STATE OF PUNJABversusGIAN CHAND & ORS.

                       [2012) 11 S.C.R. 1100


A                       STATE OF PUNJAB
                                  v.
                        GIAN CHAND & ORS.
                (Civil Appeal No. 9007 of 2012 etc.)
                       DECEMBER 13, 2012
B
      [SWATANTER KUMAR AND MADAN B. LOKUR, JJ.]

          Service Law - Pension - Commutation - Table for
    calculation of commutation substituted by a Circular -
C   Affecting the employees of Punjab State Electricity Board
    retiring between 31-7-2003 and 31-10-2006 - Writ petition by
    the employees retiring between the above period contending
    that the Circular was to their disadvantage - High Court
    allowing the petitions - On appeal, new plea raised by State
D   that Circular was issued due to financial crunch and that under
    the Rules, the respondents-employees had option to withdraw
    the request of commutation - Held: New pleas are not
    permissible to be raised for the first time before Supreme
    Court - But the new questions raised are substantial legal
E   questions and are having far reaching consequences and
    hence require discussion and determination by the Court -
    The impugned judgment also lacks proper reasoning -
    Therefore, matter remitted to High Court for fresh decision in
    accordance with law - Cost of Rs. 50, 0001- to be paid to
F   respondent Nos. 1 to 26 in equal proportion - Punjab Civil
    Services Rules Vol. II - r. 11.5(1), Note 2 - Practice and
    Procedure - New Plea - Permissibility.

       Practice and Procedure - New Plea - Raised before
  Supreme Court - Permissibility - Held: Not permissible -
G Determination of new plea may deprive either of the parties
  of a right to appeal to Supreme Court - Such deprivation can
  be construed as prejudicial to the rights and interest of the
  parties.

H                                1100


                  ''
    STATE OF PUNJAB v. GIAN CHAND & ORS.             1101


     Punjab State Electricity Board had adopted the A
P.ules pertaining to pension contained in the Punjab Civil
Services Rules, Vol. II for its employees. Table of
commutation of pension was provided in terms of Rule
11.5(2) of the Civil Services Rules. Appellant-State issued
a Circular dated 29.7.2003, whereby the existing table was B
replaced with a new table for calculation of commutation
of pension and was applicable to all the cases of
retirement arising on or after 31. 7.2003. However, by a
further Circular dated 31.10.2006, the previous circular
was superseded, revising the existing table of c
commutation of pensions.

    The employees-respondents who retired between
31.7.2003 and 30.10.2006 filed writ petition, challenging
the Circular dated 29.7.2003 contending that the table of
calculation of commutation of pensions, provided by that D
Circular was to their disadvantage. They pleaded that it
was in violation of Article 14 of the Constitution. High
Court allowed the petition.
     In appeal to this court, appellant-State inter-alia     E
contended that the State issued the Circular dated
29.7.2003, as the State was suffering from serious
financial crunch and that the respondents had choice to
withdraw the request of commutation under Note 2 to
Rule 11.5 (1).                                               F
    The respondents contended that all the pleas raised
before this court by the appellant was raised for the fist
time and taking new grounds for the first time before
Supreme Court could not be permitted.
                                                             G
    Partly allowing C.A. Nos. 9007, 9010, 9011, 1912,
9013, 9014, 9015, 9016 and 9019 of 2012 and remitting
them to High Court and directing to detach the C.A.Nos.
9008-9009/2012, 9017/2012 and 9018/2012 from the other
appeals, the Court                                           H
    1102   SUPREME COURT REPORTS                [2012] 11 S.C.R.


A       HELD: 1.1. From the record, it is clear that the
  substantial pleas are being sought to be raised before
  this Court for the first time. From the orders passed by
  this Court, it is clear that white granting liberty to the State
  to file additional affidavit, no objection was raised by the
B respondents. Now, once the additional facts and
  grounds had been brought on record to which the said
  respondents have already filed a rejoinder, they cannot
  be permitted to raise the objection in regard to the new
  grounds being examined by the Court. There are
c certainly lapses on the part of the State, but the questions
  raised before this Court are not only substantial legal
  questions but are also likely to have far reaching
  consequences. It is argued that the Circular dated 29th
  July, 2003 has been issued by the State of Punjab and
  the same having been quashed, there is every likelihood
0
  that all the employees of the State of Punjab, including
  various corporations, would raise similar claims. The
  grounds with regard to Note 2 of Rule 11.5, financial
  crunch of the State and there being proper rationale for
  fixation of the cut-off period (31st July, 2003 to 30th
E October, 2010) are matters which require discussion and
  determination by the Court in accordance with law.
  Equally, the pleas raised by the respondents require
  proper examination. There is no doubt that the Circular
  dat~d 29th July, 2003 does not contain any reason,
F whatsoever, for passing a directive, which enmass
  adversely affects the people who have retired in the
  period between 31st July, 2003 to 31st October, 2006.
  Additional affidavit filed before this Court, with the leave
  of the Court, does provide reasons and some justifiable
G grounds in support of the Circular. [Paras 11 and 12]
  [1112-A·E]
      1.2. The judgment impugned does not discuss the
  plea of arbitrariness and discrimination in its proper
H perspective. The Court also has not deliberated upon as
     STATE OF PUNJAB v. GIAN CHAND & ORS.                 1103

to whether the law stated by this Court in the case of *V.        A
Kasturi is applicable to the facts 9f the case in hand or
not, particularly with reference to the contentions raised.
Another aspect which could be considered by this Court
on the basis of the material produced before it, was
whether the format to a statutory rule can be amended,            B
altered or substituted by an executive order. For lack of
proper reasoning in the judgment of the High Court, in
view of the additional pleas raised before this Court
which have significant ramifications in law and with
regard to the liability of the State, the judgment of the High    c
Court is set aside and the matter is remitted to the High
Court for fresh decision in accordance with law. [Paras
12 and 13] [1112-F-H; 1113-A-B]

     1.3. The determination of the contentions raised
before this Court for the first time may deprive either of D
the parties of a right to appeal to this Court. Deprivation
of right to appea! can be construed as prejudicial to the
rights and interests of the parties to the /is. [Para 13]
[1113-C-D]
                                                                  E
    1.4. The Civil Appeal Nos. 9007 of 2012, 9010-9016 of
2012 and 9019 of 2012 are partly allowed and the matter
is remitted to the High Court, however, with cost of
Rs.50,000/- to be paid to the respondent Nos.1 to 26 in
equal proportion cost being conditional to the hearing of         F
the writ petition, in default thereto, the appeal preferred
by the State shall stand dismissed. [Para 14] [1113-D-E]
     *V. Kasturi v. Managing Director, State Bank of India 1998
(5) SLR 629; State of Bihar v. Bihar Pensioner's Samaj
(2006) 5 SCC 65; State of Punjab v. Amar Nath Goyal (2005)        G
6 SCC 754: 2005 (2) Suppl. SCR 549; Union of India v. P.N.
Menon and Ors. (1994) 4 SCC 69; Chairman, All India
Railway Recruitment Board and Anr. v. M. Shyam Kumar and
ors. (2010) 6 sec 614: 2010 (6) SCR 291; D.S. Nakara v.
Union of India (1983) 1 sec 305:1983 (2) SCR 165; Dr.             H
    1104   SUPREME COURT REPORTS             [2012] 11 S.C.R.


A Rajinder Singh v. State of Punjab (2001) 5 SCC 482: 2001(2)
  SCR 1108 - referred to.

      2. As the questions arising Civil Appeal Nos. 9008-
  9009/2012 and 9017-9018/2012 are different and the High
B Court has dealt with these questions on merits, the
  arguments raised in Civil Appeals Nos. 9007/2012, 9010-
  9016/2012 and 9019/2012 are not available to the State of
  Punjab in these cases. Thus, these cases are ordered to
  be detached from this batch and be listed for hearing
C independently. [Para 15] (1113-F-G]

                       Case Law Reference:
        1998 (5) SLR 629          Referred to        Para B
        (2006) 5 sec 65           Referred to        Para B
D
        2005 (2) Suppl. SCR 549 Referred to          Para 8
        (1994) 4 sec 69           Referred to        Para 8
        2010 (6) SCR 291          Referred to        Para 8
E       1983 (2) SCR 165          Referred to        Para 9
        2001 (2) SCR 11 OB        Referred to        Para 9

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    9007 of 2012.
F
         From the Judgment & Order dated 21.7.2008 of the High
    Court of Punjab & Haryana at Chandigarh in CWP No. 15554
    of 2007.

                              WITH
G
        C.A. Nos.9008-9009, 9010, 9011, 9012, 9013, 9014,
    9015, 9016, 9017, 9018, 9019 of 2012.

      K.V. Viswanathan, Bairam Gupta, Nidhesh Gupta, Jayant
H K. Sud, Rakesh Khanna, Manjit Singh, AAG, Shefali Malhotra,
     STATE OF PUNJAB v. GIAN CHAND & ORS.                    1105


Adeeta Mujahid, Balaji Srinivasan, Udit Kumar Chaturvedi,             A
Arzu Chimni {for Kuldip Singh), K.K. Mohan, Tarjit Singh {for
Kamal Mohan Gupta), Ajay Pal, Suryanarayana Singh, Pragati
Neekhra,Tarun Gupta, M.K. Ghai, S. Janani, K. Sarada Devi,
Nikhil Nayyar, Ansar Ahmad Chaudhary for the appearing
parties and M.L. Ahuja (Respodent-in-person).                         B

     The Judgment of the Court was delivered by

    SWATANTER KUMAR, J. 1. Leave granted in all the
Special Leave Petitions.
                                                                      c
CAs@ SLP (Cl Nos. 25856/08, 18878/10, 22841/09, 23121/
10, 23607/10, 25387/12, 27327/08, 3110/12 and 9569/10

     2. Petitioners before the High Court and Respondent
Nos.1 to 26 before this Court, were in service of the Punjab
State Electricity Board (for short, the 'PSEB') on different posts.   D
All these respondents superannuated on different dates
between 31st July, 2003 and 30th October, 2006 after they had
satisfactorily rendered the required years of service in PSEB.
Though these respondents had retired on different dates, their
grievance was common and hence all of them filed a common             E
writ petition challenging the circular dated 29th July, 2003
issued by the Government. The circular dated 29th July, 2003
reads as under :

    "I am directed to invite a reference to the subject cited         F
    above and to say that the Governor of Punjab is pleased
    to prescribe a new table {copy enclosed) for present
    values for the calculation of commutation of pension to
    replace the present table incorporated as Annexure to
    Chapter XI of Punjab Civil Service Rules Volume II. This          G
    table supersedes the existing table with immediate effect
    and shall apply to all the cases of retirement arising on or
    after 31.07.2003.

    2.     Annexure to Chapter XI of Punjab Civil Services
                                                                      H.
    1106   SUPREME COURT REPORTS                 (2012] 11 S.C.R.

A       Rules shall be deemed to have been substituted
        accordingly. Correction slip shall be issued in due course.
              It may please be ensured that this is brought to the
        notice of all the employees who are retiring on or after
B
        31.07.2003 inviting their attention to provisions of Note 2
        below Rule 11.5(1) of Punjab Civil Services Rules, Volume-
        11."
       3. The grievance of the respondents was in relation to the
  table of calculation of commutation of pension, which had been
C replaced to the disadvantage of the persons who had retired
  within the above-referred period. They pleaded violation of
  Article 14 of the Constitution of India.
       4. The PSEB had framed regulations called the Punjab
0 State Electricity Board Main Service Regulations, Vol.I, Part I,
  1972 in exercise of the powers conferred by Section 79(c) of
  the Electricity Supply Act, 1948. Regulation 1.7 of these
  Regulations provided that unless it was otherwise specifically
  provided in any regulation, the PSEB employees' claim to pay
E and allowances shall be regulated by the Regulations in force
  at the lime in respect of which the pay and allowances are
  earned. It also provided that claims with regard to pension shall
  be by the regulations in force applicable to him at the time when
  the employee retires or is discharged from service. As the
  PSEB had not framed any Regulations of its own with regard
F to the Pension Rules pertaining to pension contained in the
   Punjab Civil Services Rules, Vol..11 were to be applicable to the
  employees of the PSEB. The PSEB had, vide its circular dated
  4th September, 1999, (Circular No. 36 of 1998) adopted the
  applicability of the Punjab Government Rules. Rule 11.5 of the
G Punjab Civil Service Rules, Vol.II dealing with the subject reads
  as under:
        "11.5 (1) The lump sum payable on commutation shall be
        calculated in accordance with a table or tables of present
H
     STATE OF PUNJAB v. GIAN CHAND & ORS.                 1107
             [SWATANTER KUMAR, J.]
     values which shall be prescribed by the competent            A
     authority.

     Note 1. - The lump payable on commutation to Government
     employees who have served under more than one
     Government when the commutation tables applied by the
                                                                   8
     different Governments are not identical, shall be calculated
     according to the commutation table of the Government
     under whose rule making control they are, at the time of
     retirement. In the case of Government employees who are
     temporarily lent by one Government to another, the
    commutation shall be according to the table of the lending C
     Government and in the case of those who are permanently
    transferred from one Government to another it shall be
    according to the table of the Government to which their
    services have been permanently transferred.
                                                                   D
    Note 2. - In the event of the table of present values
    applicable to an applicant having been modified between
    the date of administrative sanction to commutation and the
    date on which commutation is due to become absolute,
    payment shall be made in accordance with the modified E
    table, but it shall be open to the applicant if the modified
    table is less favourable to him than that previously in force,
    to withdraw his application, by notice in writing despatched
    within 14 days of the date on which he receives notice of
    modification. (2) The table of present value is given in F
    Annexure to this Chapter and will be applicable to all
    Government employees.
    For the purpose of this rule, the age, in case of impaired
    lives, shall be assumed to be such age, not being less than
    the actual age as the certifying medical authority may        G
    direct."
     5. The table of commutation of pension was prescribed by
the State Government on the recommendation made by the 4th
Pay Commission which was accepted by the State Government         H
    1108    SUPREME COURT REPORTS                 [2012] 11 S.C.R.


A and was implemented with effect from 1st January, 1996. The
  State of Punjab, appellant herein, issued a circular dated 29th
  July, 2003 replacing the existing table with a new table for
  calculation of commutation of pension superseding the existing
  table. As already noticed, this circular contains the table of
B commutation of pension. As is clear from the above referred
  circular dated 29th July, 2003, it had directed deemed
  substitution of Annexure to Chapter XI of the Punjab Civil
  Services Rules, Volume II and stated that commutation table
  was based on rate of interest of 8 per cent per annum
c (commutation value for pension to Re1/- per annum). However,
  vide circular dated 31st October, 2006, this circular was
  superseded. The circular dated 31st October, 2006 revised the
  existing table of commutation of pension and the Governor of
   Punjab reduced the discount rate from existing 8 per cent to
  4.75 per cent and consequently revised the existing table in
0
   terms of Rule 11.5(2). As a result. employees who retired
   between 31st July, 2003 and 30th October, 2006 are at a
   disadvantageous position. The respondents cited illustrations
   to show that they were placed at a disadvantageous position.
   The circular dated 29th July, 2003 is arbitrary and has no
E reasonable nexus for making a classification between the
   employees who retired during the above period and the
   employees who retired prior to and /or after the cut off period.
   Before the High Court, the appellant as well as the PSEB filed
   a reply in which facts were hardly disputed. In that reply, it was
F stated that the law relied upon by the respondents before the
    High Court was not applicable and the claim of the said
    respondents was generally denied. They prayed for dismissal
    of the writ petition.

G       6. The High Court, vide its judgment dated 21st July, 2008
  accepted the writ filed by the respondents and while allowing
  the writ petition, the High Court noticed that no justification or
  clarification had been provided by the State, while making a
  feeble attempt to defend its stand and there was no rational
H basis for providing the cut off dates between the period from
    STATE OF PUNJAB v. GIAN CHAND & ORS.                    1109
           [SWATANTER KUMAR, J.]
31st July, 2003 to 30th October, 2006. The following operative A
part of the judgment can usefully be reproduced at this stage :
    "After hearing the counsel for the parties, we are of the
    considered opinion that this petition deserves to be
    allowed and our opinion is further strengthened by the ratio   8
    of law, laid down in V. Kasturi's case (supra) which has
    been followed by Hoshiar Singh's case (supra). The State
    cannot be permitted to create two categories of retirees
    by providing a cut off date as there is no rationale.

    In view of the above, we allow the writ petition and quash · C
    the impugned circular dated 29.07.2003 and restore the
    pension of the petitioner, in accordance with the revised
    table, issued as per the Circular dated 31.10.2006
    (Annexure P-6)."
                                                                 D
    7. Aggrieved from the above judgment of the High Court,
the State of Punjab has filed the present appeal by way of
special leave challenging the legality and correctness of the
above judgment.

    8. On behalf of the appellant, it is contended that :          E

     (a)    the High Court has not correctly applied the
           principle of law contained in the judgment of this
           Court in the case of V. Kasturi v. Managing
           Director, State Bank of India [1998 (5) SLR 629].       F
           That case related to computation of pension and
           not commuting of pension.
     (b)   The circular was neither arbitrary nor violative of
           Article 14 of the Constitution of India as there was G
           rationale behind the decision of the State
           Government which had been implemented by the
           PSEB.
     (c)   The State was suffering from serious financial
           crunch and the State with the intention to balance      H
    1110     SUPREME COURT REPORTS                (2012] 11 S.C.R.


A                its financial liability, for good and valid economic
                 reasons had issued the circular dated 29th July,
                 2003. Reliance in this regard is placed upon the
                 judgment of this Court in the case of State of Bihar
                 v. Bihar Pensioner's Samaj [(2006) 5 SCC 65] and
B                State of Punjab v. Amar Nath Goyal ((2005) 6 SCC
                 754].

           (d)   Date of retirement by itself is a reasonable
                 classification and does not offend the doctrine of
                 equality. Reliance in this regard is placed upon
c                Union of India v. P.N. Menon & Ors. [(1994) 4 SCC
                 69]. Vide circular dated 29th July, 2003, an attempt
                 had been made on behalf of the Government to
                 stabilize its financial position. It was a decision
                 taken in the larger public interest and can even be
D                supported by subsequent reasons. Reliance for this
                 proposition is placed upon the case of Chairman,
                 All India Railway Recruitment Board & Anr. v. M.
                 Shyam Kumar & Ors. ((2010) 6 SCC 614].

E          (e)   Under Note 2 to Rule 11.5(1 ), the respondents had
                 a choice to withdraw the request for commutation,
                 if they were adversely affected within 14 days from
                 the issuance of the circular dated 29th July, 2003
                 in terms of the Punjab Civil Service Rules.
F      9. On behalf of the respondents, it is contended that none
  of these arguments were raised either in the affidavits filed
  before the High Court or even during the course of hearing. No
  records were produced to substantiate any such plea. On the
  contrary, it was a case of 'no stand' on behalf of the official
G respondents as even noticed by the High Court. It is vehemently
  argued that the date of retirement by itself is capable of
  providing a rational basis for issuance of such orders and the
  same would affect the rights of the parties adversely. In this
  regard r,eliance is placed on the cases of V. Kasturi (supra) and
H D.S. Nakara v. Union of India ((1983) 1 SCC 305]. According
      STATE OF PUNJAB v. GIAN CHAND & ORS.                     1111
              [SWATANTER KUMAR, J.]

to the respondents, the High Court bas rightly applied the law         A
as stated by this Court. Further, to substantiate their plea, it has
been argued with some vehemence that no reasons are
disclosed in the circular and there is no rationale for such
categorization. It is also the contention that an executive circular
cannot amend, alter or substitute an appendix or annexure              B
which is the result of an exercise of statutory power. In this
regard, reference is made to the judgment of this Court in the
case of Dr. Rajinder Singh v. State of Punjab ((2001) 5 SCC
482]. The appellant cannot be permitted to take new grounds
before this Court for the first time and the appeals deserve to        c
be dismissed.
      10. From the record, it is clear that none of these
 arguments were taken in the counter affidavit or even appear
 to have been addressed before the High Court during the
 course of arguments. The substantial pleas are being sought D
 to be raised before this Court for the first time. It requires to
 be noticed at this stage that vide order dated 16th December,
 201 Opassed by a Bench of this Court after heanng, liberty was
granted to the State to file additional affidavit. The affidavit
dated 7th January, 2011 was filed on behalf of the State taking E
 the ground that the State of Punjab had faced an acute financial
crisis in the year 2003 and, in fact, was in a virtual debt trap.
Since the commutation of pension is essentially loan/advance
against the future payments of the monthly pension, the State
Government could ill-afford to raise further debt at higher rate F
of interest to make such payments to employees at
concessional effective rate of interest which was as low as 4.75
per cent per annum. The chart showing figures of fiscal
indicators of Punjab from 2002-03 to 2006-07 was also
annexed to this affidavit. Still another affidavit was filed with the G
leave of the Court dated 21st April, 2011 by the Deputy
Secretary, Department of Finance, Punjab, Chandigarh bringing
on record the policy of the Government, formula adopted for
commutation factor and giving facts and figures as to how the
circular dated 29th July, 2003 came to be issued.
                                                                      H
    1112    SUPREME COURT REPORTS                  [2012] 11 S.C.R.

A        11. From the orders passed by this Court, it is clear that
  while granting liberty to the State to file additional affidavit, no
  objection was raised by the respondents herein. Now, once the
  additional facts and grounds had been brought on record to
  which the said respondents have already filed a rejoinder, they
B cannot be permitted to raise the objection in regard to the new
  grounds being examined by the Court. There are certainly
  lapses on the part of the State, but the questions raised before
  us are not only substantial legal questions but are also likely to
  have far reaching consequences. It is argued that the circular
c dated 29th July, 2003 has been issued by the State of Punjab
  and the same having been quashed, there is every likelihood
  that all the employees of the State of Punjab, including various
  corporations, would raise similar claims. The grounds with
  regard to Note 2 of Rule 11.5, financial crunch of the State and
  there being proper rationale for fixation of the cut off period (31st
0
  July, 2003 to 30th October, 2010) are matters which require
  discussion and determination by the Court in accordance with
  law. Equally, the pleas raised by the respondents require proper
  examination. There is no doubt that the circular dated 29th July,
  2003 does not contain any reason, whatsoever, for passing a
E directive, which enmass adversely affects the people who have
   retired in the period between 31st July, 2003 to 31st October,
   2006. Additional affidavit now filed before this Court, with the
   leave of the Court, does provide reasons and some justifiable
   grounds in support of the circular. All that we propose to say is
F that the contentions raised by the respective parties are worthy
   of consideration in accordance with law.
       12. The judgment impugned in the present petition, in fact,
  does not even discuss the plea of arbitrariness and
G discrimination in its proper perspective. The Court also has not
  deliberated upon as to whether the law stated by this Court in
  the case of V. Kasturi (supra) to the facts of the case in hand
  or not, particularly with reference to the contentions raised.
  Another aspect which could be considered by this Court on the
  basis of the material produced before it, was whether the format
H
     STATE OF PUNJAB v. GIAN CHAND & ORS.                    1113
            [SWATANTER KUMAR, J.]
to a statutory rule can be amended, altered or substituted by        A
an executive order.
       13. For lack of proper reasoning in the judgment of the
 High Court, in view of the additional pleas raised before this
 Court which have significant ramifications in law and with regard
 to the liability of the State, we are left with no option but to set B
 aside the judgment of the High Court under appeal and remit
the matter to the High Court for fresh decision in accordance
with law. We would request the High Court to consider all the
arguments that have been noticed by us above. All the affidavits
placed on record of this Court shall also be placed before the C
High Court for its consideration.Another reason which can be
stated in support of the view that we are taking is that the
determination of the contentions raised before this Court for the
first time may deprive either of the parties of a right to appeal
to this Court. Deprivation of right to appeal can be construed D
as prejudicial to the rights and interests of the parties to the
/is.
      14. Accordingly, the appeal is partly allowed and the matter
is remitted to the High Court, however, with cost of Rs.50,000/
- to be paid to the respondent Nos.1 to 26 in equal proportion       E
cost being conditional to the hearing of the writ petition, in
default thereto, the appeal preferred by the State shall stand
dismissed.
CAs @ SLP (Cl Nos.18734-18735/07, 4036/07 and 7474/                  F
07
     15. As the questions arising in these cases are different
and the High Court has dealt with these questions on merits,
the argu1nents raised in SLP Nos. Civil Appeals @ SLP (C)
Nos. 25856/08, 18878/10, 22841/09, 23121/10, 23607/10, G
25387/12, 27327/08, 3~ 10/12 and 9569/10 are not available
to the State of Punjab in these cases. Thus, these cases are
ordered to be detached from this batch and be listed for
hearing independently.
K.K.T.                                Appeals partly allowed. H