STATE OF PUNJABversusJUSTICE S.S. DEWAN (RETIRED CHIEF JUSTICE) AND ORS.

--                           STATE OF PUNJAB
                                    v.
                                                                                            A

              JUSTICE S.S. DEWAN (RETIRED CHIEF JUSTICE)
                                AND ORS.

                                     APRIL 25, 1997
                                                                                            B
                    (K. RAMASWAMY, G.T. NANAVATI AND
                           K. VENKATASWAMI, JJ.]

           Service Law :

            Pu11jab Superior Judicial Service Rules 1963, Rule 16 (as
                                                                                            c
     ame11ded}-Judge retiri11g from Pu11jab High Court-Fixatio11 of pe11sion-I11-
     troductio11 of be11eficiary provision-Applicability of-Held, 11ot available to
     those already retired si11ce it is a retiral bemfit to make judicial services more
     attractive so that those who are already i11 service may not leave it and 11ew
     e11tra11ts may be tempted to joillt it.                                            D
           Retiral be11efits-llltroductio11 of a be11eficiary provision-Criteria for
     detenni11atio!l-lleld, illlentio11 of the statute to be see11-lf it is a liberalisa-
     tion of an existi11g scheme, all pe11Sio11ers to be treated equally a11d if it is an
     introduction of new retiral be11efits, its benefits will 11ot be available to those    E
     who had already retired prior to its introduction.

           The respondent Chief Justice of a High Court, retired w.e.f.
     5.10.1989. He elected to receive his pension benefits in accordance with part
     III of Schedule I to the High Court Judges (Conditions of Service) Act,
     1954 read with the Punjab Superior Judicial Service Rules, 1963. His                   F
     pension was accordingly determined by taking into account the qualifying
     service rendered by him as a member of the Punjab Superior Judicial
     Service and as a Judge of the High Court. However, on 20.2.1990 Rule 16
     of Punjab Superior Judicial Service Rules, 1963 was amended and a
     proviso was also added to it, under which period of practice up to 10 years            G
     was to be treated as part of qualifying service. This enlargement of the
     period of qualifying service would lead to an increase in the quantum of
     pension.

          The respondent claimed that being a direct recruit to the Punjab
     Superior Judicial Service he was entitled to addition of actual period of              H
                                            1027
    1028                  SUPREME COURT REPORTS                     [1997] 3 S.C.R.

A   practice at the Bar not exceeding IO years to his qualifying service and
    therefore, his pension and other retirement benefit have to be refixed. But
    the State Government decided that the notification dated 22.2.1990 has
    only prospective effect and therefore benefit of the amendment of R. 16
    cannot be given to the respondent.

B          The respondent filed a writ petition praying that Union of India and
    the State Government be directed to compute his pension afresh in accord-
    ance with the said provision. The Single Judge relying on D.S. Nakara and
    Others v. Union of India, [1983) 1 SCC 305 held that all retired judge
    irrespective of the date of retirement constitute one class and the benefit
C   available under the amended rule cannot be confined to the judges who
    retired after the amendment and as such allowed the petition. The State
    filed a letters patent appeal, which was dismissed by the Division Bench
    with a clarification that the prayer being restricted only to pension not to
    other retirement benefit. Hence, this appeal.

D          Allowing the appeal, this Court

            HELD : 1.1. If the amendment has been made by way of upward
    revision of existing pen~ion scheme, ratio of D.S. Nakara case would apply.
    If it is held to be a new retiral benefit of a new scheme then it cannot be
E   extended to those who retired earlier. [1032-E-F]

          1.2. Conceptually, pensior. is a reward for past service. Length of
    service is determinative of eligibility and the quantum of pension. The
    formula adopted for determining last average emoluments drawn has an
    impact on the quantum of the pension. D.S. Nakara case involved the
F   change of formula for determining average emoluments and it was treated
    as liberalisation of upward revision of the existing pension scheme. On the
    basis of same reasoning it can be said that any modification with respect
    to the other determinative factor, namely, qualifying service made with a
    view to make, it more beneficial in term of quantum of pension can also be
G   regarded as liberalisation or upward revision of the existing pension
    scheme. If, however, the change is not confined to the period of service but
    extends or relates to a period anterior to the joining of service, then it would
    assume a different character. Then it is not liberalisation of the existing
    scheme but introduction of a new retiral benefit. Here what has been done
    by amending Rule 16, the purpose seems to make the service more attrac-
H   tive for those who are already in service so that they may not leave it and
             STATE v. JUSTICE S.S. DEWAN [ NANAVATI, J.]               1029

for new entrants so that they may be tempted to joint it. Though Rule 16       A
does not specifically state that amended rule will apply only to those who
retired aller 22.1.1990, the intention behind it clearly appears to be to
extend the new benefit only to those who retired after that date. So, the
principle of D.S. Nakara case will have no application to this type of case.
Hence, the benefit of the amendment would be available to only those direct
recruits who retired after it has come into force. [1012-1<'-H; 1013-A-B]      B

        Union of India v. P.N. Menon, [1994] 4 SCC 68, relied on.

        D.S. Nakara and Ors. v. Union of India, [1983] 1 SCC 305, referred
to.
                                                                               c
        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 506 of
1992.

     From the Judgment and Order dated 28.10.91 of the Punjab &
Haryana High Court in L.P.A. No. 1295 of 1991
                                                                               D
        Manoj Swaup, (NIP) for the Appellant.

        K.C. Dua for the Respondents.

        The Judgment of the Court was delivered by
                                                                               E
      NANAVATI. J, The respondent who retired as the Chief Justice of
the High Court of Punjab and Haryana on 31.12.89 was enrolled as an
advocate on 27.1.59, appointed as District and Sessions Judge on 20.11.68
and then as a Judge and the Chief Justice of Punjab and Haryana High
Court on 14.12.77 and 4.10.89 respectively. On his retirement he elected p
for computation of his pension under Part III of the 1st Schedule to the
High Court Judges (Conditions of Service) Act, 1954. According to the
provisions contained in Part III, pension of the Judge has to be determined
in accordance with the rules of his service. The rules which applied to him
are the Punjab Superior Judicial Service Rules, 1963. His pension was,
therefore, fixed in accordance with the said rules. On 20.2.90, Rule 16 of G
the said Rules was amended by the Government of Punjab and it was
provided that in case of a direct recruit to the Punjab Superior Judicial
Service the actual period of practice at the bar not exceeding 10 years shall
be added to his service qualifying for superannuation pension and other ·
retirement ben~fits. In view of this amendment the respondent claimed that H
                                                                                       I
                                                                                     /ff

    1030                  SUPREME COURT REPORTS                   (1997] 3 S.C.R.

A being a direct recruit to the Punjab Superior Judicial Service he was
    entitled to addition of actual period of practice at the bar not exceeding
    10 years to his qualifying service and, therefore, his pension and other
    retirement benefits have to be rcfixed. The High Court, in its turn, wrote
    to the Accountant General on 5.6.90 for refixation of his pension and other
    retirement benefits after giving him benefit of the amendment. The Ac-
B   countant General, it appears, was not inclined to agree with this claim and,
    therefore, referred the matter to the State Government for correct inter-
    pretation of the rule. On 25.2.91 the State Government decided that the
    notification dated 22.2.90 has only prospective effect and, therefore, benefit
    of the amended Rule 16 cannot be given to the respondent. He, therefore,
C   filed a writ petition in the High Court inter alia praying that the Union of
    India and the State Government be directed to give benefit of the amended
    Rule 16 to him and to compute his pension afresh in accordance with the
    said provision. The stand taken by the Union of India was that it was not
    really concerned with the subject-matter of the petition and that it per-
D    tained to the State of Punjab . The State contended that the amended rule
     applies to those only who retired after 22.2.90.

          The learned Single Judge follmving the judgment following the judg-
    ment of this Court in D.S. Nakara and Others v. Union of India, (1983] 1
    sec 305 held that all retired judges irrespective of the date of retirement
E   constitute one class and the benefits available under the amended rule
    cannot be confined to the judges who retired after the amendment. He,
    therefore, found the action of the State of Punjab as illegal, allowed the
    petition and directed the State of Punjab to refix pension of the Respon-
    dent in accordance with the amended rule with effect from 22.2.90 and to
    pay the arrears with interest at the rate of 18 pc; cent per annum. The
F
    State of Punjab filed a letters patent appeal. The Division Bench of the
    High Court dismissed it with a clarification that the prayer being restricted
    only to pension and not to other retirement benefits, the order passed by
    the learned Single Judge should be read as confined lo grant of pension
    only. The Stale has, therefore, liled this appeal.
G
           The only controversy in this appeal is whether the High Court was
     right in directing refixation of pension of the respondent in accordance
     with amended Rule 16. The respondent, having retired as a Judge of a High
     Court and having elected to receive pension payable under Part III of the
H    First Schedule to the Act his entitlement was as provided in paragraph 2
           STATE v. JUSTICE S.S. DEWAN [ NANAVATI,J.]                   1031

of that Schedule, which reads as under :                                        A
           "2. The pension payable to such a Judge shall be -

            (a) the pension to which he is entitled under the ordinary rules
        of his service if he had not been appointed a Judge, his service as
        a Judge being treated as service therein for the purpose of cal-        B
        culating that pension; and

            (b) ................"

      It is not in dispute that he being a member of the Punjab Superior
Judicial Service the Punjab Superior Judicial Service Rules, 1963 applied       C
to him. Rule 16 of the said Rules at the time of his retirement provided as
under:

            "16. Death-cum-Retirement Benefits : In respect of death-cum-
        retirement benefits the members of the service shall be governed        D
        by the all India Service (Death-cum-Retirement Benefits) Rules,
        1958, as amended from time to time."

       Ruic 8 of the All India Services Rules, inter alia, provides that
qualifying service of a member of the Service for purposes of those Rules
begins from the date of his substantive appointment to the Service. It is       E
also not in dispute that pension of the respondent was calculated and paid
accordingly. On February 22, 1990 Rule 16 was amended and since then it
is as quoted below :

            "16. Death-cum-retirement benefits : In respect of death-cum-
        retirement benefits the members of the service shall be governed        F
        by the Punjab Civil Services Rules, Volume II as amended from
        time to time.

           Provided that in the case of a direct recruit to this service, the
        actual period of practice at Bar not exceeding ten years, shall be      G
        added to his service qualifying for superannuation pension and
        other retirement benefits."

      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 Service (death-cum- H
    1032                  SUPREME COURT REPORTS                  [1997) 3S.C.R.

A retirement benefits) Rules, now they are governed by the Punjab Civil
    Service 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
B   the length of service rendered by him as a member of the Punjab Superior
    Judicial Service and also as a J udgc of the High Court, if he was elevated
    to that position before retirement. Even in case of a direct recruit to that
    Service his standing at the Bar was irrelevant but now that period has to
    be added for determining the qualifying service. Obviously, this enlarge-
C   ment for the period of qualifying service wouldlead to an increase in the
    quantum of pension. This has been regarded by the High Court and as
    contended by the respondent, liberalisation of the pension scheme. For that
    reason, it further held that benefit of a rule liberalising pension cannot be
    restricted to persons retiring subsequently that is after the date of such
D   liberalisation otherwise it would amount to vicious discrimination violative
    of Article 14 of the Constitution. The High Court has also held that there
    is nothing in the language of the Rule to suggest that the benefit conferred
    by it is confined to the persons retiring after February 22, 1990.

           Therefore, what we have to consider is : What is the nature of the
E change made by the amendment? ls it by way of upward revision of the
    existing pension scheme? Then obviously the ratio of the decision in D.S.
    Nakara's 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.
F
           Conceptually, pension is a reward for past service. It is determined
    on the basis of length of service and last pay drawn. Length of service is
    determinative of eligibility and the quantum of pension. The formula
    adopted for determining last average emoluments drawn has an impact on
    the quantum of pension. In D.S. Nakara's case (supra) the change in the
G   formula of determining average emoluments by reducing 36 months' service
    to 10 months' Service as measure of pension, made with a view to giving a
    higher average, was regarded as liberalisation or upward revision of the
    existing pension scheme. On the basis of same reasoning it may be said that
    any modification with respect to the other determinative factor, namely,
H   qualifying service made with a view to make it more beneficial in terms of
                  STATE v. JUSTICE S.S. DEWAN [ NANAVATI, J.]                  1033

      quantum of pension can also be regarded as liberalisation or upward               A
      revision of the existing pension scheme. If, however, the change is not
      confined to the period of service but extends or relates lo a period anterior
      to the joining of service then it would assume a different character. Then
      it is not liberalisation of the existing scheme but introduction· of a new
      retiral benefit. What has been done by amending Rule 16 is to make the
      period of practice al the Bar, which was otherwise irrelevant for determin-
                                                                                        B
      ing the qualifying service, also relevant for that purpose. It is a new concept
      and a new retrial benefit. The object of the amendment does not appear
      to be to go for liberalisation. The purpose for which it appears to have
      been made is to make it more attractive for those who are already in
      service so that they may not leave it and for new entrants so that they may       c
      be tempted to join it. Though Rule 16 does not specifically state that the
      amended rule will apply only to those who retired after 22.2.90, the
      intention behind it clearly appears to be to extend the new benefit to those
      only who retired after that date. For these reasons the principle laid down
      in D.S. Nakara's case (supra) that if pensioners form a class computation         D
      of their pension cannot be by different formula affording unequal treat-
      ment merely on the ground that some retired earlier and some retired later,
      will have no application to a case of this type. Therefore, on both the
      grounds the High Court was in error in applying the ratio of the decision
      in D.S. Nakara's case (supra) to this case. As rightly contended on behalf
      of the State, benefit of the amendment would be available to only those           E
      direct recruits who retired after it has come into force.

            The following observations made by this court in Union of India v.
      P.N. Menon, (1994) 4 SCC 68 also to some extent support the view that we
      are taking :                                                                      F

                  "Whenever the Government or an authority which can be held
---           to be a State within the meaning of Article 12 of the Constitution,
              frames a scheme for persons who have superannuated from service,
              due to many constraints, it is not always possible to extend the
              same benefits to one and all, irrespective of the dates of Super-         G
              annuation. As such any revised scheme in respect of post-retire-
              ment benefits, if implemented with a cut-off date, which can be
              held to be reasonable and rational in the light of Article 14 of the
              Constitution, need not be held to be invalid. It shall not amount
              to "picking out a date from the hat", as was said by this Court in        H
    1034                  SUPREME COURT REPORTS                   [1997] 3 S.C.R.

A            the case of D.R. Nim v. U11io11 of /11dia in connection with fixation
             of seniority. Whenever a revision takes place, a cut-off date be-
             comes imperative because the benefit has to be allowed within the
             financial resources available with the Government."

       We, therefore, allow this appeal, set aside the judgment and order
B passed by the High Court and dismiss the writ petition filed by the
  respondents. In view of the facts and circumstances of the case there shall
  be no order as to costs.

    B.K.S.                                                       Appeal allowed.