some retired later’. This
according to us is the decision in Nakara [(1983) 1 SCC 305 :
1983 SCC (L&S) 145 : (1983) 2 SCR 165] and no more.”
 (emphasis supplied)
It was observed that the effect of the judgment in Nakara (supra) was that the
same computation according to the liberalised formula must be applicable to pre
and post 1 April 1979 retirees and that the decision cannot be construed to mean
that the same amount of pension must be receivable.
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57
43 In KL Rathee v. Union of India18, the decision in Nakara (supra) was
explained in the following terms :
“6. Nakara case dealt with the manner of calculation of
pension on the basis of average emoluments of a retired
government employee. Prior to the liberalisation of the
formula for computation of pension made by the
memorandum dated 25-5-1979, average emoluments of the
last thirty months of service of the employee provided that
basis for calculation of pension. The 1970 service of the
employee provided that average emoluments must be
calculated on the basis of the emoluments received by a
government servant during the last ten months of the service.
That apart, a new slab system for computation of pension
was introduced and the ceiling on pension was raised […].
7. It is to be seen that the judgment did not strike down the
definition of “emoluments”. It merely held that if pension was
to be calculated on the basis of the last ten months’
emoluments of a government servant, after 1-4-1979, there is
no reason why those who retired before 1-4-1979 should get
pension calculated on the basis of average of last thirty-six
months’ emoluments. In other words, the rule of computation
must be the same. The Court did not hold that those who
have retired before 1-4-1979 must be treated as having the
same emoluments as those who retired on or after 1-4-1979
for the purpose of calculation of pension. Therefore, on the
strength of Nakara case, the petitioner is not entitled to ask
for computation of pension with reference to emoluments
which he never got.”
44 In Col. B.J Akkara (Retd.) v. Government of India19, this Court
summarised the principles relating to pension. Justice RV Raveendran writing for
a two-Judge bench observed:
“20. The principles relating to pension relevant to the issue
are well settled. They are:
(a) In regard to pensioners forming a class, computation of
pension cannot be by different formula thereby applying an
unequal treatment solely on the ground that some retired
earlier and some retired later. If the retiree is eligible for
pension at the time of his retirement and the relevant pension
scheme is subsequently amended, he would become eligible
to get enhanced pension as per the new formula of
computation of pension from the date when the amendment
takes effect. In such a situation, the additional benefit under
 18 1991 2 SCC 104 19 (2006) 11 SCC 709
PART C
58
the amendment, made available to the same class of
pensioners cannot be denied to him on the ground that he
had retired prior to the date on which the aforesaid additional
benefit was conferred.
(b) But all retirees retiring with a particular rank do not form a
single class for all purposes. Where the reckonable
emoluments as on the date of retirement (for the purpose of
computation of pension) are different in respect of two groups
of pensioners, who retired with the same rank, the group
getting lesser pension cannot contend that their pension
should be identical with or equal to the pension received by
the group whose reckonable emolument was higher. In other
words, pensioners who retire with the same rank need
not be given identical pension, where their average
reckonable emoluments at the time of their retirement
were different, in view of the difference in pay, or in view
of different pay scales being in force.
[…]
One set cannot claim the benefit extended to the other set on
the ground that they are similarly situated. Though they
retired with the same rank, they are not of the “same class” or
“homogeneous group”. The employer can validly fix a cut-off
date for introducing any new pension/retirement scheme or
for discontinuance of any existing scheme. What is
discriminatory is introduction of a benefit retrospectively (or
prospectively) fixing a cut-off date arbitrarily thereby dividing a
single homogeneous class of pensioners into two groups and
subjecting them to different treatment.”
 (emphasis supplied)
45 The decision in SPS Vains (supra) has been relied upon by the petitioners.
The issue in that case was whether the officers of the rank of Major General, who
had retired prior to 1 January 1996, could be given the benefit of the provisions of
the revised pay scale, though according to the policy only those who retired after
the said cut-off date would be entitled to such benefit. The rank of Brigadier is a
feeder post for the promotional rank of Major General. A Major General always
drew a higher pension than the pension payable to the officers holding the rank of
a Brigadier, as on the basis of the recommendation of the Fourth Pay
Commission, the pension was calculated on the basis of the salary drawn during
the last ten months prior to retirement. An anomaly arose with the acceptance of
the recommendation of the Fifth Pay Commission which created a situation in
PART C
59
which a Brigadier began drawing more pension and family pension than the
Major General. The Government increased the pension of Major Generals who
had retired prior to 1996 so that they do not receive lesser pension than the
officers of the rank of Brigadier. The disparity which was noted in that case is
evident from the following extract of the judgment:
“23. From the submissions made, the dispute appears to
be confined only to the question whether officers of the
rank of Major General in the army and of equivalent rank
in the two other wings of the Defence forces, who had
retired prior to 1.1.1996 have been validly excluded from
the benefit of the revision of pay scales in keeping with
the recommendations of the fifth Central Pay
Commission by virtue of the Special Army Instruction
2/S/1998.”
This Court held that such a disparity in the pension payable to two groups of
officers occupying the same rank of Major General based on those retiring before
or after 1 January 1996 violated Article 14. It was in this backdrop that this Court
directed that the pay of all pensioners in the rank of Major General and its
equivalent rank in the other two wings of the Defence services should be
notionally fixed at the rate given to the similar officers of the same rank after the
revision of pay scales with effect from 1 January 1996, and thereafter to compute
the pensionary benefits with prospective effect from the date of the writ petition.
The decision in SPS Vains (supra) thus involved a completely different factual
situation. The rank of Brigadier was a feeder post for the rank of Major General.
An anomaly had arisen as a result of which the pay and pension of Brigadier
were higher than of the Major Generals. By increasing the pension of Major
General, distinction was made between those who had retired before and after 1
January 1996. This was held to be violative of Article 14.
PART C
60
46 The canvass which is sought to be traversed in these proceedings under
Article 32 of the Constitution trenches upon a domain which is reserved for
executive policy. We must remember that adjudication cannot serve as a
substitute for policy. Lon Fuller described public policy issues that come up in
adjudication as “polycentric problems”, that is, they raise questions that have a
“multiplicity of variable and interlocking factors, decisions on each one of which
presupposes a decision on all others”. Such matters, according to Fuller, are
more suitably addressed by elected representatives since they involve
negotiations, trade-offs and a consensus-driven decision-making process. Fuller
argues that adjudication is more appropriate for questions that result in “either-or”
answers.20 Most questions of policy involve complex considerations of not only
technical and economic factors but also require balancing competing interests for
which democratic reconciliation rather than adjudication is the best remedy.
Further, an increased reliance on judges to solve matters of pure policy
diminishes the role of other political organs in resolving contested issues of social
and political policy, which require a democratic dialogue. This is not to say that
this Court will shy away from setting aside policies that impinge on constitutional
rights. Rather it is to provide a clear-eyed role of the function that a court serves
in a democracy. The OROP policy may only be challenged on the ground that it is
manifestly arbitrary or capricious. In this regard, we now evaluate the policy
which has been adopted by the Union Government.
 20 Fuller, L. L., & Winston, K. I. (1978). The Forms and Limits of Adjudication. Harvard Law Review, 92(2), 353–
409.
PART C
61
47 The policy of OROP adopted by the Union Government stipulates thus:
(i) The benefits will be effective from 1 July 2014;
(ii) Pensions of past pensioners would be refixed on the basis of the
pension of retirees of calendar year 2013;
(iii) Pension for all pensioners would be protected; and
(iv) In future, the pension would be refixed after every five years.
48 The principles governing pensions and cut-off dates can be summarised
as follows:
(i) All pensioners who hold the same rank may not for all purposes form a
homogenous class. For example, amongst Sepoys differences do exist
in view of the MACP and ACP schemes. Certain Sepoys receive the
pay of the higher ranked personnel;
(ii) The benefit of a new element in a pensionary scheme can be
prospectively applied. However, the scheme cannot bifurcate a
homogenous group based on a cut-off date;
(iii) The judgment of the Constitution Bench in Nakara (supra) cannot be
interpreted to read the one rank one pension rule into it. It was only
held that the same principle of computation of pensions must be
applied uniformly to a homogenous class; and
(iv) It is not a legal mandate that pensioners who held the same rank must
be given the same amount of pension. The varying benefits that may be
applicable to certain personnel which would also impact the pension
payable need not be equalised with the rest of the personnel.
PART C
62
49 Applying the above principles to the facts of the case, we find no
constitutional infirmity in the OROP principle as defined by the communication
dated 7 November 2015 for the following reasons:
(i) The definition of OROP is uniformly applicable to all the pensioners
irrespective of the date of retirement. It is not the case of the petitioners
that the pension is reviewed ‘automatically’ to a class of the pensioners
and ‘periodically’ to another class of the pensioners;
(ii) The cut-off date is used only for the purpose of determining the base
salary for the calculation of pension. While for those who retired after
2014, the last drawn salary is used to calculate pension, for those who
retired prior to 2013, the average salary drawn in 2013 is used. Since
the uniform application of the last drawn salary for the purpose of
calculating pension would put the prior retirees at a disadvantage, the
Union Government has taken a policy decision to enhance the base
salary for the calculation of pension. Undoubtedly, the Union
Government had a range of policy choices including taking the
minimum, the maximum or the mean or average. The Union
government decided to adopt the average. Persons below the average
were brought up to the average mark while those drawing above the
average were protected. Such a decision lies within the ambit of policy
choices;
PART C
63
(iii) While no legal or constitutional mandate of OROP can be read into the
decisions in Nakara (supra) and SPS Vains (supra), varying pension
payable to officers of the same rank retiring before and after 1 July
2014 either due to MACP or the different base salary used for the
calculation of pension cannot be held arbitrary; and
(iv) Since the OROP definition is not arbitrary, it is not necessary for us to
undertake the exercise of determining if the financial implications of the
scheme is negligible or enormous.
50 In terms of the communication dated 7 November 2015, the benefit of
OROP was to be effected from 1 July 2014. Para 3 (v) of the communication
states that “in future, the pension would be re-fixed every five years”. Such an
exercise has remained to be carried out after the expiry of five years possibly
because of the pendency of the present proceedings.
51 We accordingly order and direct that in terms of the communication dated
7 November 2015, a re-fixation exercise shall be carried out from 1 July 2019,
upon the expiry of five years. Arrears payable to all eligible pensioners of the
armed forces shall be computed and paid over accordingly within a period of
three months.
PART C
64
52 The petition is disposed of in the above terms.
53 Pending application(s), if any, shall stand disposed of.
……………………...............................J.
 [Dr Dhananjaya Y Chandrachud]
.……………………...............................J.
 [Surya Kant]
.……………………...............................J.
 [Vikram Nath]
New Delhi;
March 16, 2022

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

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