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.

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

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

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has been replaced by ‘one rank multiple pensions’ for persons with the same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

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

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

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

“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

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

9.1.4 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

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

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

(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

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

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

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

(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

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

(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

(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

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

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

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

(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

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

(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

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(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

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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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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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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

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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.”

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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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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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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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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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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

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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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‘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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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

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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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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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(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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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.

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.

PART C

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.

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

PART C

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: -

PART C

“….(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

PART C

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

PART C

“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

PART C

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

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

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

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

PART C

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

PART C

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

PART C

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

PART C

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

PART C

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

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

PART C

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.

PART C

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

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

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

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

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

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

(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

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

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