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State Of Punjab v. Justice S.S Dewan (Retired Chief Justice) And Others
Factual and Procedural Background
The respondent, a former Chief Justice of the Punjab & Haryana High Court, retired on 31-12-1989. Upon retirement he opted for pension under Part III of the First Schedule to the High Court Judges (Conditions of Service) Act, 1954, which links a retired Judge’s pension to the rules of his prior service—in this case, the Punjab Superior Judicial Service Rules, 1963.
On 22-02-1990 the Government of Punjab amended Rule 16 of those Rules to provide that, for “direct recruits,” up to ten years’ practice at the Bar would be added to qualifying service for superannuation pension. Relying on this amendment, the respondent sought refixation of his pension. The Accountant General referred the matter to the State Government, which ruled on 25-02-1991 that the amendment was prospective only.
The respondent filed a writ petition before the High Court seeking application of the amended Rule 16. A learned Single Judge allowed the petition, directing refixation of pension with 18% interest, invoking this Court’s decision in D.S. Nakara v. Union of India. The State’s letters patent appeal was dismissed by a Division Bench (limited to pension alone). The State of Punjab appealed to the Supreme Court.
Legal Issues Presented
- Whether the amendment to Rule 16 of the Punjab Superior Judicial Service Rules, 1963, adding up to ten years of Bar practice to qualifying service, is prospective or retrospective for purposes of pension computation.
- Whether the liberalisation principle in D.S. Nakara v. Union of India requires extension of the amended Rule 16 to Judges who retired before 22-02-1990.
Arguments of the Parties
Respondent’s Arguments
- Being a “direct recruit,” his period of Bar practice (up to ten years) should be added to qualifying service under the amended Rule 16.
- The amendment constitutes a liberalisation of the existing pension scheme; denying its benefit to pre-amendment retirees violates Article 14.
State of Punjab’s Arguments
- The amendment is prospective; it applies only to members who retire on or after 22-02-1990.
- The change introduces a new retiral benefit rather than merely revising the existing pension formula; therefore, D.S. Nakara is inapplicable.
Union of India’s Position
- Asserted that the controversy concerns the State of Punjab and took no substantive stand on merits.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| D.S. Nakara v. Union of India (1983) 1 SCC 305 | Liberalisation/upward revision of pension schemes must extend to all retirees to avoid discrimination under Article 14. | Distinguished. The Court held the amendment introduced a new retiral benefit, not merely a liberalised formula, so Nakara did not govern. |
| Union of India v. P.N. Menon (1994) 4 SCC 68 | Reasonableness of cut-off dates in post-retirement benefit schemes; permissible if rational under Article 14. | Cited to support validity of fixing a prospective cut-off date for new pension benefits. |
| D.R. Nim v. Union of India AIR 1967 SC 1301 | Observation on selecting cut-off dates (“picking a date from the hat”) in the context of seniority. | Referenced (via P.N. Menon) to affirm that cut-off dates, when rational, are constitutionally permissible. |
Court's Reasoning and Analysis
The Supreme Court examined the nature of the amendment to Rule 16. Pension is ordinarily calculated on two determinants: length of qualifying service and last pay drawn. While changes to these determinants can liberalise an existing scheme (Nakara), the Court distinguished between:
- Modifications confined to service already rendered (a liberalisation), and
- Benefits referencing a period before entry into service (a new retiral benefit).
The amendment, by counting pre-service Bar practice—a period previously irrelevant—introduced “a new concept and a new retiral benefit,” aimed at making judicial service more attractive. Consequently, it was not an “upward revision” of the existing scheme but a new benefit intended for future retirees.
Because the benefit was prospective, the classification between pre- and post-22-02-1990 retirees was held reasonable. The Court found the High Court erred in applying Nakara; that decision does not compel retrospective extension of entirely new retirement benefits.
Holding and Implications
APPEAL ALLOWED; WRIT PETITION DISMISSED.
The respondent is not entitled to refixation of pension under the amended Rule 16. The decision affirms the State’s authority to introduce new post-retirement benefits prospectively, provided the cut-off date is rational. No broader precedent altering pension jurisprudence was set beyond reaffirming the distinction between liberalised formulas and entirely new benefits.
G.T Nanavati, J.— The respondent who retired as the Chief Justice of the High Court of Punjab and Haryana on 31-12-1989 was enrolled as an advocate on 27-1-1959, appointed as District and Sessions Judge on 20-11-1968 and then as a Judge and the Chief Justice of the Punjab and Haryana High Court on 14-12-1977 and 4-10-1989 respectively. On his retirement he elected for computation of his pension under Part III of the Ist Schedule to the High Court Judges (Conditions of Service) Act, 1954. According to the provisions contained in Part III, pension of the Judge has to be determined in accordance with the rules of his service. The rules which applied to him are the Punjab Superior Judicial Service Rules, 1963. His pension was, therefore, fixed in accordance with the said rules. On 20-2-1990, Rule 16 of the said rules was amended by the Government of Punjab and it was provided that in case of a direct recruit to the Punjab Superior Judicial Service the actual period of practice at the Bar not exceeding 10 years shall be added to his service qualifying for superannuation pension and other retirement benefits. In view of this amendment the respondent claimed that being a direct recruit to the Punjab Superior Judicial Service he was entitled to addition of actual period of practice at the Bar not exceeding 10 years to his qualifying service and, therefore, his pension and other retirement benefits have to be refixed. The High Court, in its turn, wrote to the Accountant General on 5-6-1990 for refixation of his pension and other retirement benefits after giving him the benefit of the amendment. The Accountant General, it appears, was not inclined to agree with this claim and, therefore, referred the matter to the State Government for correct interpretation of the rule. On 25-2-1991 the State Government decided that the notification dated 22-2-1990 has only prospective effect and, therefore, benefit of the amended Rule 16 cannot be given to the respondent. He, therefore, filed a writ petition in the High Court inter alia praying that the Union of India and the State Government be directed to give benefit of the amended Rule 16 to him and to compute his pension afresh in accordance with the said provision. The stand taken by the Union of India was that it was not really concerned with the subject-matter of the petition and that it pertained to the State of Punjab. The State contended that the amended rule applies to those only who retired after 22-2-1990.
2. The learned Single Judge following the judgment of this Court in D.S Nakara v. Union of India (1983) 1 SCC 305 held that all retired Judges irrespective of the date of retirement constitute one class and the benefits available under the amended rule cannot be confined to the Judges who retired after the amendment. He, therefore, found the action of the State of Punjab illegal, allowed the petition and directed the State of Punjab to refix pension of the respondent in accordance with the amended rule with effect from 22-2-1990 and to pay the arrears with interest at the rate of 18 per cent per annum. The State of Punjab filed a letters patent appeal. The Division Bench of the High Court dismissed it with a clarification that the prayer being restricted only to pension and not to other retirement benefits, the order passed by the learned Single Judge should be read as confined to grant of pension only. The State has, therefore, filed this appeal.
3. The only controversy in this appeal is whether the High Court was right in directing refixation of pension of the respondent in accordance with amended Rule 16. The respondent, having retired as a Judge of a High Court and having elected to receive pension payable under Part III of the First Schedule to the Act his entitlement was as provided in paragraph 2 of that Schedule, which reads as under:
“2. The pension payable to such a Judge shall be —
(a) the pension to which he is entitled under the ordinary rules of his service if he had not been appointed a Judge, his service as a Judge being treated as service therein for the purpose of calculating that pension; and
(b) ***”
4. It is not in dispute that he being a member of the Punjab Superior Judicial Service, the Punjab Superior Judicial Service Rules, 1963 applied to him. Rule 16 of the said Rules at the time of his retirement provided as under:
“16. Death-cum-retirement benefits.—In respect of death-cum-retirement benefits the members of the Service shall be governed by the All India Services (Death-cum-Retirement Benefits) Rules, 1958, as amended from time to time.”
5. Rule 8 of the All India Services Rules, inter alia, provides that qualifying service of a member of the Service for purposes of those rules begins from the date of his substantive appointment to the Service. It is also not in dispute that pension of the respondent was calculated and paid accordingly. On 22-2-1990 Rule 16 was amended and since then it is as quoted below:
“16. Death-cum-retirement benefits.—In respect of death-cum-retirement benefits the members of the Service shall be governed by the Punjab Civil Services Rules, Volume II as amended from time to time:
Provided that in the case of a direct recruit to this Service, the actual period of practice at Bar not exceeding ten years, shall be added to his service qualifying for superannuation pension and other retirement benefits.”
6. The change brought about by the amendment is that whereas in respect of death-cum-retirement benefits members of the Punjab Superior Judicial Service were earlier governed by the All India Services (Death-cum-Retirement Benefits) Rules, now they are governed by the Punjab Civil Services Rules. Moreover, now in the case of a direct recruit to the Punjab Superior Judicial Service the actual period of practice at the Bar not exceeding 10 years has to be added to his service for the purpose of determining the qualifying service. Formerly, that is, prior to 22-2-1990, qualifying service of a member of the Punjab Superior Judicial Service was the length of service rendered by him as a member of the Punjab Superior Judicial Service and also as a Judge of the High Court, if he was elevated to that position before retirement. Even in case of a direct recruit to that Service his standing at the Bar was irrelevant but now that period has to be added for determining the qualifying service. Obviously, this enlargement of the period of qualifying service would lead to an increase in the quantum of pension. This has been regarded by the High Court and as contended by the respondent, liberalisation of the pension scheme. For that reason, it further held that benefit of a rule liberalising pension cannot be restricted to persons retiring subsequently that is after the date of such liberalisation otherwise it would amount to vicious discrimination violative of Article 14 of the Constitution. The High Court has also held that there is nothing in the language of the rule to suggest that the benefit conferred by it is confined to the persons retiring after 22-2-1990.
7. Therefore, what we have to consider is what is the nature of the change made by the amendment. Is it by way of upward revision of the existing pension scheme? Then obviously the ratio of the decision in D.S Nakara case (1983) 1 SCC 305 would apply. If it is held to be a new retiral benefit or a new scheme then the benefit of it cannot be extended to those who retired earlier.
8. Conceptually, pension is a reward for past service. It is determined on the basis of length of service and last pay drawn. Length of service is determinative of eligibility and the quantum of pension. The formula adopted for determining last average emoluments drawn has an impact on the quantum of pension. In D.S Nakara case (1983) 1 SCC 305 the change in the formula of determining average emoluments by reducing 36 months' service to 10 months' service as measure of pension, made with a view to giving a higher average, was regarded as liberalisation or upward revision of the existing pension scheme. On the basis of the same reasoning it may be said that any modification with respect to the other determinative factor, namely, qualifying service made with a view to make it more beneficial in terms of quantum of pension can also be regarded as liberalisation or upward revision of the existing pension scheme. If, however, the change is not confined to the period of service but extends or relates to a period anterior to the joining of service then it would assume a different character. Then it is not liberalisation of the existing scheme but introduction of a new retiral benefit. What has been done by amending Rule 16 is to make the period of practice at the Bar, which was otherwise irrelevant for determining the qualifying service, also relevant for that purpose. It is a new concept and a new retiral benefit. The object of the amendment does not appear to be to go for liberalisation. The purpose for which it appears to have been made is to make it more attractive for those who are already in service so that they may not leave it and for new entrants so that they may be tempted to join it. Though Rule 16 does not specifically state that the amended rule will apply only to those who retired after 22-2-1990, the intention behind it clearly appears to be to extend the new benefit to those only who retired after that date. For these reasons the principle laid down in D.S Nakara case (1983) 1 SCC 305 that if pensioners form a class computation of their pension cannot be by different formula affording unequal treatment merely on the ground that some retired earlier and some retired later, will have no application to a case of this type. Therefore, on both the grounds the High Court was in error in applying the ratio of the decision in D.S Nakara case (1983) 1 SCC 305 to this case. As rightly contended on behalf of the State, benefit of the amendment would be available to only those direct recruits who retired after it has come into force.
9. The following observations made by this Court in Union of India v. P.N Menon (1994) 4 SCC 68, (1994) 27 ATC 515 also to some extent support the view that we are taking:
“Whenever the Government or an authority which can be held to be a State within the meaning of Article 12 of the Constitution, frames a scheme for persons who have superannuated from service, due to many constraints, it is not always possible to extend the same benefits to one and all, irrespective of the dates of superannuation. As such any revised scheme in respect of post-retirement benefits, if implemented with a cut-off date, which can be held to be reasonable and rational in the light of Article 14 of the Constitution, need not be held to be invalid. It shall not amount to ‘picking out a date from the hat’, as was said by this Court in the case of D.R Nim v. Union of India AIR 1967 SC 1301, (1968) 1 LLJ 264 in connection with fixation of seniority. Whenever a revision takes place, a cut-off date becomes imperative because the benefit has to be allowed within the financial resources available with the Government.”
10. We, therefore, allow this appeal, set aside the judgment and order passed by the High Court and dismiss the writ petition filed by the respondents. In view of the facts and circumstances of the case there shall be no order as to costs.
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