ALL MANIPUR PENSIONERS ASSOCIATION BY ITS SECRETARYversusTHE STATE OF MANIPUR AND OTHERS

                        [2019] 9 S.C.R. 905                             905


         ALL MANIPUR PENSIONERS ASSOCIATION                             A
                  BY ITS SECRETARY
                                 v.
           THE STATE OF MANIPUR AND OTHERS
                  (Civil Appeal No.10857 of 2016)                       B
                           JULY 11, 2019
            [M. R. SHAH AND A.S. BOPANNA, JJ.]
       Service Law – Grant of benefit of revised pension – Creation
of two classes of pensioners – When discriminatory – Govt. of
                                                                        C
Manipur issued office memorandum dated 21.04.1999 revising the
quantum of pension, however, it provided that those Govt. employees
who retired on or after 01.01.1996 shall be entitled to the revised
pension at a higher percentage and those who retired before
01.01.1996 shall be entitled at a lower percentage – Challenged
before the Single Judge of the High Court –Allowed– Set aside by        D
Division Bench –Held: State of Manipur has adopted the CCS
(Pension) Rules to be applicable to the State of Manipur and also
came out with the 1977 Pension Rules– All the government servants
retired in accordance with the provisions of the Pension Rules and
after completing qualifying service are entitled to the pension/
                                                                        E
pensionary benefits– Therefore, all the pensioners form only one
homogeneous class – Issue in the present appeal is squarely covered
by the decision of Supreme Court in the case of D.S. Nakara and
Others v. Union of India – Division Bench clearly erred in not
following the said decision – On merits also, there is no valid
justification to create two classes, viz. one who retired pre-1996      F
and another who retired post-1996, for the purpose of grant of
revised pension, solely on the ground of financial constraint – Such
classification has no nexus with the object and purpose of grant of
benefit of revised pension– All the pensioners form one class who
are entitled to pension as per the pension rules – Art.14 ensures to
                                                                        G
all equality before law and equal protection of laws – Art.16 permits
a valid classification – A valid classification is truly a valid
discrimination– Whenever a cut-off date, as in the present case is
fixed to categorise one set of pensioners for favourable
consideration over others, the twin test for valid classification or
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                               905
906            SUPREME COURT REPORTS                        [2019] 9 S.C.R.


A     valid discrimination therefore must necessarily be satisfied – Object
      and purpose for revising the pension was due to the increase in the
      cost of living – State cannot arbitrarily pick and choose from
      amongst similarly situated persons, a cut-off date for extension of
      benefits especially pensionary benefits– Such classification has no
      nexus with the object and purpose of revision of pension, hence is
B
      unreasonable, discriminatory and arbitrary and therefore rightly
      set aside by the Single Judge – All the pensioners, irrespective of
      their date of retirement, viz. pre-1996 retirees shall be entitled to
      revision in pension at par with pensioners who retired post-1996 –
      Central Civil Services (Pension) Rules, 1972 – Manipur Civil
C     Services (Pension) Rules, 1977 – r.49 – Constitution of India –
      Arts.14 and 16.
            Constitution of India– Arts.14 and 16 – Twin test for valid
      discrimination/classification – When not satisfied – Discussed.
             Constitution of India – Art.16 – Test for valid classification –
D     Held: Test for a valid classification may be summarised as a
      distinction based on a classification founded on an intelligible
      differentia, which has a rational relationship with the object sought
      to be achieved.
            Allowing the appeal, the Court
E
            HELD:1.1 The State of Manipur has adopted the Central
      Civil Services (Pension) Rules to be applicable to the State of
      Manipur. Therefore, all the government servants retired in
      accordance with the provisions of the Pension Rules and after
      completing qualifying service are entitled to the pension/
F     pensionary benefits.While passing the impugned judgment and
      order, the Division Bench of the High Court has not followed the
      decision of Supreme Court in the case of D.S. Nakara case,
      considering some of the observations made by this Court in the
      subsequent decisions in the cases of R. Veerasamy; Amar Nath
G     Goyal and P.N. Menon to the effect that the decision in the case
      of D.S. Nakara is one of the limited application and there is no
      scope for enlarging the ambit of that decision to cover all schemes
      made by the retirees or a demand for an identical amount of
      pension irrespective of the date of retirement. It is not in dispute

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     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                            907
           SECRETARY v. STATE OF MANIPUR

that the State Government has adopted the Central Civil Services          A
(Pension) Rules, to be applicable to the State of Manipur. The
State has also come out with the Manipur Civil Services (Pension)
Rules, 1977. It is also not in dispute that subject to completing
the qualifying service the government servants retired in
accordance with the pension rules are entitled to pension.
                                                                          B
Therefore, as such, all the pensioners form only one homogeneous
class. Therefore, it can be said that all the pensioners form only
one class as a whole. By not following the decision of Supreme
Court in the case of D.S. Nakara, considering some of the
observations made by this Court in the aforesaid decisions,
namely P.N.Menon and other decisions, the Division Bench of the           C
High Court has not at all considered the distinguishable facts in
the aforesaid decisions. [Paras 6.1, 7.2 and 7.4][916-F-G;
917-C-D; 918-B-C; 921-B-C]
      1.2 Similarly, the decisions of Supreme Court in the cases
of Hari Ram Gupta and Kallakkurichi Taluk Retired Officials               D
Association, Tamil Nadu also shall not be applicable to the facts
of the case on hand. The Division Bench of the High Court has
clearly erred in not appreciating and/or considering the
distinguishable facts in the cases of Hari Ram Gupta; R.
Veerasamy; Amar Nath Goyal; P.N. Menon and Amrit Lal Gandhi.
[Paras 7.8, 7.9] [922-D-E]                                                E

       1.3 Even otherwise on merits also, there is no valid
justification to create two classes, viz., one who retired pre-1996
and another who retired post-1996, for the purpose of grant of
revised pension. Such a classification has no nexus with the object
and purpose of grant of benefit of revised pension. All the               F
pensioners form a one class who are entitled to pension as per
the pension rules. Article 14 of the Constitution of India ensures
to all equality before law and equal protection of laws. At this
juncture it is also necessary to examine the concept of valid
classification. A valid classification is truly a valid discrimination.   G
Article 16 of the Constitution of India permits a valid classification.
The result to be achieved by the just objective presupposes the
choice of some for differential consideration/treatment over
others. A classification to be valid must necessarily satisfy two
tests. Firstly, the distinguishing rationale has to be based on a
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908            SUPREME COURT REPORTS                        [2019] 9 S.C.R.


A     just objective and secondly, the choice of differentiating one set
      of persons from another, must have a reasonable nexus to the
      objective sought to be achieved. The test for a valid classification
      may be summarised as a distinction based on a classification
      founded on an intelligible differentia, which has a rational
      relationship with the object sought to be achieved. Therefore,
B
      whenever a cut-off date (as in the present controversy) is fixed
      to categorise one set of pensioners for favourable consideration
      over others, the twin test for valid classification or valid
      discrimination therefore must necessarily be satisfied. In the
      present case, the classification in question has no reasonable
C     nexus to the objective sought to be achieved while revising the
      pension. The object and purpose for revising the pension is due
      to the increase in the cost of living. All the pensioners form a
      single class and therefore such a classification for the purpose of
      grant of revised pension is unreasonable, arbitrary, discriminatory
      and violative of Article 14 of the Constitution of India. The State
D
      cannot arbitrarily pick and choose from amongst similarly situated
      persons, a cut-off date for extension of benefits especially
      pensionary benefits. There has to be a classification founded on
      some rational principle when similarly situated class is
      differentiated for grant of any benefit. Increase in the cost of living
E     would affect all the pensioners irrespective of whether they have
      retired pre-1996 or post-1996.All the pensioners belong to one
      class. Therefore, by such a classification/cut-off date the equals
      are treated as unequals and therefore such a classification which
      has no nexus with the object and purpose of revision of pension
      is unreasonable, discriminatory and arbitrary and therefore the
F
      said classification was rightly set aside by the learned Single Judge
      of the High Court. At this stage, it is required to be observed
      that whenever a new benefit is granted and/or new scheme is
      introduced, it might be possible for the State to provide a cut-off
      date taking into consideration its financial resources. But the
G     same shall not be applicable with respect to one and single class
      of persons, the benefit to be given to the one class of persons,
      who are already otherwise getting the benefits and the question
      is with respect to revision. [Paras 8, 8.1] [922-E-H; 923-A-G]
           1.4 The controversy/issue in the present appeal is squarely
H     covered by the decision of Supreme Court in the case of D.S.
     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                          909
           SECRETARY v. STATE OF MANIPUR

Nakara. The decision of this Court in the case of D.S. Nakara           A
shall be applicable with full force to the facts of the case on hand.
The Division Bench of the High Court has clearly erred in not
following the decision of this Court in the case of D.S. Nakara
and has clearly erred in reversing the judgment and order of the
Single Judge. The impugned judgment and order passed by the
                                                                        B
Division Bench is quashed and set aside. The judgment and order
passed by the Single Judge is hereby restored and it is held that
all the pensioners, irrespective of their date of retirement, viz.
pre-1996 retirees shall be entitled to revision in pension at par
with those pensioners who retired post-1996. The arrears be paid
to the respective pensioners within a period of three months from       C
today. [Para 9] [923-H; 924-A-C]
      D.S. Nakara and Others v. Union of India
      (1983) 1 SCC 305 : [1983] 2 SCR 165 – followed.
      Hari Ram Gupta (D) through L.R. Kasturi Devi v. State
      of U.P. (1998) 6 SCC 328 : [1998] 3 SCR 854;                      D
      Ex-Services League v. Union of India (1991) 2 SCC
      104 : [1991] 1 SCR 158; Kallakkurichi Taluk Retired
      Officials Association, Tamil Nadu and others v. State of
      Tamil Nadu (2013) 2 SCC 772 : [2013] 4 SCR 883
      – held inapplicable.                                              E
      T.N. Electricity Board v. R. Veerasamy & Others (1999)
      3 SCC 414 : [1999] 2 SCR 221; State of Punjab and
      Others v. Amar Nath Goyal & Others (2005) 6 SCC
      754 : [2005] 2 Suppl. SCR 549 ; Union of India v. P.N.
      Menon (1994) 4 SCC 68 ; State of Rajasthan v. Amrit               F
      Lal Gandhi (1997) 2 SCC 342 : [1997] 1 SCR 121
      – distinguished.
                       Case Law Reference
[1983] 2 SCR 165               followed                Para 2.1
[1998] 3 SCR 854               held inapplicable       Para 4.3         G

[1999] 2 SCR 221               distinguished           Para 4.3
[2005] Suppl. 2 SCR 549        distinguished           Para 4.3

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910            SUPREME COURT REPORTS                          [2019] 9 S.C.R.


A     [1991] 1 SCR 158            held inapplicable              Para 4.3
      (1994) 4 SCC 68              distinguished                 Para 4.3
      [1997] 1 SCR 121             distinguished                 Para 5.2
      [2013] 4 SCR 883            held inapplicable              Para 5.3
B           CIVIL APPELLATE JURISDICTION: Civil Appeal No.10857
      of 2016
           From the Judgment and Order dated 01.03.2016 of the High Court
      of Manipur, at Imphal in Writ Appeal No. 28 of 2006
            R. Balasubramanian, Sr. Adv., Ananga Bhattacharyya, Adv. for
C
      the Appellant.
            Sanjay Hegde, Sr. Adv., Ashutosh Dubey, Abhishek Chauhan,
      Rajendra, Ms. R. Dubey, Manish Khurana, Sushil Pandy, Ashok Kumar
      Singh, Advs. for the Respondents.
D           The Judgment of the Court was delivered by
            M.R. SHAH, J.
             1. Feeling aggrieved and dissatisfied with the impugned judgment
      and order passed by the Division Bench of the High Court of Manipur at
      Imphal dated 01.03.2016 passed in Writ Appeal No. 28 of 2006, by which
E     the Division Bench of the High Court has allowed the said appeal
      preferred by the respondent – State and has quashed and set aside the
      judgment and order dated 24.3.2005 passed by the learned Single Judge
      in Writ Petition (C) No. 1455 of 2000, by which the learned Single Judge
      held that the method of calculating the revised pension in paragraph 4.1
F     of the office memorandum dated 24.4.1999 in respect of pre-1996
      pensioners is different from the method of calculating the revised pension
      for the Government employees who retired/died in harness on or after
      1.1.1996 is arbitrary and violative of Article 14 of the Constitution of
      India, the original writ petitioners have preferred the present appeal.

G           2. The facts leading to the present appeal in nutshell are as under:
             That the State of Manipur adopted the Central Civil Services
      (Pension) Rules, 1972, as amended from time to time. As per Rule 49 of
      the Central Civil Services Rules, 1972, a case of a government employee
      retired in accordance with the provisions of the rules after completing
      qualifying service of not less than 30 years, the amount of pension shall
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     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                   911
     SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

be calculated at 50% of the average emoluments subject to a maximum              A
of Rs.4500/- per month. It appears that considering the increase in the
cost of living, the Government of Manipur decided to increase the quantum
of pension as well as the pay of the employees. That the Government of
Manipur issued an office memorandum dated 21.4.1999 revising the
quantum of pension. However, provided that those Manipur Government
                                                                                 B
employees who retired on or after 1.1.1996 shall be entitled to the revised
pension at a higher percentage and those who retired before 1.1.1996
shall be entitled at a lower percentage.
       2.1 Feeling aggrieved by office memorandum dated 21.4.1999
providing two different revised pensions, viz, the higher percentage of
revised pension to the government employees who retired on or after              C
1.1.1996 and the lower percentage of revised pension to those who retired
on or before 1.1.1996, the appellant herein – All Manipur Pensioners
Association approached the learned Single Judge of the High Court of
Manipur by way of Writ Petition (C) No.1455 of 2000. It was the case
on behalf of the original writ petitioners that all the pensioners who retired   D
on or after 1.1.1996 and those who retired before 1.1.1996 form only
one class as a whole and therefore the classification between those who
retired on or after 1.1.1996 and those who retired on or before 1.1.1996
for the purpose of granting the benefit of revised pension is arbitrary,
unreasonable and violative of Article 14 of the Constitution of India. It
was submitted that the date of retirement cannot form the very criterion         E
for classification. Before the learned Single Judge, heavily reliance was
placed on the decision of this Court in the case of D.S. Nakara and
others vs. Union of India, reported in (1983) 1 SCC 305. The writ
petition before the learned Single Judge was opposed by the State
Government and the aforesaid classification was sought to be justified           F
solely on the ground that considering the financial constraints of the
State, the State was justified in granting revised pension differently to
those who retired after 1.1.1996 and those who retired before 1.1.1996.
It was the case on behalf of the State that considering the financial
constraints of the State, the State was not in a position to extend the
benefit of pension making the percentage given by the Government of              G
India in its memorandum dated 17.12.1998 to the pre-1996 pensioners
and accordingly a decision was taken to extend the benefit of revised
pension at certain percentage for the pre-1996 pensioners and higher
percentage for the post 1996 pensioners. Relying upon the decision of
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912             SUPREME COURT REPORTS                           [2019] 9 S.C.R.


A     this Court in D.S. Nakara’s case (supra), by the judgment and order
      dated 24.3.2005, the learned Single Judge allowed the writ petition and
      held the classification between those pensioners who retired prior to
      1996 and those who retired after 1996 as arbitrary and violative of Article
      14 of the Constitution of India and consequently directed the State
      Government to pay the revised pension uniformly to all the pensioners
B
      irrespective of any cut-off date, i.e., those who retired pre-1996 or those
      who retired post-1996.
             2.2. Feeling aggrieved and dissatisfied with the judgment and order
      dated 24.3.2005 passed by the learned Single Judge in Writ Petition (C)
      No. 1455 of 2000, the State preferred appeal before the Division Bench
C     of the High Court. By the impugned judgment and order dated 1.3.2016,
      the Division Bench of the High Court has allowed the said appeal and
      has quashed and set aside the judgment and order passed by the learned
      Single Judge by observing that a classification is permissible and cut-off
      date can be pressed into service depending on financial resources of
D     the State. The Division Bench has held that the cut-off date fixed by the
      State government as 1.1.1996 for payment of revised pension to pre-
      1996 retirees and post-1996 retirees cannot be termed to be unreasonable
      or irrational in the light of Article 14 of the Constitution of India and
      therefore need not be held to be invalid.
E           3. Feeling aggrieved and dissatisfied with the impugned judgment
      and order passed by the Division Bench of the High Court, the original
      writ petitioners have preferred the present appeal.
            4. Shri R. Balasubramanian, learned Senior Advocate has
      appeared for the appellant herein and Shri Sanjay Hegde, learned Senior
F     Advocate has appeared for the State.
             4.1 Shri R. Balasubramanian, learned Senior Advocate appearing
      on behalf of the appellant – Pensioners Association has vehemently
      submitted that in the facts and circumstances of the case, the Division
      Bench of the High Court has materially erred in allowing the appeal and
G     quashing and setting aside the judgment and order passed by the learned
      Single Judge of the High Court and approving the creation of two classes
      of pensioners, viz., pre-1996 and post-1996 for the purpose of revision
      in pension, which is contrary to catena of decisions of this Court including
      the decision of this Court in the case of D.S. Nakara (supra).

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     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                     913
     SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

       4.2 It is further submitted by Shri R. Balasubramanian, learned             A
Senior Advocate appearing on behalf of the appellant – Pensioners
Association that the Division Bench of the High Court has materially
erred in not following the decision of this Court in the case of D.S.
Nakara (supra). It is submitted that the Division Bench of the High
Court has not properly appreciated the fact that the decision of this
                                                                                   B
Court in the case of D.S. Nakara (supra) has not been diluted at all in
any of the subsequent decisions and still holds the field. It is submitted
that the decisions of this Court in the cases of Hari Ram Gupta (D)
through L.R. Kasturi Devi v. State of U.P., reported in (1998) 6 SCC
328; T.N. Electricity Board v. R. Veerasamy & others, reported in
(1999) 3 SCC 414; State of Punjab and others v. Amar Nath Goyal                    C
& others, reported in (2005) 6 SCC 754, which came to be considered
by the Division Bench of the High Court while not following the decision
of this Court in the case of D.S. Nakara (supra) shall not be applicable
to the facts of the case on hand and all the aforesaid decisions are
clearly distinguishable.
                                                                                   D
       4.3 It is further submitted by Shri R. Balasubramanian, learned
Senior Advocate appearing on behalf of the appellant – Pensioners
Association that the Division Bench of the High Court has erred in not
properly appreciating the fact that all the pensioners form only one class
as a whole and therefore they cannot be divided in two/classified into
two groups for the purpose of giving more financial benefits to one group          E
than the other. It is submitted that the State’s financial difficulty/constraint
cannot be a ground to discriminate and/or create two classes who as
such belong to one class only.
        4.4 It is further submitted by Shri R. Balasubramanian, learned
Senior Advocate appearing on behalf of the appellant – Pensioners                  F
Association that the High Court has not properly appreciated the fact
that all the pensioners, whether they have retired pre-1996 or post-1996
are governed by the pension rules and are entitled to pension and therefore
as such they form only one class as a whole and therefore all the
pensioners are entitled to the same pensionary benefitsirrespective of             G
their date of retirement.
      4.5 It is further submitted by Shri R. Balasubramanian, learned
Senior Advocate appearing on behalf of the appellant – Pensioners
Association that as held by this Court in the case of D.S. Nakara (supra)
(para 42), the classification has to be based on some rational principle           H
914             SUPREME COURT REPORTS                            [2019] 9 S.C.R.


A     and the rational principle must have nexus to the objects sought to be
      achieved. It is submitted that if the State Government considered it
      necessary to revise the pension due to the escalation in the cost of living
      and other things, there is no rational principle behind it for granting the
      revised pension only to those who retired post-1996 and simultaneously
      denying the same to those who retired pre-1996. It is vehemently
B
      submitted that if the revision of pension was necessitated due to the
      escalation in the cost of living etc., there is no reason to deny the benefit
      of revised pension to those who retired pre-1996. It is submitted that
      therefore this revision which classified pension into two classes is not
      based on any rational principle. It is submitted that as held by this Court
C     in the case of D.S. Nakara (supra) if the rational principle is the one of
      dividing pensioners with a view to giving something more to persons
      otherwise equally placed, it would be discriminatory. It is submitted that
      this arbitrary division has not only no nexus to the revision in pensionbut
      it is counterproductive and runs counter to the whole gamut of pension
      scheme, more particularly the revision in pension.
D
              4.6 It is further submitted by Shri R. Balasubramanian, learned
      Senior Advocate appearing on behalf of the appellant – Pensioners
      Association that the only justification by the State to create two classes
      for the purposes of payment of revision in pension, viz., those who retired
      pre-1996 and those who retired post-1996 was the financial constraint.
E     It is submitted that the aforesaid has no nexus with the object and purpose
      of revision in pension. It is submitted therefore that such a classification
      is absolutely arbitrary and therefore violative of Articles 14 & 16 of the
      Constitution of India. It is submitted that as such the learned Single
      Judge of the High Court was justified in holding creation of two classes
F     for the purpose of revision in pension as arbitrary and violative of Article
      14 of the Constitution of India.
             4.7 It is further submitted by Shri R. Balasubramanian, learned
      Senior Advocate appearing on behalf of the appellant – Pensioners
      Association that looking to the object and purpose of the revision in
G     pension, namely, increase in the cost of living, the Division Bench of the
      High Court has materially erred in observing and holding that as the
      State does not have the financial resources to pay uniform pension to all
      the retired employees and therefore cut-off date fixed by the State
      Government as 1.1.1996 for payment of revised pension to pre-1996
      retirees and post-1996 retirees cannot be termed to be unreasonable or
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     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                 915
     SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

irrational in the light of Article 14 of the Constitution of India. It is      A
submitted that the aforesaid finding recorded by the Division Bench of
the High Court is just contrary to the decision of this Court in the case of
D.S. Nakara (supra) and other subsequent decisions in which the
decision of this Court in the case of D.S. Nakara(supra) has been
followed.
                                                                               B
        4.8 It is further submitted by Shri R. Balasubramanian, learned
Senior Advocate appearing on behalf of the appellant – Pensioners
Association that in the present case the decision of this Court in the case
of D.S. Nakara (supra) is squarely applicable to the facts of the case.
It is submitted therefore that the Division Bench of the High Court has
materially erred in quashing and setting aside the judgment and order          C
passed by the learned Single Judge in holding the decision of the State
Government creating two groups for the purpose of revision in pension
as arbitrary, unreasonable and violative of Article 14 of the Constitution
of India.
      4.9 Making the above submissions and heavily relying upon the            D
decision of this Court in the case of D.S. Nakara(supra), it is prayed to
allow the present appeal.
      5. The present appeal is vehemently opposed by Shri Sanjay Hegde,
learned Senior Advocate appearing on behalf of the respondent – State.
                                                                               E
       5.1 It is vehemently submitted by Shri Sanjay Hegde, learned Senior
Advocate appearing on behalf of the respondent – State that in the facts
and circumstances of the case and after considering the observations
made by this Court in the cases of Hari Ram Gupta (supra), R.
Veerasamy (supra) and Amar Nath Goyal (supra), the Division Bench
of the High Court has rightly held that the cut-off date fixed by the State    F
Government for the purpose of revised pension cannot be said to be
unreasonable or irrational in the light of Article 14 of the Constitution of
India.
       5.2 It is further submitted by Shri Sanjay Hegde, learned Senior
Advocate appearing on behalf of the respondent – State that the decision       G
of this Court in the case of D.S. Nakara (supra), which has been heavily
relied upon by the learned Senior Advocate appearing on behalf of the
appellant – Pensioners Association, subsequently came to be considered
by this Court and it has been observed that the decision of this Court in
the case of D.S. Nakara (supra) is one of the limited application and
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916            SUPREME COURT REPORTS                           [2019] 9 S.C.R.


A     there is no scope for enlarging the ambit of that decision to cover all
      schemes made by the retirees or a demand for an identical amount of
      pension irrespective of the date of retirement. In support of his above
      submission, Shri Sanjay Hegde, learned Senior Advocate appearing on
      behalf of the respondent – State has heavily relied upon the decisions of
      this Court in the cases of Indian Ex-Services League v. Union of
B
      India, reported in (1991) 2 SCC 104, Union of India v. P.N. Menon,
      reported in (1994) 4 SCC 68 and State of Rajasthan v. Amrit Lal
      Gandhi, reported in (1997) 2 SCC 342.
             5.3 Shri Sanjay Hegde, learned Senior Advocate appearing on
      behalf of the respondent – State has also heavily relied upon some of the
C     observations made by this Court in the case of Kallakkurichi Taluk
      Retired Officials Association, Tamil Nadu and others v. State of Tamil
      Nadu, reported in (2013) 2 SCC 772in support of his submission that
      financial constraint can be a valid ground to grant the benefit of revised
      pension to some of the pensioners and it is always open to the State
D     Government looking to its own financial constraint to grant the benefit of
      revised pension by providing the cut-off date. It is submitted therefore
      that such a classification and/or creation of two groups for the purpose
      of granting the benefit of revised pension cannot be said to be
      unreasonable, irrational and violative of Article 14 of the Constitution of
      India as sought to be contended on behalf of the Pensioners Association.
E
            5.4 Making the above submissions and relying upon the aforesaid
      decisions, it is prayed to dismiss the present appeal.
             6. We have heard the learned Senior Advocates for the respective
      parties at length.
F             6.1 It is not in dispute that the State of Manipur has adopted the
      Central Civil Services (Pension) Rules to be applicable to the State of
      Manipur. Therefore, all the government servants retired in accordance
      with the provisions of the Pension Rules and after completing qualifying
      service are entitled to the pension/pensionary benefits. It appears that
G     considering the increase in the cost of living, the State Government
      enhanced/revised the pension of its employees with effect from 1.1.1996
      as in the case of Central Government employees. However, this revision
      in pension was done differently, viz., for employees who retired prior to
      1.1.1996 and for employees who retired after 1.1.1996. Consequently,
      the State provided a lower percentage of increase to those who retired
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     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                    917
     SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

pre-1996 and provided higher percentage of increase to those who retired          A
post-1996. The learned Single Judge of the High Court held that such a
classification is not permissible in law keeping in mind the equality clause
of the Constitution. However, on an appeal, by the impugned judgment
and order, the Division Bench of the High Court has reversed the decision
of the learned Single Judge and has observed and held that as in the
                                                                                  B
present case the State does not have the financial resources to pay
uniform pension to all the retired employees, the cut-off date fixed by
the State Government as 1.1.1996 for payment of revised pension to
pre-1996 retirees and post-1996 retirees cannot be termed to be
unreasonable and irrational in the light of Article 14 of the Constitution
of India. While passing the impugned judgment and order, the Division             C
Bench of the High Court has not followed the decision of this Court in
the case of D.S. Nakara (supra), considering some of the observations
made by this Court in the subsequent decisions in the cases of R.
Veerasamy (supra); Amar Nath Goyal(supra) and P.N. Menon (supra)
to the effect that the decision in the case of D.S. Nakara (supra) is one
                                                                                  D
of the limited application and there is no scope for enlarging the ambit of
that decision to cover all schemes made by the retirees or a demand for
an identical amount of pension irrespective of the date of retirement.
      6.2 Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the Division Bench of the High Court, the original
writ petitioners – All Manipur Pensioners Association – employees/                E
pensioners who retired pre-1996 have preferred the present appeal.
       7. The short question which is posed for consideration before this
Court is, whether in the facts and circumstances of the case, the decision
of this Court in the case of D.S. Nakara (supra) shall be applicable or
not, and in the facts and circumstances of the case and solely on the             F
ground of financial constraint, the State Government would be justified
in creating two classes of pensioners, viz., pre-1996 retirees and post-
1996 retirees for the purpose of payment of revised pension and whether
such a classification is arbitrary, unreasonable and violative of Article 14
of the Constitution of India or not?                                              G
       7.1 At the outset, it is required to be noted that in the present case,
the State Government has justified the cut-off date for payment of revised
pension solely on the ground of financial constraint. On no other ground,
the State tried to justify the classification. In the backdrop of the aforesaid
                                                                                  H
918             SUPREME COURT REPORTS                           [2019] 9 S.C.R.


A     facts, the aforesaid question posed for consideration before this Court is
      required to be considered.
             7.2 It is not in dispute that the State Government has adopted the
      Central Civil Services (Pension) Rules, to be applicable to the State of
      Manipur. The State has also come out with the Manipur Civil Services
B     (Pension) Rules, 1977. It is also not in dispute that subject to completing
      the qualifying service the government servants retired in accordance
      with the pension rules are entitled to pension. Therefore, as such, all the
      pensioners form only one homogeneous class. Therefore, it can be said
      that all the pensioners form only one class as a whole. Keeping in mind
      the increase in the cost of living, the State Government increased the
C     quantum of pension and even pay for its employees. The State
      Government also enhanced the scales of pension/quantum of pension
      with effect from 1.1.1996 keeping in mind the increase in the cost of
      living. However, the State Government provided the cut-off date for the
      purpose of grant of benefit of revised pension with effect from 1.1.1996
D     to those who retired post-1996 and denied the revision in pension to
      those who retired pre-1996. The aforesaid classification between these
      pensioners who retired pre-1996 and post-1996 for the purpose of grant
      of benefit of revision in pension is the subject matter of this appeal. As
      observed hereinabove, the aforesaid classification is sought to be justified
      by the State Government solely on the ground of financial constraint.
E
            7.3 At the outset, it is required to be noted that in the case of
      D.S.Nakara (supra), such a classification is held to be arbitrary,
      unreasonable, irrational and violative of Article 14 of the Constitution of
      India. In paragraphs 42 and 65, this Court in the case of D.S. Nakara
      (supra) has observed and held as under:
F
            “42. If it appears to be undisputable, as it does to us that the
            pensioners for the purpose of pension benefits form a class, would
            its upward revision permit a homogeneous class to be divided by
            arbitrarily fixing an eligibility criteria unrelated to purpose of
            revision, and would such classification be founded on some rational
G           principle? The classification has to be based, as is well settled, on
            some rational principle and the rational principle must have nexus
            to the objects sought to be achieved. We have set out the objects
            underlying the payment of pension. If the State considered it
            necessary to liberalise the pension scheme, we find no rational
H
ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                   919
SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

principle behind it for granting these benefits only to those who           A
retired subsequent to that date simultaneously denying the same
to those who retired prior to that date. If the liberalisation was
considered necessary for augmenting social security in old age to
government servants then those who, retired earlier cannot be
worst off than those who retire later. Therefore, this division which
                                                                            B
classified pensioners into two classes is not based on any rational
principle and if the rational principle is the one of dividing pensioners
with a view to giving something more to persons otherwise equally
placed, it would be discriminatory. To illustrate, take two persons,
one retired just a day prior and another a day just succeeding the
specified date. Both were in the same pay bracket, the average              C
emolument was the same and both had put in equal number of
years of service. How does a fortuitous circumstance of retiring
a day earlier or a day later will permit totally unequal treatment in
the matter of pension? One retiring a day earlier will have to be
subject to ceiling of Rs 8100 p.a. and average emolument to be
                                                                            D
worked out on 36 months’ salary while the other will have a ceiling
of Rs 12,000 p.a. and average emolument will be computed on
the basis of last 10 months’ average. The artificial division stares
into face and is unrelated to any principle and whatever principle,
if there be any, has absolutely no nexus to the objects sought to be
achieved by liberalising the pension scheme. In fact this arbitrary         E
division has not only no nexus to the liberalised pension scheme
but it is counter-productive and runs counter to the whole gamut
of pension scheme. The equal treatment guaranteed in Article 14
is wholly violated inasmuch as the pension rules being statutory in
character, since the specified date, the rules accord differential
                                                                            F
and discriminatory treatment to equals in the matter of commutation
of pension. A 48 hours’ difference in matter of retirement would
have a traumatic effect. Division is thus both arbitrary and
unprincipled. Therefore, the classification does not stand the test
of Article 14.
65. That is the end of the journey. With the expanding horizons of          G
socio-economic justice, the Socialist Republic and welfare State
which we endeavour to set up and largely influenced by the fact
that the old men who retired when emoluments were comparatively
low and are exposed to vagaries of continuously rising prices, the
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920            SUPREME COURT REPORTS                             [2019] 9 S.C.R.


A           falling value of the rupee consequent upon inflationary inputs, we
            are satisfied that by introducing an arbitrary eligibility criterion:
            “being in service and retiring subsequent to the specified date”
            for being eligible for the liberalised pension scheme and thereby
            dividing a homogeneous class, the classification being not based
            on any discernible rational principle and having been found wholly
B
            unrelated to the objects sought to be achieved by grant of liberalised
            pension and the eligibility criteria devised being thoroughly arbitrary,
            we are of the view that the eligibility for liberalised pension scheme
            of “being in service on the specified date and retiring subsequent
            to that date” in impugned memoranda, Exs. P-1 & P-2, violates
C           Article 14 and is unconstitutional and is struck down. Both the
            memoranda shall be enforced and implemented as read down as
            under: In other words, in Ex. P-1, the words:
             “that in respect of the government servants who were in service
            on March 31, 1979 and retiring from service on or after that date”
D           and in Ex. P-2, the words:
              “the new rates of pension are effective from April 1, 1979 and
            will be applicable to all service officers who became/become non-
            effective on or after that date”

E           are unconstitutional and are struck down with this specification
            that the date mentioned therein will be relevant as being one from
            which the liberalised pension scheme becomes operative to all
            pensioners governed by 1972 Rules irrespective of the date of
            retirement. Omitting the unconstitutional part it is declared that all
            pensioners governed by the 1972 Rules and Army Pension
F           Regulations shall be entitled to pension as computed under the
            liberalised pension scheme from the specified date, irrespective
            of the date of retirement. Arrears of pension prior to the specified
            date as per fresh computation is not admissible. Let a writ to that
            effect be issued. But in the circumstances of the case, there will
G           be no order as to costs.”
            7.4 While the aforesaid decision of this Court in the case of D.S.
      Nakara (supra) was relied upon by the appellant herein and as such
      which came to be considered and followed by the learned Single Judge,

H
     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                921
     SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

the Division Bench considering some of the observations made in the           A
cases of Hari Ram Gupta (supra); R. Veerasamy (supra); Amar
Nath Goyal(supra) and P.N. Menon (supra), has observed and held
that the decision of this Court in the case of D.S. Nakara(supra) is one
of the limited application and there is no scope for enlarging the ambit of
that decision to cover all schemes made by the retirees or a demand for
                                                                              B
an identical amount of pension irrespective of the date of retirement.
However, by not following the decision of this Court in the case of
D.S. Nakara (supra), considering some of the observations made by
this Court in the aforesaid decisions, namely P.N.Menon(supra) and
other decisions, the Division Bench of the High Court has not at all
considered the distinguishable facts in the aforesaid decisions.              C
       7.5 In the case of P.N. Menon(supra), the controversy was
altogether different one. The factual position that needs to be highlighted
insofar as P.N. Menon (supra) is concerned, is that the retired
employees had never been in receipt of “dearness pay” when they retired
from service and therefore the O.M. in question could not have been           D
applied to them. This is how this Court examined the matter. This Court
also noticed that prior to the O.M. in question, the pension scheme was
contributory and only with effect from 22.9.1977, the pension scheme
was made non-contributory. Since the respondent employees in the first
cited case were not in service at the time of introducing the same they
were held not eligible for the said benefit. Therefore, the said decision     E
shall not be applicable to the facts of the case on hand, more particularly
while considering and/or applying the decision of this Court in the case
of D.S. Nakara (supra).
      7.6 In the case of Amrit Lal Gandhi (supra), pension was
introduced for the first time for the University teachers based on the        F
resolution passed by the Senate and Syndicate of Jodhpur
        University. The same was approved by the State Government
with effect from 1.1.1990. Therefore, the controversy was not between
one set of pensioners alleging discriminatory treatment as against another
set of pensioners. There were no pensioners to begin with. The retirees       G
were entitled to provident fund under the existing provident fund scheme.
The question of discrimination between one set of pensioners from another
set of pensioners did not arise in the said decision. With the aforesaid
facts, this Court observed that financial viability is a relevant issue.
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922             SUPREME COURT REPORTS                            [2019] 9 S.C.R.


A            7.7 Similarly, the decision of this Court in the case of Indian Ex-
      Services League (supra) also shall not be applicable to the facts of the
      case on hand. The facts in this case and the facts in the case of D.S.
      Nakara (supra) are clearly distinguishable. In the case of Indian Ex-
      Services League (supra), the dispute was with respect to PF retirees
      and Pension retirees and to that it was held that PF retirees and Pension
B
      retirees constitute different classes and therefore this Court distinguished
      the decision of this Court in the case of D.S. Nakara (supra). Therefore,
      the aforesaid decision shall not be applicable to the facts of the case on
      hand at all.
             7.8 Similarly, the decisions of this Court in the cases of Hari Ram
C     Gupta (supra) and Kallakkurichi Taluk Retired Officials
      Association, Tamil Nadu (supra) also shall not be applicable to the
      facts of the case on hand.
             7.9 In view of the above, we are satisfied that none of the
      judgments, relied upon by the learned Senior Advocate for the respondent
D     – State, has any bearing to the controversy in hand. The Division Bench
      of the High Court has clearly erred in not appreciating and/or considering
      the distinguishable facts in the cases of Hari Ram Gupta (supra); R.
      Veerasamy (supra); Amar Nath Goyal (supra); P.N. Menon (supra)
      and Amrit Lal Gandhi (supra).
E            8. Even otherwise on merits also, we are of the firm opinion that
      there is no valid justification to create two classes, viz., one who retired
      pre-1996 and another who retired post-1996, for the purpose of grant of
      revised pension, In our view, such a classification has no nexus with the
      object and purpose of grant of benefit of revised pension. All the
F     pensioners form a one class who are entitled to pension as per the pension
      rules. Article 14 of the Constitution of India ensures to all equality before
      law and equal protection of laws. At this juncture it is also necessary to
      examine the concept of valid classification. A valid classification is truly
      a valid discrimination. It is true that Article 16 of the Constitution of
      India permits a valid classification. However, a very classification must
G     be based on a just objective. The result to be achieved by the just
      objective presupposes the choice of some for differential consideration/
      treatment over others. A classification to be valid must necessarily satisfy
      two tests. Firstly, the distinguishing rationale has to be based on a just
      objective and secondly, the choice of differentiating one set of persons
H     from another, must have a reasonable nexus to the objective sought to
     ALL MANIPUR PENSIONERS ASSOCIATION BY ITS                                  923
     SECRETARY v. STATE OF MANIPUR [M.R. SHAH, J.]

be achieved. The test for a valid classification may be summarised as a         A
distinction based on a classification founded on an intelligible differentia,
which has a rational relationship with the object sought to be achieved.
Therefore, whenever a cut-off date (as in the present controversy) is
fixed to categorise one set of pensioners for favourable consideration
over others, the twin test for valid classification or valid discrimination
                                                                                B
therefore must necessarily be satisfied. In the present case, the
classification in question has no reasonable nexus to the objective sought
to be achieved while revising the pension. As observed hereinabove, the
object and purpose for revising the pension is due to the increase in the
cost of living. All the pensioners form a single class and therefore such
a classification for the purpose of grant of revised pension is unreasonable,   C
arbitrary, discriminatory and violative of Article 14 of the Constitution of
India. The State cannot arbitrarily pick and choose from amongst
similarly situated persons, a cut-off date for extension of benefits
especially pensionary benefits.There has to be a classification founded
on some rational principle when similarly situated class is differentiated
                                                                                D
for grant of any benefit.
        8.1 As observed hereinabove, and even it is not in dispute that as
such a decision has been taken by the State Government to revise the
pension keeping in mind the increase in the cost of living. Increase in
the cost of living would affect all the pensioners irrespective of whether
they have retired pre-1996 or post-1996. As observed hereinabove, all           E
the pensioners belong to one class. Therefore, by such a classification/
cut-off date the equals are treated as unequals and therefore such a
classification which has no nexus with the object and purpose of revision
of pension is unreasonable, discriminatory and arbitrary and therefore
the said classification was rightly set aside by the learned Single Judge       F
of the High Court. At this stage, it is required to be observed that whenever
a new benefit is granted and/or new scheme is introduced, it might be
possible for the State to provide a cut-off date taking into consideration
its financial resources. But the same shall not be applicable with respect
to one and single class of persons, the benefit to be given to the one
class of persons, who are already otherwise getting the benefits and the        G
question is with respect to revision.
       9. In view of the above and for the reasons stated above, we are
of the opinion that the controversy/issue in the present appeal is squarely
covered by the decision of this Court in the case of D.S. Nakara (supra).
                                                                                H
924             SUPREME COURT REPORTS                           [2019] 9 S.C.R.


A     The decision of this Court in the case of D.S. Nakara (supra) shall be
      applicable with full force to the facts of the case on hand. The Division
      Bench of the High Court has clearly erred in not following the decision
      of this Court in the case of D.S. Nakara (supra) and has clearly erred
      in reversing the judgment and order of the learned Single Judge. The
      impugned judgment and order passed by the Division Bench is not
B
      sustainable and the same deserves to be quashed and set aside and is
      accordingly quashed and set aside. The judgment and order passed by
      the learned Single Judge is hereby restored and it is held that all the
      pensioners, irrespective of their date of retirement, viz. pre-1996 retirees
      shall be entitled to revision in pension at par with those pensioners who
C     retired post-1996. The arrears be paid to the respective pensioners
      within a period of three months from today.
             10. The instant appeal is allowed accordingly. However, in the
      facts and circumstances of the case, there shall be no order as to costs.

D
      Divya Pandey                                                  Appeal allowed.




E




F




G




H