Holding

Retired High Court judges are entitled to the cash equivalent of un‑utilised earned leave at retirement as per Rule 208 and Rule 2, and the Union's refusal is untenable.

Summary

Retired judges of the High Court, including Justice S.N. Saxena, sought payment of the balance of their leave‑encashment amount or permission to deposit it in the Treasury after retirement. The Union of India refused, relying on the "one‑time settlement" concept in Rule 208 of the All India Services (Leave) Rules, 1955. The Supreme Court examined the interplay of Rule 208 with Rule 2 of the High Court Judges (Conditions of Service) Rules, 1956 and the High Court Judges (Conditions of Service) Act, 1954, and held that a judge is entitled to a cash equivalent of un‑utilised earned leave at the time of retirement. The Court rejected the Union’s stance as discriminatory and ordered that the writ petitions be allowed. Consequently, the civil appeals filed by the Union were dismissed and the writ petitions were granted.

Issues considered

The extent of entitlement of retired High Court judges to cash equivalent of un‑utilised earned leave under Rule 208 of the All India Services (Leave) Rules, 1955 read with Rule 2 of the High Court Judges (Conditions of Service) Rules, 1956.
Whether the "one‑time settlement" provision bars any further payment or deposit of the leave‑encashment amount after retirement.
Whether the Union of India's refusal to honour the claim amounts to discriminatory treatment of the petitioners.

Legislation cited

Constitution of Indias. Article 221(2)
High Court Judges (Conditions of Service) Act, 1954s. Section 2(c), s. Section 4, s. Section 5, s. Section 6

Subjects

Leave encashmentRetirement benefitsHigh Court judgesOne‑time settlementDiscriminationRule interpretationCivil appealWrit petitionArticle 32

Judgment

"
U.O.L v. JUSTICE (RETD.) S.N. SAXENA 283
T.L.V. Iyer, S.B. Sanyal, Ms. Shobha Dixit, Manoj Swarup, Ms. Nidhi A
Agarwal, B.K. Prasad, S.N. Terdol, Pradyot Kumar Chakravarty, Shrish Kumar
Misra, Anish Kumar Gupta, Tara Chandra Sharma, V.B. Joshi (NP), Sushii
Kumar Jain (NP), G.S. Chatterjee (NP), Goodwill lndeevar (NP) and Ashok
K. Srivastava for the appearing parties.

The following Order of the Court was delivered : B

These Civil Appeals and the Writ Petition involve a short question as
regard interpretation of Rule 208 of the All India Services (Leave) Rules,
1955 read with Rule 2 of the High Court Judges (Condition of Service)
Rules, 1956.
c
The respondents herein who were the writ petitioners before the High
Court as also the writ petitioners before us were appointed as Judges of the
High Court. They have since retired. They were elevated to the High Court
from Judicial Service quota. Most of them were to reach the age of
superannuation in Higher Judicial Services of the respective State a few days D
or a few months prior to their elevation to the High Court. It is not in dispute
that in terms of the rules governing the conditions of service framed by the
respective States; retirement benefits as also the leave encashment benefits
are deposited in their account. It was so done in the case of all the writ
petitioners. After their elevation most of them expressed their desire to deposit
1
the said amount in the Treasury. Curiously enough, whereas in the cases of E
some of the Judge such request was acceded to but in the case of the writ
petitioners the same had been turned down. As despite demand they were not
paid the balance of the amount by way of difference of the leave encashment,
writ petitions came to be filed before the Allahabad High Court. The said
writ applications have been allowed. Aggrieved, the Union of India is in F
appeal before us.

An application under Article 32 of the Constitution of India has been
filed by the petitioners herein, who are retired Judges of the Ca)cutta High
Court, as their requests for payment of the balance sum and/or permitting
them to deposit the amount drawn by them in the Treasury was turned down G
on the ground of pendency of the special leave petitions before this Court.

The contention of Union of India in all these appeals as also writ
petition is that the amount in question having been withdrawn by the writ
petitioners, keeping in view the concept of "one time settlement" engrafted
in Rule 208 of the All India Services (Leave) Rules, 1955, they are not H
284 SUPREME COURT REPORTS [2003) 2 S.C.R.

A · entitled to any further amount.
It is not in dispute that the conditions of service of a Judge of High
Court is governed by the High Court Judges (Conditions of Service) Act,
1954. No specific provision exists therein as regards encashment of the
,..
'>... --
unavailed leave. The said benefit, however, is conferred upon the High Court
B Judges in terms of Rule 2 of the High Court Judges (Conditions of Service)
Rules, 1956 read with Rule 208 of the All India Services (Leave) Rules,
1955.

Rule 2 of the High Court Judges (Conditions of Service) Rules, 1956
reads thus :
c
"2. The conditions of services of a Judge of a High Court for which
no express provision has been made in the High Court Judges
(Conditions of Service) Act, 1954, shall be and shall from the
commencement of the Constitution be deemed to have been,
D determined by the rules for the time being applicable to a member of
the Indian Administrative Service holding the rank of Secretary to the
Government of the State in which the principle seat of the High Court
is situated:

Provided that, in the case of a Judge of the High Court of Delhi and
E a Judge of the High Court of Punjab & Haryana the conditions of
service shall be determined by the rules for the time being applicable t-
to a member of the Indian Administrative Service on deputation to

F
the Government of India holding the rank of Joint Secretary to the
Government of India stationed at New Delhi:

Provided further that, in respect of facilities for medical treatment
-
and accommodation in hospitals the provisions of the All India Service
(Medical Attendance) Rules, 1954, in their application to Judge, shall
be deemed. to have taken effect from January 26, 1950:

Provided also that where at the request of the President, any Judge
G undertakes to discharge any function outside his normal duties in any
locality away from his headquarters, the President may, having regard
to the nature of such functions and 'locality, determine the facilities
that may be afforded to such Judge including accommodation, transport
and telephone so long as he continues to discharge such function,
either without any payment or at a concessional rate."
H
iJ.0.1. v. JUSTICE (RETD.) S.N. SAXENA 285

Rule 20-B of All India Services (Leave) Rules, 1955 reads thus: A
"20-B. Payment of cash equivalent of leave salary-(!) The Government
shall suo motu sanction to a member of the service who retires from
the service under sub-rule (I) of Rule 1.6 of the All India Services
(Death-cum-Retirement Benefits) Rules, 1958 having attained the age
of 58 years on or after September 30, 1977 the cash equivalent of B
leave salary in respect of the period of earned leave at his credit on
the date of his retirement, subject to a maximum of 180 days.

(2) The cash equivalent of leave salary payable to a member of the
service under sub-rule (I) above shall also include dearness allowance
admissible to him on the leave salary at the rates in force on the date C
of retirement, and it shall be paid in one lump-sum, as a one-time
·settlement.

(3) The city compensatory allowance and the house rent allowance
shall not be included in calculating the cash equivalent of leave salary D
under this rule ..

From the cash equivalent so worked out no deduction shall be made
on account of pension and pensionary equivalent of other retirement
benefits."

It is also relevant to notice Clause (2) of Article 221 ofthe Constitution, · E
which reads thus:

"Every Judge shall be entitled to such allowances and to such rights
in respect of leave of absence and pension as may from time to time
be determined by or under law made by Parliament and, until so F
determined, to such allowances and rights as are .specified in the
Second Schedule ............ "

We may notice the factual matrix of the matter from Civil Appeal No.
2664 of 1999.
G
One of the petitioners, Justice (Retd.) S.N. Saxena joined Subordinate
Judiciary as Munsif in 1959. He in course of time was promoted as District
Judge. In January, 1992, he applied for grant of pensionary and other retiral
benefits including leave encashment in terms of the extant rule applicable to
his case in expectancy of his retirement as District Judge.' The date of his
superannuation as District Judge would have been 15.7.1992 had he been not H
286 SUPREME COURT REPORTS (2003] 2 S.C.R.

A elevated as a High Court Judge. He was elevated as High Court Judge with
effect from 7.7.92. Most of the benefits of the post of District Judge were
sanctioned to him in ignorance of his elevation as a High Court Judge. The
(
papers and cheques etc. were sent to the last place of his posting being
'I
District Judge to as member of U.P. Public Service Tribunal No.II Lucknow.
His Staff deposited the cheque in his account. Shri Saxena on his retirement
.~

B as a High Court Judge submitted papers asking for retiral benefits including
leave encashment of 8 months/maximum of 240 days as High Court Judge
as per Rules. On 16/17.5.96 a recommendatory letter was issued by the
Accountant General. He retired as a High Court Judge on 15.7.96. In the
month of September, 1996 certain queries were made by the Union
c Government and the Accountant General UP replied thereto. On 16.12.96
major part of the gratuity and other retiral benefits were sanctioned to be
paid, except leave encashment of 240 days. The writ petition was, therefore,
filed:

It is not in dispute that in terms of the Rules, leave encashment benefit
D from 30th September, 1977 till 30th June, 1986 was for 180 days whereas for
the period !st July, 1986 to 30th June, 1997 the same was raised to 240 days.
Yet again on and from 1st July, 1997 the period of leave encashment has
been raised to 300 days.

Concededly a retired Judge of a High Court is entitled to payment of
E
cash equivalent of leave salary for the period of earned leave at his credit on
the date of his retirement in terms of Rule 208 of the All India Services
(Leave) Rules, 1955 read with Rule 2 of the High Court Judges (Conditions .,
of Service) Rules, 1956.

F It was so held in Union of India v. Gurnam Singh, [1982] 3 SCR 700
in the following terms:

"It is true that rule 20-B revolves around the concept of earned leave,
and the expression 'earned leave' has ben specifically defined by
clause (b) of Rule 2 of the All India Service (Leave) Rules, 1955 as
G "leave earned under Rule 10." But Rule 10 merely lays down the rate
and amount of earned leave. The principle in which 'eamed leave' is
rooted must be discovered from Rule 4, which provides that "except
as otherwise provided in these rules leave shall be earned by duty
only". Their performance of duty is the basis of earning leave. That
H concept is also embedded in the High Court Judges (Conditions of
U.0.1. v. JUSTICE (RETD.) S.N. SAXENA 287
Service) Act, 1954. Under that Act, the time spent by a judge on duty A
constitutes the primary ingredient in the concept of 'actual service'
(Clause (c), sub-section (I) of Section 2), which is the reason for
crediting leave in the leave account of a Judge (Section 4). Although
the expression 'earned leave' is not employed in the Act, the
fundamental premise for the grant of leave to a Judge is that he has B
earned it. He has earned it by virtue of the time spent by him on
actual service. That a Judge earns the leave which is credited to his
leave account is borne out by the proviso to Section 6 of the Act,
which declares that the grant under Section 6 of leave not due will
not be made "if the Judge is not expected to return to duty at the end
of such leave and earn the leave granted". The concept then on which C
Rule 20-B proceeds is familiar to and underlies the statutory scheme
relating to leave formulated in the Act. It bears a logical and reasonable
relationship to the essential content of that scheme. On that, it must
be regarded as a provision absorbed by Rule 2 of the High Court
Judges Rules, 1956 into the statutory structure defining the conditions
of service of a Judge of a High Court." D
It is beyond any cavil that the Government of India had also issued a
circular letter addressed to Chief Secretaries of the State Governments to the
effect that the retired Judges of the High Court are entitled to the payment
of cash equivalent to unutilized earned leave standing to their credit at the E
time of their retirement.

Having regard to the constitutional scheme as also the decision of this
Court, there cannot be any doubt whatsoever that the cash equivalent in lieu
of unavailed leave would be payable at the time of retirement of the Judge
of the High Court and not prior thereto. A member of the Higher Judicial F
Service cannot antif:ipate the date by which his elevation to High Court
would come through. So is the State Government. Pursuant to or in furtherance
of the statutory rules applicable to the case of the members of the Higher
Judicial Service, the respective State Governments had deposited the amount
of pension and other retiral benefits credited in the account of the officer G
concerned, which, in our opinion, would not mean that on his elevation as a
High Court Judge he would be deprived of the benefits of a retired High
Court Judge to which he is otherwise entitled to not only under the statutory
rules but also under the Constitution. The crucial expression employed in
Rule 20B of the All India Service (Leave) Rules is "A member of the service
who retries from the service". Therefore, retirement is sine qua non fi>r H
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288 SUPREME COURT REPORTS [2003] 2 S.C.R.

A payment of leave encashment.

It is not in dispute that elevation of a Member of a Higher Judicial
Service to the post of a Judge of High Court would not amount to his retirement
or cessation of service. On his elevation Judicial Officer carries with him all
the benefits accrued to him during his past service. The services rendered by
B the wr.it petitioners as judicial officers as also a High Court Judge would be
a continuing one. It is, therefore, axiomatic that a. High Court Judge on
attaining the age of superann~ation would be entitled to all the retiral benefits
in terms of the High Court Judges (Conditions of Service) Act and the Rules
framed thereunder.
c In Shiv Dayal Shrivastava v. Union of India, [1984) I SCC 724 this
court held:

"6. Chapter II of the Act deals with leave. Section 3 provides the
kinds of leave admissible to a Judge. Section 4 makes provision for
D a leave account to be maintaine. · Section 5 deals with aggregate
amount of leave which may be g i!~d. Jection 5-A makes provision
for commutation of leave on half allowances into leave on full
allowances while Sections 6, 7 and 8 deal with grant of leave of
specific kinds. These provisions in the Act deal with leave which has
to be asked for and taken during the tenure of working as a Judge.
E
Leave necessarily implies authorised absence from duty or employment
(see Webster's Third New international Dictionary) Rule 20-8 makes
provision for payment of cash equivalent of leave due under the
appropriate provisions but subject to a maximum of 180 days. We
have already indicated that the ratio of Gurnam Singh case (1982) 3
F SCR 700: (1982) 2 sec 314: 1982 sec (L&S) 236: AIR 1982 SC
1265 has not been disputed. It would necessarily mean acceptance of
the position that the Act did not make provision for payment of the
retirement benefit contemplated under Rule 20-B; otherwise Rule 20-
B could not have been applifd. The scheme in Rule 20-B is that the
payment would be made suo motu and without any application for it.
G Leave referred to under the Act is one which has to be asked for and
is intended to meet a different situation. For calculating the benefits
under Rule 20-B, Section 5(3) of the Act is not relevant and in case
in the leave account maintained under Section 4 of the Act leave is
due, the benefit under Rule 20-B has to be worked out subject to the
H upper limit of 180 days, equal to six months, the claim made by the
U.0.1. v. JUSTICE (RETD.) S.N. SAXENA 289
petitioner that he was entitled to the benefit of six months is, therefore, A
justified subject, of course, to admissibility of leave to the extent of
180 days in the leave account. No dispute was raised before us that
as a fact petitioner had to his credit more than 180 days of leave."

In Satish Chandra v. Union of India and Ors., [1987] Supp SCC 592 ,
following Gurnam Singh supra it was held: B
"2. Coming to the question of the cash equivalent of leave to the
credit of the petitioner, the learned Additional Solicitor General has
placed before us the latest government order dated July 23, 1987, in
which it is stated that the maximum limit for payment of cash
equivalent of leave to the credit of the judges of the High Courts and C
the Supreme Court has been raised to 240 days from 180 days with
effect from July I, 1986 as in the case of those governed by Rule 20-
B of the All India Services (Leave) Rules. We only wish to point out
that as a result of the judgment of this Court in Union of India v.
Gurnam Singh, AIR (1982) SC 1265: [1982] 2 SCC 314; 1982 SCC D
(L&S) 236, the maximum limit of 240 days becomes automatically
applicable to judges as soon as it was made applicable to those
governed by All India Services (Leave) Rules. It was not necessary
for the Ac.countant Generals and the Pay and Accounts Officers to
seek fresh instructions from the Government. We also point out that
it has already been clarified in Shiv Dayal Shrivastava v. Union of E
India, [AIR (1984) SC 465 :[1984] I sec 724 :; 1984 sec (L&S)
179] that in calculating the leave to the credit of a judge the provisions
of Section. 4 alone were re:evant and not those of Section 5 of the
High Court Judges (Conditions of Service) Act. Since the leave account
is maintained in terms of leave on half allowances, the leave is first F
to be converted to leave on full allowance by dividing by 2 the total
amount of leave on half allowances standing to the credit of the judge
in the leav.e account. After this is done the judge is entitled to be paid
the cash equivalent up to a maximum of 180 days in the case of a
judge who has retired on or before June 30, 1986 and 240 days in the
case of a judge who has retired on or after July I, 1986. What applies G
to judges of the High Court applies mutatis mutandis to judges of the
Supreme Court. A direction will issue to the respondent to calculate
the amount of cash equivalent of leave to be paid to the petitioner in
accordance with what we have now said."
There cannot thus be any doubt whatsoever that the writ petitioners H
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290 SUPREME COURT REPORTS [2003) 2 S.C.R.

A would be entitled to the reliefs claimed for by them in their respective writ
petitions. We are in agreement with the views expressed by the High Court.

So far as the Writ Petition under Article 32 of the Constitution of India
filed by retired Judges of the Calcutta High Court is concerned, we may
further point out that request made by three other Judges of the said High
B Court for revised payment.lfad been sanctioned and despite the fact that the
case of the writ petitioners stand on the same footing and they are similarly
circumstanced, no such order of sanction has been passed in their case despite
requests on the ground that the Union of India had filed application for
special leave before this Court against the judgment of the Allahabad High
C Court. The action on the part of the Union of India is thus clearly
discriminatory in nature.

For the foregoing reasons, we are of the opinion that the stand taken
by the Union of India cannot be accepted.

D Accordingly, Civil Appeals are dismissed and the Writ Petition is
allowed. In this facts and circumstances of this case, however, the parties
shall pay anJ bear their own costs.

R.P. Appeals dismissed/Petition allowed.