Holding

The distinction between pre‑ and post‑1 Nov 2002 retirees is justified as each class is governed by distinct parameters, and the High Court’s order for a uniform dearness relief rate is set aside.

Summary

The case concerned the computation of dearness relief (DA) on pension for United Bank of India retirees. The retirees argued that the bank’s practice of granting a higher, tapering DA rate to those who retired before 1 Nov 2002 and a lower flat rate of 0.18% to post‑Nov 2002 retirees was arbitrary and violated the 1993 settlement and Article 14. The Calcutta High Court held the distinction unjustified and ordered uniform DA for all retirees. On appeal, the Supreme Court examined the Appendix II of the 1995 Pension Regulations, the 2005 and 2010 Bipartite Settlements, and RBI circulars, concluding that the two groups are governed by different formulae and parameters and that a flat‑rate uniformity would render the scheme unworkable. Consequently, the High Court’s decision was set aside. The appeals were allowed and the writ petition dismissed.

Issues considered

The validity of the distinction between pre‑1 Nov 2002 and post‑1 Nov 2002 retirees for dearness relief computation.
Whether the Bipartite Settlements and Appendix II of the Pension Regulations require a uniform dearness relief rate for all retirees.
Whether the RBI circulars on dearness relief override the bank’s obligations under the settlements.
Whether the classification of retirees violates Article 14 of the Constitution.

Legislation cited

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970s. 19(2)(f)

Subjects

dearness reliefpensionretireesclassificationArticle 14Bipartite SettlementBanking Regulationsservice lawequal treatment

Judgment

436 [2018]REPORTS
SUPREME COURT 5 S.C.R. 436 [2018] 5 S.C.R.

A UNITED BANK OF INDIA AND OTHERS
v.
UNITED BANK OF INDIA RETIREES’ WELFARE
ASSOCIATION AND OTHERS ETC.
(Civil Appeal Nos. 5252-5255 of 2018)
B
MAY 16, 2018
[ADARSH KUMAR GOEL AND UDAY UMESH LALIT, JJ.]
Service law: Pension – Dearness allowance – Claim of retirees
for full compensation against price rise on dearness relief –
C Grievance of retirees was that appellant-bank made distinction in
terms of dearness relief on the basis of dates of retirement of
pensioners and that denial of benefit of full dearness relief to retirees
prior to 1.11.2002 was arbitrary – High Court held that there was
no justification for making distinction between pre November 2002
D retirees and post November 2002 retirees and the appellant must
pay dearness relief to all pensioners at the same rate – Aggrieved,
Banks appealed – Held: Each class is governed by distinct and
different parameters – The conferral of advantages of benefits on
two different classes of retirees has a completely distinct formula
and rates and it is not possible to have a synthesis on any count or
E to put both the sets of retirees on any common parameters – It is
thus hazardous to adopt a flat rate – Any attempt to tinker with
either the formula or the rate would make the whole scheme
unworkable – Both the categories of retirees, namely, pre November
2002 and post November, 2002 stand on different footing, the
F parameters which govern the computation of dearness relief are
also on a different level – High Court failed to appreciate these
aspects – The impugned judgment was completely erroneous and is
set aside.
Allowing the appeals and dismissing writ petition, the Court
G HELD: 1.1 Appendix II to the Pension Regulations had
categorized employees in three different segments and the
dearness relief payable on basic pension in respect of employees
in these three categories was on the basis of tapering formula
which differed in each of the categories. In respect of those who
were in the first category i.e. those who had retired earliest, the
H
436
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 437
RETIREES’ WELFARE ASSO.

dearness relief was 0.67% on the first slab namely upto A
Rs.1250/- of basic pension. The rate then tapered and finally
was 0.17% of basic pension in excess of Rs.2130/-. At the same
time in respect of retirees in the second category, the rate of
dearness relief was 0.35 per cent in respect of first slab namely
upto Rs.2400/-. Here also the dearness relief was on a tapering
B
formula and finally was 0.09% of basic pension in excess of
Rs.4100/-. The third category which was in respect of employees
who retired after 01.04.1998, the rate was 0.25% for the first
slab upto Rs.3380/-. Going by the tapering formula, the rate was
0.06 per cent of the basic pension in excess of Rs.5770/-. If
Clause 7(2) of the 9th Bipartite Settlement dated 27.04.2010 is C
compared with the last category of the Appendix II of the Pension
Regulations, there is hardly any change in respect of retirees
during the period 01.04.1998 to 31.10.2002. Thus, whatever
benefit was conferred and was enjoyable by the employees who
retired before November 2002 was not taken away. [Para 21]
D
[464-G-H; 465-A-D]
1.2 If both categories dealt with by 9th Bipartite Settlement
dated 27.04.2010 are further compared, the retirees prior to
01.11.2002 would be entitled to dearness relief on a tapering
formula where the initial slab upto Rs.3550/- is to be governed
by quotient of 0.24%. The tapering formula then ends with 0.06% E
of basic pension in excess of Rs.6010/-. The starting point is at a
level of 0.24% while the end point tapers to 0.06%. The maximum
advantage is sought to be given to those who are getting basic
pension at lower levels of slab who would get the dearness relief
at 0.24%. As against this, the retirees after 01.11.2002 are to be F
given dearness relief at a flat rate of 0.18% of the basic pension.
Theoretically, the starting level for the retirees prior to 01.11.2002
is at a higher level of 0.24% as against the retirees after
01.11.2002. It could possibly be said that for those who are with
basic pension in the region of Rs.6000/-, on the basis of a tapering
formula may well, in the ultimate analysis, average to the same G
level of 0.18%.[Para 22] [465-E-G]
2. The parity that was sought in the petition was not so
much regarding applicability of same rate of 0.18% but was in
respect of “flat rate” idea. The calculation of dearness allowance
H
438 SUPREME COURT REPORTS [2018] 5 S.C.R.

A of Rs.14274/- on basic pension of Rs.7880/- in the case of
Santipriya Roy is in keeping with tapering formula as given in the
Bipartite Settlement dated 27.04.2010. The tabular chart then
proceeds to calculate full compensation on account of dearness
allowance with slab rate of 0.24% on the entire basic pension of
Rs.7880/- which figure comes to Rs.18912/-. Thus the submission
B
was that the dearness relief be computed on 0.24% for the entirety
of basic pension and not just for the first slab upto Rs.3550/-.
But such calculation completely disregards that rate which is a
flat rate applicable in case of post 01.11.2002 retirees is not 0.24%
for the entire amount of basic pension but at a different level of
C 0.18% and the threshold requirement of quarterly average of
the Index is also different. If we were to simply borrow the same
rate of 0.18% in the case of retirees prior to 01.11.2002, the
concerned retirees may well be at a disadvantage. For instance,
the basic pension of Rs. 7880/- of said Santipriya Roy would yield
a figure of Rs. 14184/- with flat rate of 0.18%. It will not therefore
D
be correct to adopt and apply the same rate as is made applicable
in case of post 01.11.2002 retirees. [Para 23] [465-G-H; 466-A-C]
3. The tapering formula undoubtedly begins with 0.24%
for the first segment of Rs.3550/- of basic pension and then
progressively steps down and finally reaches the level of 0.06%
E where the basic pension is in excess of Rs.6010/-. What is devised
by way of such tapering formula is higher rate at the lower levels
of segments so that larger number of peoples would get maximum
advantage and the rate thereafter keeps stepping down. The
benefit which is sought to be conferred by the tapering formula
F lies in the averaging which comes to near about the same quantum
as is given to the post 01.11.2002 retirees. No illustration has
been placed on record to submit that even with 0.18% dearness
allowance those who retired after November 2002 walk away with
substantially greater advantage as against pre November 2002
retirees. Each class is governed by distinct and different
G parameters. Both classes are distinct and do not form a
homogenous group. It would be extremely difficult and hazardous
to adopt a flat rate as is sought to be projected. [Para 24] [466-E-
G; 467-A-B]
4. Any attempt to tinker with either the formula or the rate
H would make the whole scheme unworkable. It is true that the
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 439
RETIREES’ WELFARE ASSO.

tapering formula was done away with by Reserve Bank of India A
but that by itself cannot entitle the retirees prior to 01.11.2002
either to be conferred the advantage at the same rate made
applicable by Reserve Bank of India or at the flat rate of 0.24%
as was sought to be projected. [Para 25] [467-C, E]
Indian Ex-Services League and Others v. Union of India B
and Others (1991) 2 SCC 104 : [1991] 1 SCR 158;
Union of India v. P. N. Menon and Others (1994) 4
SCC 68; Kunhayammed and Others v. State of Kerala
and Another (2000) 6 SCC 359 : [2000] 1 Suppl. SCR
538 – relied on.
C
D. S. Nakara v. Union of India (1983) 1 SCC 305 :
[1983] 2 SCR 165; Kallakkurichi Taluk Retired
Officials Association Tamil Nadu and others v. State of
Tamil Nadu (2013) 2 SCC 772 : [2013] 4 SCR 883;
Krishena Kumar v. Union of India and Others (1990) 4
SCC 207 : [1990] 3 SCR 352; State of Punjab v. Justice D
S. S. Dewan (Retired Chief Justice) and Others (1997)
4 SCC 569 : [1997] 3 SCR 1027; Col. B. J. Akkara
(Retd.) v. Government of India and Others (2006) 11
SCC 709 : [2006] 7 Suppl. SCR 58– referred to.
Case Law Reference E

[2013] 4 SCR 883 referred to Para 12
[1990] 3 SCR 352 referred to Para 13
[1991] 1 SCR 158 relied on Para 19 F
(1994) 4 SCC 68 relied on Para 19
[1997] 3 SCR 1027 referred to Para 19
[2006] 7 Suppl. SCR 58 referred to Para 19
G
[2013] 4 SCR 883 referred to Para 19
[2000] 1 Suppl. SCR 538 relied on Para 19
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5252-
5255 of 2018
H
440 SUPREME COURT REPORTS [2018] 5 S.C.R.

A From the Judgment and Final Order dated 26.09.2016 read with
Order dated 05.12.2016 of the High Court at Calcutta in APO No. 315
of 2015, APO No. 316 of 2015 and RVWO No. 57 of 2016 respectively.
Dhruv Mehta, V. K. Bali, Jitendra Sharma, A.S. Nambiar, Ms. V.
Mohana, Sr. Advs., Rajesh Kumar, Gaurav Kumar Singh, Rakesh
B Chaurasiya, Bhumit Solanki, M/s Mitter & Mitter Co., Arun K. Sinha,
P.N. Jha, Ms. Richa Nayak, Ms. Ritu Puri, Aditya Soni, Sumit Sinha,
Sinha Shrey Nikhilesh, Harsh B., Sewa Ram, C.S. Waliya, P. K. Manohar,
Rajshekhar Rao, Kotla Harshvardhan, Ms. Amita Singh Kalkal,
Ms. Aditi Gupta, Advs. for the appearing parties.
C The Judgment of the Court was delivered by
UDAY UMESH LALIT, J. 1. Leave granted.
2. These appeals by special leave are directed against (i) the
common Judgment and Final Order dated 26.09.2016 passed by the High
Court at Calcutta in APO Nos.315 and 316 of 2015; and (ii) against the
D order dated 05.12.2016 passed by the High Court at Calcutta in RVWO
Nos.57 and 58 of 2016 in aforementioned APO Nos.315 and 316 of
2015. By its Judgment and Orders under appeal, the High Court held
that there was no justification for making a distinction between pre
November, 2002 retirees and post November, 2002 retirees and the
E appellant must pay dearness relief to all pensioners at the same rate.
3. A Memorandum of Settlement dated 29.10.1993 was entered
into between the managements of 58 banks as represented by the Indian
Banks’ Association on one hand and their workmen as represented by
the All India Bank Employees’ Association on the other. Said
F memorandum recited that the parties had agreed to introduce pension
scheme in banks for the workmen/employees in lieu of employers’
contribution to the provident fund and that the pension scheme so agreed
was to be broadly on Central Government/Reserve Bank of India pattern.
Paragraph 6 of the memorandum dealt with Dearness Allowance relief
to the pensioners and it stipulated:
G
“Dearness relief to pensioners will be granted at such rates as
may be determined from time to time in line with the Dearness
Allowance formula in operation in Reserve Bank of India”
4. In exercise of powers conferred by Clause (f) of sub-Section
(2) of Section 19 of Banking Companies (Acquisition and Transfer of
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 441
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

Undertakings) Act, 1970, the Board of Directors of the Union Bank of A
India after consultation with the Reserve Bank of India and with the
previous sanction of the Central Government made “Union Bank of India
(Employees’) Pension Regulations, 1995 (hereinafter referred to as the
“Pension Regulations”). Paragraph 2(d) defined “average emoluments”
to be the average of pay drawn by an employee during last 10 months of
B
service in the bank while Para 2(s) defined “pay”. Para 37 of the Pension
Regulations was as under:
“Dearness Relief- (1) Dearness relief shall be granted on basic
pension or family pension or invalid Pension or on compassionate
allowance in accordance with the rates specified in Appendix II.”
C
Appendix II to the Pension Regulations dealt with Dearness
Allowance on basic pension. It categorized employees as under:-
“(a) Those workmen who had retired on or after 01.01.1986 and
before 01.11.1992 and those officers who had retired on or
after 01.01.86 but before 01.07.1993. D
(b) Those workmen who retired on or after 01.11.1992 and officers
who retired on or after 01.07.1993 and
(c) Those employees who would retire on or after 01.04.1998.”
Different rates of Dearness Allowance relief as percentage of
E
basic pension were prescribed in respect of aforesaid three categories
in said appendix II as under:
“APPENDIX-II
(See Regulation 37)
Dearness relief on basic pension shall be as under: F

(1) In the case of employees who were in the workmen cadre
and who retired on or after the 1st day of January, 1986, but
before the 1st day of November, 1992; and in the case of employees
who were in the officers cadre and who retired on or after the
1st day of January, 1986, but before the 1st day of July, 1993, G
dearness relief shall be payable for every rise or be recoverable
for every fall, as the case may be, of every 4 points over 600
points in the quarterly average of the all India Average Consumer
Price Index for Industrial Workers in the series 1960 = 100. Such
H
442 SUPREME COURT REPORTS [2018] 5 S.C.R.

A increase or decrease in dearness relief for every said four points
shall be calculated in the manner given below:-

Scale of basic pension The rate of dearness relief as a per
month percentage of basic
(1) pension
B (2)
(i) Up to Rs. 1250 0.67 per cent.
(ii) Rs.1251 to Rs. 2000 0.67 per cent of Rs. 1250 plus
0.55 per cent of basic pension in
excess of Rs. 1250.
(iii) Rs. 2001 t o Rs.2130 0.67 per cent of Rs. 1250 plus
C
0.55 per cent of the difference
between Rs. 2000 and Rs. 1250
plus 0.33 per cent of basic
pension in excess of Rs. 2000.
(iv) Above Rs.2130 0.67 per cent of Rs.1250 plus
D 0.55 per cent of the difference
between Rs. 2000 and Rs. 1250
plus 0.33 per cent of the
difference between Rs. 2130 &
Rs. 2000 plus 0.17 per cent of
basic pension in excess of Rs. Sc
E 2130. Pe
(2) In the case of employees who are in workmen cadre and who
retire on or after 1st day of November, 1992; and in the case of (i
employees who are in the officers’ cadre and who retire on or (ii
after 1st day of July, 1993, dearness relief shall be payable for
F every rise or be recoverable for every fall, as the case may be, of
every 4 points over 1148 points in the quarterly average of All (ii
India Average Consumer Price Index for Industrial workers in
the series 1960=100. Such increase or decrease in dearness relief
for every said four points shall be calculated in the manner given
G below: (i v

Scale of basic pension The rate of dearness relief as a per
Per month month percentage of basic pension

(1) (2)
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 443
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

(i ) Up to Rs .2400 0.35 per cent. A
(ii ) Rs.2401 t o 0.35 per cent of Rs .2400 plus 0.29
Rs.3850 per cent of b asic pension in excess
as a per of R s.2400.
basic (ii i) Rs.3851 to 0.35 per cent of Rs .2400 plus 0.29
Rs.4100 per cent of the difference between
R s.38 50 and Rs.2400 plus 0.1 7 per B
cent of basic p ension in excess of
R s.38 50.
0 plus (i v)Above Rs.4100 0.35 per cent of Rs .2400 plus 0.29
sion in per cent of the difference between
R s.38 50 and Rs.2400 plus 0.1 7 per
0 plus cent of the difference between
R s.41 00 & Rs. 3850 Plus 0.09 per C
ference
. 1250 cent of basic p ension in excess of
R s.41 00.
basic
00. 3. In the case of employees who retire on or after the 1st day of
0 plus April, 1998, dearness relief shall be payable for every rise or be
ference recoverable for every fall, as the case may be, of every 4 points over D
. 1250 1616 points in the quarterly average of the All India Average Consumer
of the Price Index for Industrial workers in the series 1960=100. Such increase
130 & or decrease in dearness relief for every said four points shall be calculated
cent of in the manner given below:
of Rs. Scale o f basic pens ion The rat e of dearness relief as a per
Per m onth mo nth percentage of basic pension E
(1) (2)

(i ) Up to Rs. 3380 0.2 5 per cen t.
(ii ) Rs. 3381 t o 0.2 5 per cent of R s.3380 plus 0.21
Rs. 5420 per cent of basic pensio n in excess
of Rs.3 380. F
(ii i) Rs. 5421 t o 0.2 5 per cen t of Rs . 3380 plu s 0.21
Rs. 5770 per cen t of the differen ce bet ween
Rs.5420 and Rs.3 38 0 plus 0.12 per
cent of basic pension in excess of
Rs.5420.
(i v) Above Rs.5770 0.2 5 per cent of R s.3380 plus 0.21 G
per cen t of the differen ce bet ween
a per Rs.5420 and Rs.3 38 0 plus 0.12 per
nsion cent of the differen ce between
Rs.5770 & Rs. 542 0 Plus 0.06 per
cent of basic pension in excess of
Rs.5770. H
444 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 5. On 02.06.2005 a Bipartite Settlement was arrived at between
the managements of 50 banks, represented by the Indian Banks’
Association on one hand and their workmen, represented by the All
India Bank Employees’ Association, National Federation of Bank
Employees, Bank Employees’ Federation of India, Indian National Bank
Employees’ Federation and National Association of Bank Workers on
B
the other. It was inter alia recited:
“(D) The AIBEA, NCBE, BEFI, INBEF and NOBW (hereafter
jointly called the Unions) submitted their Charter of Demands on
various dates between 10th June 2002 and 5th September 2002
for revision in wages and other service conditions of workmen to
C IBA and requested for negotiations on the same, with a view to
arriving at an amicable settlement.
(E) Simultaneously, IBA also raised with the Unions, issues on
behalf of the managements of banks concerned, to be discussed
and settled with a view to improving efficiency of operations,
D customer service, utilisation of manpower, discipline and
maintaining harmonious industrial relations.
(F) The parties initially agreed after negotiations that the total
quantum of wage increase arising out of a Settlement to be signed
in this regard shall be Rs.1,288 crores per annum including the
E cost of superannuation benefits and accordingly exchanged
rd
minutes on 23 November 2004 at Mumbai. It is agreed that for
the purpose of this settlement, the additional cost of pension be
shared between the parties at the ratio as agreed and pension
costed accordingly.”
F Para 7 of the Settlement dealt with Dearness Allowance which
was provided at following rates:
“1. (i) Subordinate Staff
0.18% of ‘pay’
G (ii) Clerical Staff
(a) 0.18% of ‘pay’ upto Rs.9,650/- plus
(b) 0.15% of ‘pay’ above Rs.9,650/- and upto Rs.15,350/-
plus

H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 445
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

(c) 0.09% of ‘pay’ above Rs.15,350/- and upto Rs.16,350/-. A
(d) 0.04% of ‘pay’ above Rs.16,350/-.
st
2. On and from 1 February, 2005, Dearness Allowance shall
be payable at 0.18% of Pay.”
Para 38 provided for implementation of various provisions of the B
Settlement and insofar as “Dearness Allowance- Single Slab Rate (0.18%
of pay)”, the date of implementation was stated to be 01.02.2005.
6. On 02.06.2005 itself, a Joint Note with caption, “Salary Revision
for Officers–Conclusion of Discussions between the Indian Banks and
the Officers’ Association” was prepared. It recited, “The representatives C
of the Officers’ Associations have also agreed that the existing service
conditions be modified to the extent what has been stated in Annexure
I.” Annexure I to the Joint Note inter alia dealt with Dearness Allowance
and the relevant paragraph of said Annexure I was to the following
effect:
D
“2) Dearness Allowance
st st
(a) For the period from 1 November 2002 to 31 January,
2005, Dearness Allowance shall be payable for every rise or
fall of 4 points over 2288 points in the quarterly average of the
All India Average Working Class Consumer Price Index
E
(General) Base 1960=100 at the following rates:
(i) 0.18% of ‘pay’ upto Rs.9,650/- plus
(ii) 0.15% of ‘pay’ above Rs.9,650/- and upto Rs.15,350/-
plus
(iii) 0.09% of ‘pay’ above Rs.15,350/- and upto Rs.16,350/-. F

(iv) 0.04% of ‘pay’ above Rs.16,350/-.
st
(b) On and from 1 February, 2005, Dearness Allowance shall be
payable for every rise or fall of 4 points over 2288 in the quarterly
average of the All India Average Working Class Consumer Price G
Index (General) Base 1960=100 at 0.18 of Pay.”
7. The Bipartite Settlement dated 02.06.2005 was operational
th
for
a period of five years from 01.11.2002. Thereafter 9 Bipartite
Settlement was arrived at between the parties on 27.04.2010 and was
H
446 SUPREME COURT REPORTS [2018] 5 S.C.R.

th
A made operational for five years from 01.11.2007. Clause 7(2) of the 9
Bipartite Settlement was as under:-
“(i) On and from 1.05.2005, in the case of employees who
retired during the period 1.04.1998 to 31.10.2002, dearness relief
shall be payable for every rise or be recoverable for every fall, as
B the case may be, of every four points over 1684 points in the
quarterly average of the All India Average Consumer price Index
for Industrial Workers in the series 1960=100. Such increase or
decrease in dearness relief for every said four points shall be
calculated in the manner given below:
C
Scale of basic pension The rate of Dearness Relief payable
Per month as a percentage of Basic Pension 0.24
(1) per cent
(2)
(i) Up to Rs.3550 0.24 per cent.
D
(ii) Rs.3551 to 0.24 per cent of Rs.3550 plus 0.20 per
Rs. 5650 cent of basic pension in excess of
Rs.3550.

(iii) Rs. 5651 to 0.24 per cent of Rs.3550 plus 0.20 per
E Rs. 6010 cent of the difference between
Rs.5650 and Rs.3550 plus 0.12 per
cent of basic pension in excess of
Rs.5650.

(iv) Above Rs. 6010 0.24 per cent of Rs.3550 plus 0.20 per
F cent of the difference between
Rs.5650 and Rs.3550 plus 0.12 per
cent of the difference between
Rs.6010 & Rs. 5650 Plus 0.06 per
cent of basic pension in excess of
G Rs.6010.

(ii) In respect of retirees for the period 01.11.2002 to 30.04.2005
for whom pension has been revised w.e.f. 01.05.2005 based on
definition of pay in terms of Clause 6 of the Bipartite Settlement
nd
dated 2 June, 2005, dearness relief shall be payable w.e.f.
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 447
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

01.05.2005 for every rise or be recoverable for every fall as the A
case may be of every four points over 2288 points in the quarterly
average of All India Average Consumer Price Index for Industrial
Workers in the series 1960=100@0.18% of the basic pension.
(iii) In respect of employees who retire on or after 1.05.2005,
dearness relief shall be payable for every rise or be recoverable B
for every fall, as the case may be, of every four points over 2288
points in the quarterly average of All India Average Consumer
price index for Industrial Workers in the series 1960=100, at the
rate of 0.18 per cent of basic pension.
(iv) In respect of employees who retired or died while in service C
payable on or after 1.05.2005 Dearness Relief shall be payable at 0.18%
on 0.24 of the basic pension or family pension or invalid pension or
compassionate allowance as the case may be. Dearness Relief
in the above manner shall be paid for every rise or fall of 4 points
over 2288 points in the quarterly average of the All India Average
Consumer Price Index for industrial workers in the series D
0.20 per
1960=100.
cess of
Note: The Dearness Relief asstabove shall be payable for the halfst
year commencing from the 1 day of February and ending 31
0.20 per day of July on the quarterly average of index figures published for
between the months October, November and December stof the previous E
.12 per year and for the half year commencing from 1 day of August
st
cess of and ending with the 31 day of January on the quarterly average
of the index figures published for the months of April, May and
June of the same year.”
0.20 per
between 8. Thus, in case of employees who had retired during the period F
.12 per 01.04.1998 to 31.10.2002, dearness relief at the rate of 0.24% was
between awardable upto Rs. 3550/- of basic pension per month and thereafter
.06 per the percentage for amounts in excess of Rs. 3550/- was successively at
cess of reduced rates. On the other hand, in case of employees who retired
during the period 01.11.2002 to 30.04.2005 the percentage of 0.18% G
was without any such tapering formula. Further, comparison with
Appendix II as originally forming part of the Pension Regulations shows
that with respect to three categories of retirees the dearness relief was
earlier computed on tapering formula. The idea of tapering formula
under the Bipartite Settlement dated 27.04.2010 was retained with respect
H
448 SUPREME COURT REPORTS [2018] 5 S.C.R.

A to pre November 2002 retirees while the dearness relief to post November
2002 retirees was to be at the flat rate of 0.18 %.
9. Around this time, Reserve Bank of India, which initially was
not giving full compensation against price rise on dearness relief to
employees who retired prior to 01.11.2002 that is to say, was also giving
B dearness relief on a tapering formula, started giving full compensation Pen
i.e. without any tapering formula as would be evident from its circulars
as under:
(A) Circular dated 01.04.2008 Pay
“TELEGRAM: “RESERVE BANK RESERVE BANK OF Nov
C INDIA
Pay
TELEPHONE: 022-2260100 CENTRAL OFFICE
Nov
FAX : 022-22661892 HUMAN RESOURCES
Pay
022 – 22702524 DEVELOPMENT
Nov
D DEPARTMENT
E-MAIL : cgminchrdd@rbi.org.in MUMBAI – 400 001.
CO.HRDD.No.10139/21.01/2007-08 April 1, 2008
Chaitra 12, 1930 (S)
E The Regional Director/Principal Chief General Manager
Chief General Manager-in-Charge/
Chief General Manager/General Manager (Officer-in-Charge)/
Principal,
F Reserve Bank of India,
— — — — —-
Dear Sir,
Payment of Dearness Relief on pension/family pension
G In respect of employees retired before November 1, 2002
Please refer to the instructions contained in paragraphs 2 (ii), (iii)
and (iv) of circular CO.HRDD.No.G.97/7704/17.06.05/2007-08
dated February 1, 2008 with regard to payment of Dearness Relief
in respect of employees retired before November 1, 2002.
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 449
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

2. It has been decided that, with effect from March 1, 2008, in A
supersession of the above instructions, the Dearness Relief in
respect of employees who retired/died in harness before
November 1, 2002, may be paid as per the rates indicated below:

Pension/family pension based on Rate of Dearness Relief for the B
period March 1, 2008 to July
31, 2008.

Payscales effective from 82.32% of pension/family
November 1, 1997 (CPI = 1684) pension.
C
Payscales effective from 166.95% of pension/family
November 1, 1992 (CPI = 1148) pension

Payscales effective from 411.38% of pension/family
November 1, 1987 (CPI=600) pension
D

3. The instructions contained in the “Note” at the end of
paragraphs 2(iii) of the abovementioned circular will stand modified
to that extent. You are requested to recalculate the Dearness
Relief and make payment accordingly. E
Yours faithfully,
(A.K. Sarangi)
General Manager”
(B) CIRCULAR DATED 01.08.2008 F
“RESERVE BANK OF INDIA
www.rbi.org.in
CO.HRDD.No.G 46/1344/17.06.05/2008-2009
August 1, 2008
Shravana 10, 1929 (Saka) G
The Principal Chief General Manager/
Regional Director/
Chief General Manager-in-Charge/
Chief General Manager/
H
450 SUPREME COURT REPORTS [2018] 5 S.C.R.

A General Manager (Officer-in-Charge),
Principal,
Reserve Bank of India
__________________
Dear Sir,
B Payment of Dearness Allowance/Dearness Relief
Based on All-India Consumer Price Index numbers for Industrial
Workers (base 1960 = 100) available for the quarter ended June
2008, rate of Dearness Allowance for the quarter August 2008 to
October 2008 for employees in Classes I, III and IV, drawing pay
C in the scales of pay based on CPI = 2288, works out to 39.78% of
pay, half of 79.56%.
2. The rates of Dearness Relief on Pension/Family Pension/Ex-
Gratia, for the period August 2008 to January 2009, shall be
worked out as under:
D (i) On Pension based on the revised pay scales effective from
November 1, 2002 – 39.78% of basic pension.
(ii) The rates of Dearness Relief in respect of employees who
retired/died in harness before November 1, 2002:

E Pension/family pension Rate of Dearness Relief for the
based on period August 2008 to January,
2009

Pay-scales effective from 89.28% of pension/family
November 1, 1997 pension
F (CPI = 1684)

Pay-scales effective from 177.10% of pension/family
November 1, 1992 pension
(CPI = 1148)
G Pay-scales effective from 430.81% of pension/family
November 1, 1987 pension
(CPI = 600)

H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 451
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

3. You may please arrange to calculate and pay the Dearness A
Allowance on “Pay” Dearness Relief on Pension, Family Pension
and Ex-Gratia amount, on the above basis, unless you receive
instructions from Central Office contrary to above.
Yours faithfully,
B
(Neeraj Nigam)
Deputy General Manager”
10. Since the benefit of grant of full compensation against price
rise on dearness relief as was extended by Reserve Bank of India, was
not extended to the retirees of United Bank of India who had retired C
prior to 01.11.2002, Respondent Nos.1 to 4 herein preferred Writ Petition
No.507 of 2012 in the High Court at Calcutta. It was submitted that
though Reserve Bank of India started giving full compensation against
price rise on dearness relief to retirees prior to 01.11.2002 vide circulars
dated 01.04.2008, 01.08.2008 and 01.07.2010, the Appellant Bank
continued to make distinction in terms of dearness relief on the basis of D
dates of retirement of the pensioners and that such action on part of
appellant was clearly opposed to para 6 of the Settlement dated
29.10.1993. Submitting that the cut-off date fixed by Appellant Bank
was in violation of Reserve Bank of India formula as well as was arbitrary
or the and irrational, the respondent Nos.1 to 4 claimed full compensation against E
nuary, price rise on dearness relief. By way of example cases of respondent
Nos.3 to 4 were presented in para 30 of the petition in support of the
submission that the retirees prior to 01.11.2002 were getting prejudiced.
family Said para 30 of the petition is quoted here for ready reference.
“30. The loss being suffered every month by the petitioner Nos. 3 F
and 4 for denial of RBI dearness relief formula on pension is as
family follows:-
Santipriya Roy
Date of Retirement 30.09.2002
family Basic Pension Rs.7880/- G

Dearness Relief per slab on slab basis
Rs. 3550/- x 0.24% Rs. 8,520/-
Next Rs. 2100/- x 0.20 % Rs. 4,200/-
H
452 SUPREME COURT REPORTS [2018] 5 S.C.R.

A Next Rs. 360/- x 0.12% Rs. 432/-
Next Rs. 1870/- x 0.06% Rs. 1,122/-
Rs. 7880/- Rs. 14,274/-
Dearness Relief for full compensation against price rise
B Rs. 7880/- x 0.24% Rs. 18,912/-
Difference per slab Rs. 18,912/- (-) Rs. 14,274/- =Rs. 4,638/-
Total D.R. on Slab basis Rs.14,274/- x 708 slab Rs.10,105.99
Total D.R. on 100% Rs.18,912/- x 708 slab Rs.13,389.69
C
———————————————
Difference = Rs.3,283.70
———————————————
Kalpataru Bhattachajee
D
Date of Retirement 31.10.2002
Basic Pension Rs. 5431/-
Dearness Relief per slab on slab basis
Rs. 3550/- x 0.24% Rs. 8,520/-
E
Next Rs. 1881/- x 0.20% Rs. 3,762/-
Rs. 5431/- Rs. 12,282/-
Dearness Relief per slab for full compensation against price rise.

F Rs. 5431/- x 0.24%
Rs.13,034/-
Difference per slab Rs.13,034/- (-) Rs.12,282/- = Rs. 752/-
Total D.R. on Slab basis Rs.12,282/- x 708 slab Rs. 8,695.65
Total D.R. on 100% Rs.13,034/- x 708 slab Rs. 9,228.07
G
—————————-
Difference Rs. 532.42"
—————————-

H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 453
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

11. In the affidavit in reply filed on behalf of the appellants it was A
inter alia submitted that Pension Regulations having come into force in
1995 the settlement dated 29.10.1993 had no force and as such no benefit
could be drawn on the basis of Regulations or Circulars issued by Reserve
Bank of India. It was further submitted that the distinction in respect of
retirees prior to 01.11.2002 was on the basis of a Bipartite Settlement
B
dated 27.04.2010 and thus the genesis was stated to be in the agreement
between the parties.
12. The aforesaid writ petition was allowed by Single Judge of
the High Court vide judgment and order dated 04.03.2015. It was
observed that there was nothing in Pension Regulations indicating that
the Appellant Bank had abandoned its policy as spelt out in para 6 of the C
Settlement of 1993 to follow the rates of relief and formula adopted by
Reserve Bank of India. Relying upon the decision of this Court in D.S.
Nakara v. Union of India1, it was observed that the classification made
in the instant case denying the benefit of full dearness relief to retirees
prior to 01.11.2002 was arbitrary and irrational. The Single Judge however D
directed the Appellant Bank to take a reasoned decision with regard to
grant of 100% dearness relief to retirees prior to 01.11.2002.
13. The Judgment and order passed by the Single Judge directing
the appellant Bank to take fresh decision was questioned by the respondent
Nos.1 to 4 by filing APO No.315 of 2015, while the appellant bank E
questioned the decision by filing APO No.316 of 2015, in so far as the
findings rendered and directions issued by the Single Judge were
concerned. Both these appeals were disposed of by the Division Bench
on 26.09.2016. The Division Bench relied upon the decision of this Court
in D.S. Nakara (supra) and in Kallakkurichi Taluk Retired Officials
Association Tamil Nadu and others v. State of Tamil Nadu2 and F
observed as under:
“The effect of the joint note is that employees who retired before
the cut-off date would get dearness relief at a lower rate than
those who retired after that date. The dearness relief paid is
relatable to the cost of living index and varies in direct proportion G
to the same. It must be borne in mind that dearness relief is an
amount paid to the retirees to neutralise the astronomical rise in
prices. The object of paying dearness relief is the same,
1
(1983) 1 SCC 305
2
(2013) 2 SCC 772 H
454 SUPREME COURT REPORTS [2018] 5 S.C.R.

A irrespective of the date on which the employee retires. Inflation
hits the employees who retire before the cut-off date as hard as it
does those who retire later. Therefore the dearness relief cannot
be different for two sets of retirees.”
It further observed as under:
B “There is no dispute that the Bank Pension Regulations, 1995
have not been amended. These Regulations have been framed in
consonance and under the powers conferred on the Bank under
the Banking Companies Act. They have a statutory force of law.
Clause 6 of the Pension regulations mandates that the dearness
C relief will be paid to the employees of the member banks in
consonance with that paid by the Reserve Bank of India to its
employees. Therefore a joint note cannot take away the right of
employees to that dearness relief.”
Holding the distinction between pre-November 2002 retirees and
D post-November 2002 retirees to be unreasonable, arbitrary and
discriminatory the Division Bench directed the appellant to pay the
dearness relief to all pensioners at the same rate. The direction was
issued in following terms:
“Therefore, we direct the Bank to comply with Regulation 6 of
E the Pension Regulations and to pay pension to the pre-2002 retirees
at the same rate as enjoyed by the post-2002 retirees, as has been
paid to the retired employees of the Reserve Bank of India. The
judgment of the learned Single Judge is modified to that extent.”
14. The appellant preferred Review Applications being RVWO
F Nos.57 and 58 of 2016 submitting that the decision dated 26.09.2016
required certain typographical changes. The Division Bench of the High
Court vide its order dated 05.12.2016 effected changes as stated therein
and disposed of the Review Applications.
15. The appellant bank being aggrieved, challenged the decisions
dated 26.09.2016 and 05.12.2016 rendered by the Division Bench by
G
filing these appeals by special leave on or about 07.02.2017. By that
time, a decision rendered by Division Bench of Madras High Court in
Writ Appeal Nos.355 of 2013 and allied matters on 17.06.2013 was
affirmed by this Court by dismissing appeals arising therefrom on
01.02.2017.
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 455
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

16. At this stage it may be noted that Writ Petition Nos.50000- A
50002 of 2006 and allied writ petitions titled as A.B. Kasturirangan v.
Canara Bank etc. were allowed by Single Judge of Madras High Court
by judgment and order dated 14.12.2012. The challenge was to the non-
grant of benefit of 100% neutralization of dearness relief to retirees
prior to 01.11.2002 on lines similar to the challenge raised in the present
B
matters. It was observed by the Single Judge that the Bipartite Settlement
dated 02.06.2005 introduced dearness relief at the slab rate of 0.18% of
the basic pension; that the change from tapering rate of slab rate was
not an introduction of a new scheme but was a modification of the existing
one. He further observed that the classification introduced by the bank
was artificial and arbitrary and was not based on any rational principle C
and that the bank had virtually created class within a class. The matter
was carried in appeal. While allowing the appeals and setting aside the
decision of the Single Judge, the Division Bench observed as under:
“… the settlement has to be taken as a package deal and when
labour has gained in the matter of wages and if there is some D
reduction in the matter of dearness allowance so far as the award
is concerned, it cannot be said that the settlement as a whole is
unfair and unjust and it is not possible to scan the settlement in
bits and pieces and hold some parts good and acceptable and
others bad. It has been further held that unless it can be
demonstrated that the objectionable portion is such that it E
completely outweighs all the other advantages gained, the Court
will be slow to hold a settlement as unfair and unjust and the
settlement has to be accepted or rejected as a whole.
……..
F
… in the case on hand, the respondents are not covered by the
8th Bipartite Settlement/Joint Note and they were covered by
earlier Bipartite Settlement/Joint Note and they are not eligible to
get the benefits payable to the persons who are covered by the
8th Bipartite Settlement/Joint Note as they were made applicable
only to those employees who were in service on 01.11.2002. The G
payment of pension and other related benefits are covered by the
earlier Settlement/Joint Note and hence, it is not open to the
respondents to contend that the benefits in the form of Dearness
Allowance at 0.18% is to be given to them. In the considered
H
456 SUPREME COURT REPORTS [2018] 5 S.C.R.

A opinion of this Court, the respondents are not covered under the
8th Bipartite Settlement/Joint Note and hence, the above cited
judgment has no application to the case on hand.”
This view was under challenge in Civil Appeal Nos.8420-8421 of
2013 and was affirmed by this Court on 01.02.2017.
B 17. The appellant in the present matters contended inter alia that
the view taken by Division Bench of Madras High Court was already
affirmed by this Court by dismissing the appeal therefrom on 01.02.2017;
that the retirees prior to 01.11.2002 could not claim same benefit/parity
at par with those who retired after 01.11.2002; that the dearness
allowance payable to the pensioners was linked to the pay and pre
C
01.11.2002 retirees were being paid pension or dearness relief thereon
as per service conditions applicable to them at the time of retirement;
that the decision of this Court in D.S. Nakara (supra) would not be
applicable in the present case and that the High Court was in error in
relying upon para 6 of Settlement dated 29.10.1993 as said settlement
D had worked itself out. In its affidavit in reply the Retirees Association
submitted inter alia that in the Bipartite Settlement dated 02.06.2005,
100% neutralization of dearness allowance was introduced for the first
time by doing away with tapering rate of payment of dearness allowance
and post 01.02.2005 dearness allowance was to be paid at a single slab
rate of 0.18%. However, by subsequent Bipartite Settlement dated
E
27.04.2010 a distinction was made between pre and post 01.11.20002
retirees. The respondents submitted that the view taken by the High
Court did not call for any interference.
18. In this appeal, we heard Mr. Dhruv Mehta, learned Senior
Counsel for the appellant – Bank while the respondent namely Retirees
F Welfare Association was represented by Mr. V.K. Bali, learned Senior
Counsel. Mr. A.S. Nambiar and Ms. V. Mohna, learned Senior Counsel
appeared in IAs 51316 and 50769 respectively for interveners.
19. Before we deal with the controversy in the present matters,
the law on the point as laid down by this Court may be adverted to:
G
A] In D.S. Nakara & Others (supra) the principal question which
arose was, “is the date of retirement a relevant consideration for eligibility
when a revised formula for computation of pension is ushered in and
made effective from a specified date.”3 The inquiry was limited to non-
3
Para 2 of D.S. Nakara
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 457
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

contributory superannuation or retirement pension paid by government A
to its erstwhile employee and for the purpose and object underlying it. 4
In that case formula for computation of pension was liberalized vide
office memorandum dated 25.05.1979 but the benefit was restricted to
those government servants who were in service on 31.03.1979 and retired
on or after that date. The challenge was to arbitrary division of a
B
homogenous class by fixing the eligibility criteria unrelated to the purpose
of revision. In that context the observations of this Court in Para 42 are
relevant. Said Para 42 was as under:
“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 C
arbitrarily fixing an eligibility criteria unrelated to purpose of
revision, and would such classification be founded on some rational
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 D
underlying the payment of pension. If the State considered it
necessary to liberalise the pension scheme, we find no rational
principle behind it for granting these benefits only to those who
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 E
government servants then those who, retired earlier cannot be
worse off than those who retire later. Therefore, this division which
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 F
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
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 G
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
worked out on 36 months’ salary while the other will have a ceiling
4
Para 21 of D.S. Nakara
H
458 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 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
division has not only no nexus to the liberalised pension scheme
B
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
and discriminatory treatment to equals in the matter of commutation
C 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.”
B] The principle laid down in D.S. Nakara (Supra) was explained
D in two decisions rendered by Constitution Benches of this Court in
Krishena Kumar v. Union of India and Others5 and in Indian Ex-
Services League and Others v. Union of India and Others 6 .
Paragraphs 12 and 14 of the latter decision in Indian Ex-Services
League (Supra) were as under:
E “12. The liberalised pension scheme in the context of which the
decision was rendered in Nakara 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
F 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
G 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
5
(1990) 4 SCC 207
6
(1991) 2 SCC 104
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 459
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

further division within that class being impermissible. According A
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
B
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 and no more.
14. Nakara decision came up for consideration before another C
Constitution Bench recently in Krishena Kumar v. Union of
India. The petitioners in that case were retired Railway employees
who were covered by or opted for the Railway Contributory
Provident Fund Scheme. It was held that PF retirees and pension
retirees constitute different classes and it was never held in D
Nakara that pension retirees and PF retirees formed a
homogeneous class, even though pension retirees alone did
constitute a homogeneous class within which any further
classification for the purpose of a liberalised pension scheme was
impermissible. It was pointed out that in Nakara , it was never
required to be decided that all the retirees for all purposes formed E
one class and no further classification was permissible. We have
referred to this decision merely to indicate that another Constitution
Bench of this Court also has read Nakara decision as one of
limited application and there is no scope for enlarging the ambit of
that decision to cover all claims made by the pension retirees or a F
demand for an identical amount of pension to every retiree from
the same rank irrespective of the date of retirement, even though
the reckonable emoluments for the purpose of computation of
their pension be different.”
C] In Union of India v. P.N. Menon and Others7 the challenge G
to the cut off date and prayer for extension of similar relief of treating a
portion of dearness allowance as pay for the purpose of retirement
benefits was the subject matter. While accepting the appeal and negating

7
1994 (4) SCC 68
H
460 SUPREME COURT REPORTS [2018] 5 S.C.R.

A the challenge raised by the concerned retirees, this Court in paragraphs
10 and 11 observed as under:
“10. The concept of ‘dearness pay’ was evolved in respect of
employees in different pay ranges with different percentages of
the dearness pay. Thereafter the pension and gratuity were worked
B out and an option was given to persons, who retired on or after
30-9-1977 but not later than 30-4-1979, to choose either of the
two alternatives — (i) to have their pension and death-cum-
retirement gratuity calculated on their pay excluding the element
of dearness pay as indicated in paragraph 2 of the said office
memorandum; or (ii) to have their pension and death-cum-
C retirement gratuity recalculated after taking into account the
element of dearness pay. If the stand of the respondents is to be
accepted that this scheme should have been made available,
without there being a cut-off date, to all including those who have
retired even 20 to 25 years before the introduction of the scheme,
D then, according to us, the whole scheme shall be unworkable,
because it is linked with the payment of dearness allowance, which
is based on the level of price index. Different institutions/
departments have introduced the system of payment of dearness
allowance at different stages to mitigate the hardship of their
employees with the rise in the prices of the essential articles as a
E result of the inflation.
11. On behalf of the Union of India, it has been stated that in the
aforesaid office memorandum dated 25-5-1979, 30-9-1977 was
fixed as the cut-off date, with reference to the average cost of
living index at 272, which fell on 30-9-1977. It has been further
F stated that those who were entitled to the benefits of the said
office memorandum, were given option either to opt for the revised
formula or retain the existing formula. Some of the persons entitled
to the new formula opted to retain their existing position, because
in their case the application of the new formula would have resulted
G either in the reduction of the total pension or the increase which
would have been only marginal. It has been said that under the
office memorandum aforesaid, dearness allowance with reference
to average price index level at 272 was treated as dearness pay
for the purpose of pension for those who retired after 30-9-1977.
It has also been pointed out that pensioners, who retired on or
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 461
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

after 30-9-1977 with the benefits of dearness pay, became entitled A
to less dearness relief, as compared to those who retired before
30-9-1977 or retired after 30-9-1977, but had opted not to get the
benefit of the impugned office memorandum.”
D]. In State of Punjab v. Justice S.S. Dewan (Retired Chief
Justice ) and Others8 by way of an amendment, the years put in by a B
judicial officer as an advocate prior to his induction in judicial service
were to be added for computing length of service for the purpose of
pension. The question was whether the State was justified in limiting
this relief to those who retired after 22.02.1990. The ratio of decision in
D.S. Nakara (Supra) was distinguished on the ground that the benefit
conferred was a new benefit and not an upward revision of the existing C
pension scheme. This Court found that it was not a case of liberalization
of the existing scheme but introduction of a new retiral benefit and as
such the State was justified in making a distinction between the sets of
retirees and limiting the benefit to those who retired after the cut off
date. The observations in paragraphs 6 and 7 quoted hereunder are D
relevant:
“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 E
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 F
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 G
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

8
(1997) 4 SCC 569
H
462 SUPREME COURT REPORTS [2018] 5 S.C.R.

A 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
B
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
C of the decision in D.S. Nakara case 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.”
E] In Col. B.J. Akkara (Retd.) v. Government of India and
Others9 The principles to be considered in such matters were culled out
D in para 20 as under:
“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
E 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
F when the amendment takes effect. In such a situation, the additional
benefit under 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.
G (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
9
H (2006) 11 SCC 709
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 463
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

cannot contend that their pension should be identical with or equal A
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
B
pay scales being in force.
(c) When two sets of employees of the same rank retire at different
points of time, it is not discrimination if:
(i) when one set retired, there was no pension scheme and when
the other set retired, a pension scheme was in force; C
(ii) when one set retired, a voluntary retirement scheme was in
force and when the other set retired, such a scheme was not in
force; or
(iii) when one set retired, a PF scheme was applicable and when
the other set retired, a pension scheme was in force. D
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 E
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.”
F] In Kallakkurichi Taluk Retired Officials Association, Tamil F
Nadu and Others v. State of Tamil Nadu10 the effect of government
orders as regards pension was that employees retiring on or after
01.06.1988 were at a disadvantage as against those who had retired
before 01.06.1988. Paragraphs 38 and 39 of said decision are quoted
hereunder:
G
“38. The instant controversy should not be misunderstood as a
determination of the total carry-home pension of an employee.
All the government orders referred to above, deal with the quantum
of “dearness allowance” to be treated as “dearness pay” for the
10
(2013) 2 SCC 772 H
464 SUPREME COURT REPORTS [2018] 5 S.C.R.

A calculation of pension. “Dearness pay” is one of the many
components, which go into the eventual determination of pension.
Therefore, the focus in the adjudication of the present controversy
must be on “dearness pay”, rather than on the eventual carry-
home pension. The relevance and purpose of treating “dearness
allowance” as “dearness pay”, has been brought out in the foregoing
B
paragraphs. Therefore, clearly, the object sought to be achieved
by adding “dearness pay” to the wage of a retiree, while
determining pension payable to him, is to remedy the adverse
effects of inflation. The aforesaid object has to be necessarily
kept in mind, while examining the present controversy. Any
C classification without reference to the object sought to be achieved,
would be arbitrary and violative of the protection afforded under
Article 14 of the Constitution of India, it would also be
discriminatory and violative of the protection afforded under Article
16 of the Constitution of India.
D 39. Having given our thoughtful consideration to the controversy
in hand, it is not possible for us to find a valid justification for the
State Government to have classified pensioners similarly situated
as the appellants herein (who had retired after 1-6-1988), from
those who had retired prior thereto. Inflation, in case of all such
pensioners, whether retired prior to 1-6-1988 or thereafter, would
E have had the same effect on all of them. The purpose of adding
the component of “dearness pay” to wages for calculating pension
is to offset the effect of inflation. In our considered view, therefore,
the instant classification made by the State Government in the
impugned Government Order dated 9-8-1989 placing employees
F who had retired after 1-6-1988 at a disadvantage, vis-à-vis the
employees who had retired prior thereto, by allowing them a lower
component of “dearness pay”, is clearly arbitrary and
discriminatory, and as such, is liable to be set aside as violative of
Articles 14 and 16 of the Constitution of India.”
G 20. In the light of the principles laid down by this Court as aforesaid,
let us now consider factual perspective in the present matters.
21. At the outset it must be stated that Appendix II to the Pension
Regulations had categorized employees in three different segments and
the dearness relief payable on basic pension in respect of employees in
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 465
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

these three categories was on the basis of tapering formula which differed A
in each of the categories. In respect of those who were in the first
category i.e. those who had retired earliest, the dearness relief was
0.67% on the first slab namely upto Rs.1250/- of basic pension. The
rate then tapered and finally was 0.17% of basic pension in excess of
Rs.2130/-. At the same time in respect of retirees in the second category,
B
the rate of dearness relief was 0.35 per cent in respect of first slab
namely upto Rs.2400/-. Here also the dearness relief was on a tapering
formula and finally was 0.09% of basic pension in excess of Rs.4100/-.
The third category which was in respect of employees who retired after
01.04.1998, the rate was 0.25% for the first slab upto Rs.3380/-. Going
by the tapering formula, the rate was 0.06 per cent of the basic pension C
in excess of Rs.5770/-. If Clause 7(2) of the 9th Bipartite Settlement
dated 27.04.2010 is compared with the last category of the Appendix II
of the Pension Regulations, there is hardly any change in respect of
retirees during the period 01.04.1998 to 31.10.2002. Thus, whatever
benefit was conferred and was enjoyable by the employees who retired
D
before November 2002 was not taken away.
22. If both categories dealt with by 9th Bipartite Settlement dated
27.04.2010 are further compared, the retirees prior to 01.11.2002 would
be entitled to dearness relief on a tapering formula where the initial slab
upto Rs.3550/- is to be governed by quotient of 0.24%. The tapering
formula then ends with 0.06% of basic pension in excess of Rs.6010/-. E
The starting point is at a level of 0.24% while the end point tapers to
0.06%. The maximum advantage is sought to be given to those who are
getting basic pension at lower levels of slab who would get the dearness
relief at 0.24%. As against this, the retirees after 01.11.2002 are to be
given dearness relief at a flat rate of 0.18% of the basic pension. F
Theoretically, the starting level for the retirees prior to 01.11.2002 is at a
higher level of 0.24% as against the retirees after 01.11.2002. It could
possibly be said that for those who are with basic pension in the region
of Rs.6000/-, on the basis of a tapering formula may well, in the ultimate
analysis, average to the same level of 0.18%.
G
23. The parity that was sought in the petition was not so much
regarding applicability of same rate of 0.18% but was in respect of “flat
rate” idea. The illustrations given in para 30 of the writ petition that we
have quoted hereinabove bring home the point. The calculation of dearness
allowance of Rs.14274/- on basic pension of Rs.7880/- in the case of
H
466 SUPREME COURT REPORTS [2018] 5 S.C.R.

A Santipriya Roy is in keeping with tapering formula as given in the Bipartite
Settlement dated 27.04.2010. The tabular chart then proceeds to calculate
full compensation on account of dearness allowance with slab rate of
0.24% on the entire basic pension of Rs.7880/- which figure comes to
Rs. 18912/-. Thus the submission was that the dearness relief be
computed on 0.24% for the entirety of basic pension and not just for the
B
first slab upto Rs.3550/-. But such calculation completely disregards
that rate which is a flat rate applicable in case of post 01.11.2002 retirees
is not 0.24% for the entire amount of basic pension but at a different
level of 0.18% and the threshold requirement of quarterly average of
the Index is also different. If we were to simply borrow the same rate
C of 0.18% in the case of retirees prior to 01.11.2002, the concerned retirees
may well be at a disadvantage. For instance, the basic pension of Rs.7880/
- of said Santipriya Roy would yield a figure of Rs.14184/- with flat rate
of 0.18%. It will not therefore be correct to adopt and apply the same
rate as is made applicable in case of post 01.11.2002 retirees. What is
prayed for is also not the same rate but the same principle, namely, flat
D
rate be made applicable to pre 01.11.2002 retirees as well but at a rate
of 0.24%.
24. Would that be the correct approach? The tapering formula
undoubtedly begins with 0.24% for the first segment of Rs.3550/- of
basic pension and then progressively steps down and finally reaches the
E level of 0.06% where the basic pension is in excess of Rs.6010/-. What
is devised by way of such tapering formula is higher rate at the lower
levels of segments so that larger number of peoples would get maximum
advantage and the rate thereafter keeps stepping down. Neither can
we apply the rate of 0.18% which will then cause great harm and damage
F to the retirees nor can we adopt a flat rate of 0.24% for the entire
amount of basic pension. The benefit which is sought to be conferred
by the tapering formula lies in the averaging which comes to near about
the same quantum as is given to the post 01.11.2002 retirees. At this
stage it is noteworthy that no illustration has been placed on record to
submit that even with 0.18% dearness allowance those who retired after
G November 2002 walk away with substantially greater advantage as against
pre November 2002 retirees. In any case, this is not a matter where a
section of employees merely on account of date of retirement are being
differentiated. If we adopt a flat rate of 0.24% as is being prayed for,
the class of retirees who retired before 01.11.2002 will stand conferred
H
UNITED BANK OF INDIA v. UNITED BANK OF INDIA 467
RETIREES’ WELFARE ASSO. [UDAY UMESH LALIT, J.]

better rate than those employees who retired after 01.11.2002. Nor A
can we apply a flat rate of 0.18% for them. Each class is governed by
distinct and different parameters. These are all matters of policy making.
The conferral of advantages of benefits on two different classes of
retirees has a completely distinct formula and rates and it would not be
possible to have a synthesis on any count or to put both the sets of
B
retirees on any common parameters. Both classes are distinct and do
not form a homogenous group. It would be extremely difficult and
hazardous to adopt a flat rate as is sought to be projected. It is not a
case of creating a class within a class.
25. In our view any attempt to tinker with either the formula or
the rate would make the whole scheme unworkable as was cautioned C
by this Court in the case of P.N. Menon and Others (supra). As held in
the case of Indian Ex-Services League and Others (supra) the decision
of this Court in D.S. Nakara (supra) is one of 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 D
pension irrespective of the date of retirement. The reliance on the
resolutions/circulars issued by Reserve Bank of India was also
misplaced. It is true that the tapering formula was done away with by
Reserve Bank of India but that by itself cannot entitle the retirees prior
to 01.11.2002 either to be conferred the advantage at the same rate
made applicable by Reserve Bank of India or at the flat rate of 0.24% E
as was sought to be projected.
In our considered view, the assessment made by the Division
Bench of the Madras High Court was absolutely correct. The settlement
has to be taken as a package deal and it would be impossible to hold
certain parts good and acceptable while finding other parts to be bad. F
Moreover, the recitals D, E and F in the Bipartite settlement dated
02.06.2005 (quoted hereinabove) show that a package deal was entered
into and Rs.1288 crores per annum towards all the benefits was set
apart for the benefit of the employees. Any stepping up of benefit for a
section of employees is bound to inflate the figure of Rs.1288 crores per G
annum though that by itself is not a ground that weighs with us. In our
view both the categories of retirees, namely, pre November 2002 and
post November, 2002 stand on different footing, the parameters which
govern the computation of dearness relief are also on a different level.
The decisions rendered by the Single Judge as well as by the Division
H
468 SUPREME COURT REPORTS [2018] 5 S.C.R.

A Bench of the High Court failed to appreciate these aspects and in our
view, the said decisions are completely erroneous.
26. It may also be noted that the decision of the Division Bench of
the Madras High Court having been confirmed by this Court, the matter
stands concluded. As has been observed in paragraphs 32, 41 and 44 of
B Kunhayammed and Others v. State of Kerala and Another11, once
leave to appeal had been granted and the appellate jurisdiction of this
Court was invoked the order passed in appeal would attract the doctrine
of merger. Be that as it may, we are satisfied that the Bipartite Settlement
did not create any distinction which was inconsistent with the principles
laid down by this Court.
C
27. We therefore allow these appeals, set aside the judgments
and orders passed in the appeals and dismiss Writ Petition No.507 of
2012 preferred by respondent Nos. 1 to 4 herein. No order as to costs.

D Devika Gujral Appeals allowed and Writ Petition dismissed.

E

F

G

11
H (2000) 6 SCC 359