Supreme Court of India
T.S. THIRUVENGADAMversusTHE SECRETARY TO GOVT. OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF EXPENDITURE, NEW DELHI AND ORS.
- Citation
- 1993 INSC 57
- Decided
- 17 February 1993
- Disposal
- Appeal(s) allowed
- Bench
- KULDIP SINGH
Holding
The revised 1967 Memorandum must be applied to all central government employees absorbed in public undertakings irrespective of the cut‑off date, and denying benefits to those absorbed earlier is arbitrary and violative of Articles 14 and 16, entitling the appellant to pro‑rata pension under the Memorandum.
Summary
The appellant, a Central Government employee, was absorbed into the public sector undertaking Neyveli Lignite Corporation Ltd in 1964 after completing 15 years of pensionable service. The Government issued a 1967 Memorandum revising pension benefits for employees absorbed after 16 June 1967, denying those benefits to the appellant who was absorbed earlier. The appellant challenged this classification as arbitrary and violative of Articles 14 and 16 of the Constitution, arguing that Rule 37 of the Central Civil Services (Pension) Rules, 1972, treats all such absorptions as a single class entitled to retirement benefits. The Supreme Court held that the purpose of the 1967 Memorandum was to protect pension rights of all central government servants absorbed into public undertakings, and restricting benefits to post‑cut‑off absorptions defeats that purpose and is unconstitutional. Consequently, the Court allowed the appeal, set aside the CAT judgment, and directed that the appellant receive pro‑rata pension and related benefits under the 1967 Memorandum.
Issues considered
- Whether the cut‑off date of 16 June 1967 in the 1967 Government Memorandum, limiting revised pension benefits to employees absorbed after that date, violates Articles 14 and 16 of the Constitution.
- Whether Rule 37 of the Central Civil Services (Pension) Rules, 1972 permits a classification that denies pro‑rata pension to employees absorbed before the cut‑off date.
- Whether the appellant is entitled to pro‑rata pension and death‑cum‑retirement gratuity under the 1967 Memorandum despite being absorbed in 1964.
Legislation cited
- Central Civil Services (Pension) Rules, 1972s. Rule 37
- Constitution of Indias. Art.14, s. Art.16
Subjects
pensionpro‑rata pensioncentral civil servicespublic sector undertakingclassificationArticles 14 and 16Rule 37retirement benefitsgovernment employee absorption
Judgment
A T.S. THIRUVENGADAM
v.
THE SECRETARY TO GOVT. OF INDIA, MINISTRY OF
FINANCE, DEPARTMENT OF EXPENDITURE, NEW DELHI
AND ORS.
B
FEBRUARY 17, 1993
[KULDIP SINGH AND N.M. KASLIWAL, JJ.]
Civil Services:
c
Central Civil Services (Pension) Rules, 1972 :Retiremcm benefit:.-
Govt. sel'\!a1tts absorbed in public sector U11dertaking:.-Govemme11t of /11dia
Memorandum dated 16.'6.1967-R.evised Tenns a11d Co11ditio11s--Made ap-
plicable to those who retired after the issue of Memora11durn-Validity of
D Co11stitutio11 of India, 1950.
Articles 14 and l6-il.etireme11t be11efits to Govt. sel'\!ants absorbed i11
Public Sector U11dertaki11g:.-Govemme11t of India-Memorandum dared
16.6.1967-Tenns and Conditions revised-Made applicable from date of
E issue of the Memorandunt-Reasonableness of the classificatio11--Cut-off
date-Wliether arbitrary and discriminatory.
y
The appellant was serving the Audit Department of the Government
of India. He was sent on foreign service to the Public Sector Undertaking
Neyveli Lignite Corporation Ltd. (N.L.C.) and was absorbed there. Before
F joining N.L.C. he had already completed 15 years of pensionable govern-
ment service. Retirement benefits in such cases were regulated by
Memorandum dated November 10, 1960 issued by the Ministry of Finance
(Department of Expenditure), Ne·N Delhi. According to the said Memoran·
dum the retirement benefits for service rendered by a government servant
before his absorption in a public undertaking were admissible equal to
G what the government would have contributed had the individual been on
contributory provident fund terms, with 2% simple interest thereon. The
Government of India subsequently issued Memorandum dated June 16,
1967 J>rOviding revised terms and conditions of absorption in Central
Public Sector Undertakings but restricted the revised benefits only to
H those who were absorbed on or after June 16, 1967. The appellant retired
1078
T.S. TIURUVENGft.DAM v. SECRETARY 1079
from the public undertaking and was paid a sum of Rs. 3036 as retirement A
.
""' benefits in terms of the Memorandum dated November 10, 1960. The
benefit of the revised terms and conditions of absorption as contained in
the government Memorandum dated June 16, 1967 was denied to the
appellant on the ground that he was absorbed in the public undertaking
prior to the date of coming into force of the said Memorandum. The
appellant challenged the same by filing a Writ Petition before the High
B
Court. Subsei111ently, the Writ Petition was transferred to the Central
Administrative Tribunal which ~ejected the claim of the appellant. Being
aggrieved against the Tribunal's judgment, the appellant preferred the
present appeal.
It was contended on behalf of the appellant that it was not open to
c
the government to deny the benefit of the 1967 Memorandum to those
employees who were absorbed prior to the date of the Memorandum as it
would be arbitrary and that such classification is violative of Articles 14
'K and 16 of the Constitution.
D
On behalf of the respondents, it was contended that the revised
retirement benefits were introduced to attract more and more go\·ernment
servants for permanent absorption in government undertakings to build
up their cadres, and this being a new incentive, it has been given effect to
from the date of issue of orders and there was nothing arbitrary or E
discriminatory in fixing the cut-off date.
~llowing the appeal, this Court,
HELD : 1.1. The object of bringing into existence the revised terms
and conditions in the Memorandum dated June, 16, 1967 was to protect F
the pensionary benefits which the Central Government servants had
earned before their absorption into the public undertakings. Restricting
the applicability of the revised Memorandum only to those who are ab-
sorbed after the coming into force of the said Memorandum, would be
defeating the very object and purpose of the revised Memorandum. The
appellant along \\ith other Central Government employees was sent on G
foreign service to the public undertaking in the year 1961. He was ab-
~ sorbed in the year 1964. All those who joined foreign service alongwith the
appellant but were absorbed after June 16, 1967 have been given the
benefits under the revised Memorandum. Denying the same to the appel-
Jant would be contrary to f'airplay and justice. Assuming that the revised H
1080 SUPREME COURT REPORTS [1993) 1 S.C.R.
"'I
A Memorandum is an incentive to attract Central Government employees to
public undertakings, the persons who are so attracted do not become a ..,..
different class. They join the same class to which the persons like the
appellant belong. Therefore, all those Ce11tral Government employees who
were absorbed in public undertakings either before June 16,1967 or there-
after and were serving the public undertakings, are entitled to the benefits
B
provided under the Memorandum dated June 16, 1967.
[1083G-H; 1084A·B·C]
~
1.2. It is no doubt correct that the Memorandum dated June 16,
1967 is prospective which only means that the benefits therein. can lie
c
-
claimed only after June, 16, 1967. The Memorandum, however, takes into
consideration the past event that is the period of service under the Central
Government for the purpose of giving pro-rata pension. Whoever has
rendered pensionable service prior to coming into force of the Memoran·
dum would he entitled to claim the benefits under the said Memorandum.
-.,(
Restricting the benefits only to those who were absorbed in public under·
D taking after June 16, 1967 would be arbitrary and bit by Articles 14 and
16 of the Constitution. [1084E]
2. Rule 37 of Central Civil Services (Pension) Rules, 1972 provides
that a government servant who has been permitted to be absorbed in
E service in a Central Government public undertaking in public interest, be y
deemed to have retired from service from the date of such absorption and
shall be eligible to receive retirement benefits in accordance with the
orders of the Government applicable to him. Admittedly the appellant was
permitted to be absorbed in the Central Government public undertaking
-
F in public interest. The appellant, as such, shall be deemed to have retired
from government service from the date of his absorption and is eligible to
receive the retirement benefits. It is no doubt correct that the retirement ~
benefits envisaged under Rule 37 are to be determined in accordance with
the Government orders but the plain language of the Rule does not permit
any classification while granting the retirement benefits. When the Rule
G specifically provides that all the persons who fulfil the pre-conditions
prescribed therein shall be deemed to have retired from government
service from the date of absorption and shall be eligible to receive retire· ,.(
men! benefits then the government while granting benefits cannot deny the
same to some of them on the basis of arbitrary classification. All those
H person who fulfil the conditions u11der Rule 37 are a class by themselves
r
T.S. THIRUVENGADAM ,._ SECRETARY [KULDIP SINGH, J.I 1081
and no discrimination can be permitted within the said class. The govern· A
~ ment action in restricting the benefits under the revised Memorandum
.. dated June 16, 1967 only to those who are absorbed after that date goes
contrary to the Rule and cannot be sustained. [108SC·G)
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 666 of
1993. B
From the Judgment and Order dated 14.6.1988 of the Central Ad·
+ ministrative Tribunal, Madras in T.A. No. 12 of 1988.
M.N. Krishnamani, T. Raja and Pravir Choudhary for the Appellant.
c
- Altaf Ahmad, Addi. Solicitor General, V.N. Ganpule, Hemani Shar·
ma and S.N. Terdol for the Respondents.
The Judgment of the Court was delivered by
""' KULDIP SINGH, J. Special leave granted.
D
Applications for impleadment are allowed.
The appellant was in the service of the Central Government for a
°'{ period of about 15 years. He was thereafter permanently absorbed in a E
public undertaking, from where he retired on April 1, 1984. The question
for our consideration is whether the appellant on absorption in the public
=- undertaking was eligible for pro-rata pension and death-cum-retirement
gratuity based on the length of his qualifying service under the Goverment
till the date of absorption.
F
- --J.. The appellant was serving the Audit Department (Defence Service)
of the Government of India as Substantive Upper Division Clerk. He was
sent on foreign service to Neyveli Lignite Corporation Ltd. (public sector
undertaking) on January 9/10, 1961. He was permanently absorbed in the
public undertaking with effect from August 1, 1964. It is not disputed that G
the appellant, having joined Central Government service on July 25, 1949,
had completed 15 years of pensionable government-service. On the date of
>-- appellant's permanent absorption in the public undertaking the retirement
benefits were regulated by Memorandum dated Noverbcr 10, 1960 issued
by the Ministry of Finance (Department of Expenditure), New Delhi. H
1082 SUPREME COURT REPORTS [1993] 1 S.C.R.
A According to the said Memorandum the retirement benefits for service
rendered by a government servant before his absorption in a public under- ·)ir
taking, were admissible equal to what the government would have con-
tributed had the individual been on contributory provident fund terms, with
2% simple interest thereon. The Government of India subsequently issued
B Memorandum dated June 16, 1967 providing revised term, and conditions
of absorption in Central Public Sector Undertakings but restricted the
revised benefits only to those who were absorbed on or after June 16, 1967.
The operative features of the revised instrucuons were as under:- ~
(i) A permanent government servant with not less than 10
c years qualifying sen1ce on absorption in public undertak-
ing was eligible for pro-rata pension and death-cum-retire- -
ment gratuity based on the length of his qualifying service
under government till the date of absorption. The pension
was to be calc~!ated on the basis of average emoluments
D immediorcly before absorption.
(ii) The pro-rata pension, gratuity, etc. admissible in
respect of the service rendered under the government was
disbursable only from the date the government servant
would have normally superannuated had be continued in
E service.
The appellant retired from the public undertaking on April 1, 1984.
lt is not disputed that on January 15, 1974 ·the appellant was paid a sum
of Rs. 3036 as retirement benefits in terms of the Memorandum dated
-
F November 10, 1960. The benefit of the revised terms and conditions of
absorption as contained in the Government Memorandum dated June 16,
1967 was denied to the appellant on the short ground that he was absorbed
in the public undertaking prior to the date of coming into force of the said
Memorandum.
G The appellant filed a writ petition under Article 226 of the Constitu-
tion of India on October 19, 1984 in the Madras High Court seeking a
mandamus directing the respondents to grant him pro-rata pension and all
other benefits admissible under the revised Memorandum dated June 16,
1967. As an interim measure the High Court directed that the appellant be
H paid 50 per cent of the pro-rata pension and other pensionary benefits
T.S. 'Jl!JRUVENGADAM v. SECRETARY \KUUJfP S!NG!I. J.] 1083
under the Memorandum dated June 16, 1967 from the d_atc o[ his absorp- A
~ lion in the public undertaking. The writ petition was transferred to the
Central Administrative Tribunal, Madras. The tribunal by its judgment
dated June 14, 1988 dismissed the application and rejected the claim of the
appellant. This appeal by way of special leave is against the judgment of
the Central Administrative Tribunal.
B
The appellant has questioned the validity of the condition imposed
+ in the Memorandum dated June 16,-1967 making the Memorandum ap-
plicable only to such of the employees who arc absorbed in the public
undertakings on or after June 16, 1967. According to the appellant it was
not open lo the government lo deny the benefit of the Memorandum lo c
- those employees who were absorbed prior to the date of the Memorandum
as it \vould bring into existence arbitrary classification in respect of govern-
ment employees absorbed in the public undertakings prior to June 16, 1967
and thereafter. The appellant has contended that such classification is not
warranted under Articles 14 and 16 uf the Constitution as it has no nexus D
with the object sought to be achieved by the government Memorandum.
The contention of the respondents, on the other hand, is that the
revised retirement benefits were introduced to attract more and more
government servants for permanent absorption .in governn1ent undertakings
'-( to build up their cadres. It was thus an incentive for encadring suitable E
persons in the government undertakings. According lo the respondents,
being a new incentive, it has been given effect from the date of issue of
- orders and there is nothing arbitrary or discriminatory in fixing the cut-off
date.
F
There is no dispute that Ncyvcli Lignite Corporation Ltd. is a body
\vhich i!' sponsored, financed and controlled by the Central Governn1ent.
More and more government functions arc being brought under the govern-
ment undertakings and autonomous bodies. There is considerable mobility
from Central Government Departments to the public undertakings. The
object of brinp:ing into existence the revised terms and conditions in the G
Memorandum dated June 16, 1967 was to protect the pensionary benefits
which the Central Government servants had earned before their absorption
mtn the public undertakings. Restricting the applicability ,1[ the revised
r\:lcn1orantlum only to those \Vho are absorbed after the coming into force
of the said Memorandum, \Vould he defeating the very oh.iect and purpose H
1084 SUPREME COURT REPORTS [1993] l S.C.R.
A of the revised Memorandum. It is not disputed that the appellant along
with other Central Government employees was sent on foreign service to ·~·
I he public undertaking in the year 1961. He was absorbed in the year 1964.
All those, who joined on foreign serYice alongwith the appellant but were
absorbed after June 16, 1967, have been given the benefits under the
revi,;ed Memorandum. Denying the same to the appellant would be con-
B
trary to fair-play and justice. Assuming that the revised Memorandum is
an incentive to attract Central Government employees to public undertak-
ings, the persons who are so attracted do not become a different class. ~
They join the same class to which the persons like the appellant belong.
Therefore, all those Central Government employees who were absorbed in
c public undertakings either before June 16, 1967 or thereafter and were
serving the public undertakings, arc entitled to the benefits provided under
the Memorandum dated June 16, 1967.
-
We do not, also, find substance in the contention that the revised
benefits being new ii could only be prospective in operation and cannot be ..I
D extended to employees who were absorbed earlier. It is no doubt correct
that the Mcmor~ndtnn dated June 16, 1967 is prospective which only means
that the benefits therein can be claimed only after June 16, 1967. The
Memorandum, however, takes into consideration the past event that is the
period of service under the Central Government for the purposes of giving .
E pro-rata pension. Whoever has rendered pensionable service prior to Y
coming into force of the Memorandum would be entitled to claim the
F
benefits under the said Memorandum. Restricting the benefits only to those
who were absorbed in public undertakings after June 16, 1967 would be
arbitrary and hit by Articles 14 and 16 of the Constitution. -
We may examine the claim of the appellant under the Central Civil
Services (Pension) Rules, 1972 (the Rules). Rule 37 of the Rules is as ~
under:-
"A Government servant who has bei;n permitted to be
G absorbed in a service or post in or under a corporation or
company wholly or substantially owned or controlled by
the Government or in or under a body controlled or
financed by the Government shall, if such absorption is
declared by the Government to be in the public interest,
H be deen1cd to have retired from service from the date of
r T.S. THIRUVENGADAM v. SECRETARY [KULDIP SINGH, J.] 1085
such absorption and shall be eligible to receive retirement A
benefits which he may have dected or deemed to have
elected, and from such date as may be determined, in
accordance with the orders of the Government applicable
to him:
Provided that no declaration regarding absorption in the B
public interest in a service or post in or under such cor-
poration, company or body shall be required in respect of
a Government servant whom the Government may, by
order, declare to be a scientific employee."
c
Rule 37, thus, provides that a government servant who has been
permitted to be absorbed in service in a Central Government public
undertaking in public interest, be deemed to ·have retir.ed from service from
the date of such absorption and shall be eligible to receive retirement
-~benefits in accordance with the orders of the Government applicable to D
him. It is not disputed that the appellant was permitted to be absorbed in
the Central Government public undertaking in public interest. The appel-
lant, as such, shall be deemed to have retired from government service from
the date of his absorption and is eligible to receive the re\irement benefits.
It is no doubt correct that the retirement benefits envisaged under Rule 37
~·are to be determined in accordance with the government order but the E
plain language of the rule does not permit any classification while granting
the retirement benefits. When the Rule specifically provides that all the
- persons who fulfil the pre-conditions prescribed therein shall be deemed
to have retired from government service from the date of absorption and
shall be eligible to receive retirement benefits then the government while F
granting benefits cannot deny the same to some of them on the basis· of
..Jc arbitrary classification. All those persons who fulfil the conditions under
Rule 37 are a class by themselves and no discrimination can be permitted
within the said class. The government action in restricting the benefits
under the revised Memorandum dated June 16, 1967 only to those who are
absorbed after that date goes contrary to the Rule and cannot be sustained. G
)'. We, therefore, allow the appeal, set aside the judgment of the Central
Administrative Tribunal and direct the respondents to grant pro-rata pen-
sion and other benefits to the appellant under the office Memorandum
dated June 16, 1967. The respondents are directed to final\se the. benefits H
1086 SUPREME COURT REPORTS (1993] 1 S.C.R.
A within three months from today and all the arrears of pension etc. shall be
paid to the appellant within one month thereafter with 12% interest. Any)._
payment already received by the appellant under the interim order of the'
High Court has to be adjusted. The appellant shall be entitled to costs
which we quantify as Rs. 10,000.
B We allow I.A. 4/91 and direct that the applicants therein namely,
K.B.L. Mathur, Jaswant Lal Jetlie and C.L. Soni - whose cases are identical
to that of the appellant - be also given benefit of the Memorandum date\
June 16, 1967 in similar terms as directed by us in respect of the appellant.
These applicants shall, however, be not entitled to costs.
G.N. Appeal allowed.
-
v
-
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