HIMACHAL ROAD TRANSPORT CORPORATION & ANR versus HIMACHAL ROAD TRANSPORT CORPORATION RETIRED EMPLOYEES UNION on 22 February 2021

1. This appeal is filed by the Himachal Road Transport Corporationand another, aggrieved by the judgment and Order dated 08.01.2009,passed by the High Court of Himachal Pradesh, at Shimla in CWP No.1362 of 2001.

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2. The Himachal Road Transport Corporation is established underThe Road Transport Corporations Act, 1950. The employees of theCorporation were governed by the Contributory Provident Fund Scheme(CPF). The appellant-Corporation introduced a Pension Scheme in theyear 1995, by issuing a Notification dated 06.10.1995 and adopted CentralHCivil Service (Pension) Rules, 1972. The second appellant has approved HIMACHAL ROAD TRANSPORT CORPN. v. HIMACHAL ROADTRANSPORT CORPN. RETD. EMPLOYEES UNION [R. SUBHASH REDDY, J.]

the Scheme formulated by the Corporation. The Pension Scheme wasgiven effect to from 05.06.1995, that is from the date on which Schemewas approved by the Cabinet/ Government. For the employees whoretired from 05.06.1995, till the date of notification, i.e, 06.10.1995 andfor the employees in service, an option was given either to opt for PensionScheme, or to continue under the Contributory Provident Fund. Clause 5of the Scheme, stipulates eligibility criteria to opt for Pension Scheme.

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3. The respondent-Union, consisting of the employees who retiredprior to 05.06.1995, approached the Administrative Tribunal by filingOriginal Application in OA (D) No. 237/1996, for grant of followingreliefs:

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“i)That the cut off date for grant of pension to those employeeswho were in service of the Corporation as on June 5, 1995be quashed and set aside;

ii)That the applicants i.e. pre June 5, 1995 employees, maybe held entitled for pension as the other similarly situatedDemployees between June 5, 1995 to October 6, 1995 havebeen given the benefit as per Clause 5 of the said Scheme;

iii)That the action of the respondents Corporation in denyingpension to the applicants may be declared illegal, unjust,unreasonable, arbitrary and violative of Article 14, 16, 21.”

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The respondent-union, relying on a judgment of this Court in thecase of D.S. Nakara & Ors. v. Union of India[1] and several otherjudgments, pleaded that the fixation of cut-off date was arbitrary anddiscriminatory.

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4. The appellants have contested the Original Application, filed bythe respondent-Union, inter alia pleading that they have introduced aPension Scheme to the employees of the Corporation, with effect from05.06.1995, on which date Cabinet has approved the Scheme. It wasthe plea of the appellants that all the employees of the Corporation, whoretired prior to 05.06.1995, were already paid all the retiral benefitsincluding the benefit of Contributory Provident Fund, as such the cut-offdate fixed, i.e, 05.06.1995, for implementing the Pension Scheme, wasnot discriminatory.

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1 AIR 1983 SC 130 = (1983) 1 SCC 305

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1 AIR 1983 SC 130 = (1983) 1 SCC 305

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A5. The Himachal Pradesh Administrative Tribunal, by judgmentdated 19.06.2001, dismissed the Original Application filed by therespondent-Union, by holding that the appellants are entitled to fix thecut-off date for introducing the Pension Scheme for its employees andsuch fixation is not discriminatory. It was held that all the employees ofthe Union, who were governed by the Contributory Provident Fund, onBtheir retirement, have already availed the benefit of such fund. It wasfurther noticed by the Tribunal that, as the Cabinet has approved theScheme in its meeting held on 05.06.1995 as such, the Scheme wasgiven effect to from such date. By recording a finding that the employeeswho were already retired prior to 05.06.1995, constitute a differentCcategory and are not similarly placed as those employees who were inservice of the appellant-Corporation as on 05.06.1995, dismissed theOriginal Application.

6. The respondent-Union, aggrieved by the judgment and Orderof the Administrative Tribunal, approached the High Court of HimachalDPradesh, at Shimla, by way of Civil Writ Petition No. 1362 of 2001. Inthe Writ Petition filed, mainly it was the case of the respondent-Unionthat, the cut-off date, i.e, 05.06.1995, fixed by the Corporation forimplementation of Pension Scheme is discriminatory and has noreasonable nexus with the object sought to be achieved. It was the pleaof Union that all the employees of the Corporation, constitute aEhomogeneous class and there cannot be a classification within the class.By impugned judgment and Order dated 08.01.2009, the High Court hasallowed the Writ Petition, by quashing the cut-off date, on the groundthat no reasons were forthcoming from the appellant-Corporation, forpicking up the cut-off date, i.e, 05.06.1995, for implementation of PensionFScheme. Further, High Court has declared that the Scheme which wasnotified on 06.10.1995, shall apply to the members of the respondent-Union and other similarly situated persons, with a condition that they willhave to deposit the amount received by them under the ContributoryProvident Fund Scheme, within a reasonable time. The High Court has set aside the Order of the Administrative Tribunal dated 19.06.2001,Gpassed in OA (D) 237/1996.

7. Aggrieved by the said judgment and order passed by the HighCourt, the Road Transport Corporation is before us, by way of this civilappeal.

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HIMACHAL ROAD TRANSPORT CORPN. v. HIMACHAL ROADTRANSPORT CORPN. RETD. EMPLOYEES UNION [R. SUBHASH REDDY, J.]

8. We have heard Sri Himanshu Tyagi, learned counsel appearingfor the appellant-Corporation and Sri M.C. Dhingra, learned counselappearing for the respondent-applicant.

9. It is contended by Sri Himanshu Tyagi, learned counsel for theappellant-Corporation that, though there is no discrimination in fixing thecut-off date, i.e, 05.06.1995, by way of Notification dated 06.10.1995,the High Court has allowed the writ petition, without assigning validreasons. It is submitted that the employees who retired prior to 05.06.1995,by availing the benefit of Contributory Provident Fund Scheme, constitutea separate class. After availing the benefit of Contributory ProvidentFund Scheme, on their retirement, it is not open to plead that PensionScheme, as notified for the existing employees and the employees retiredbetween 05.06.1995 and 06.10.1995 is discriminatory. The employeeswho retired prior to 05.06.1995, and the employees presently in service,cannot be treated as a homogeneous class. It is submitted that, it isalways open for the employer to extend further benefits to the employeesprospectively. When such Scheme is introduced with effect from thedate of its approval, i.e, 05.06.1995, same is rightly not extended to theemployees who retired prior to 05.06.1995. The Pension Scheme wasapproved by the Cabinet on 05.06.1995, as such it cannot be said thatsuch a fixation is either arbitrary or illegal.

10. On the other hand, Sri M.C. Dhingra, learned counsel appearingfor the respondent-applicant, has submitted that there is absolutely noreason or justification for fixing the cut-off date, i.e, 05.06.1995, forimplementation of Pension Scheme. It is submitted that all the employeesof the Corporation constitute one homogeneous class and the appellant-Corporation should not have made any distinction among such class ofemployees. It is submitted that, as no valid reasons have been assignedby the appellant-Corporation, for fixing the cut-off date, as such theHigh Court has rightly allowed the Writ Petition and there are no groundsto interfere with the same. Further submissions of learned counsel forthe respondent is that, though the Pension Scheme was notified videNotification dated 06.10.1995, same was given effect to retrospectivelyfrom 05.06.1995, as such there is no reason for not extending such benefitto the employees who retired prior to 05.06.1995 also. With thecontentions, as referred above, learned counsel prayed for dismissal ofthe civil appeal.

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A11. Having heard the learned counsels on both sides, we haveperused the impugned order of the High Court, the order passed by theTribunal and other material placed on record.

12. Before entering into the contentious issue of fixation of cut-off date, for extending the benefit of Pension Scheme by the Corporation,Bwe need to notice certain factual aspects emerging from the pleadingsof the parties and other material on record.

13. The members of the respondent-Union were initially employedby the Mandi- Kullu Road Transport Corporation. By Order dated24.09.1974, the said Corporation was re-named as “Himachal RoadCTransport Corporation” and vide notification dated 01.10.1974, theHimachal Pradesh State Government has taken over the services ofsuch employees with effect from 02.10.1974. All the members of therespondent-Union, who were retired, were governed by the ContributoryProvident Fund Scheme, after their services were taken over by theCorporation with effect from 02.10.1974. The State Government hasDnotified the Pension Scheme on 06.10.1995, however, the same wasmade applicable with effect from 05.06.1995. The Administrative Tribunal,by drawing a distinction on the facts from the case of D.S. Nakara[1] andother judgments relied on, on behalf of the respondent, has held that thepoint which arises in the instant case is different from the cases reliedEupon. The Tribunal has held that the members of the respondent-Unionwere governed by the Contributory Provident Fund and had, on theirretirement, availed such benefit whereas the Scheme of pension wasmade applicable with effect from 05.06.1995, as per the Notificationdated 06.10.1995. The Tribunal, by recording a finding that the employeeswho already retired by availing the benefit under the ContributoryFProvident Fund Scheme, constitute a different category and are notsimilarly placed as those employees who were in service of theCorporation on 05.06.1995, on which date the Scheme was approved,has dismissed the Original Application.

14. When the order of the Tribunal, rejecting the claim of theGrespondent-Union was challenged, by way of Civil Writ Petition, theHigh Court, by referring to certain cases decided by this Court, withoutany independent assessment on the issue in question, has allowed thewrit petition, by impugned order.

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15. In the case of D. S. Nakara[1], this Court had treated thepension retirees only, as a homogeneous class and all the pensionersgoverned by The 1972 Rules, were treated as a class, because paymentof pension was a continuing obligation on the part of the State, till lifelong to the pensioners, unlike the beneficiaries of the ContributoryProvident Fund. In the said case, it was never held that the pensionretirees and the employees in service, constitute a homogeneous class.In the case of R.L Marwaha v. Union of India and others[2], this Courthas held that fixing of a date for grant of benefit, must have nexus withthe object sought to be achieved. There cannot be any dispute on theproposition. Further, the case of Union of India and another v. DeokiNandan Aggarwal[3], relates to fixation of cut-off date, for grant ofliberalized Pension Scheme. Even in the case of Subrata Sen and othersv. Union of India and others[4], where a cut-off date was fixed for thepurpose of applicability of revised pension scheme this Court has heldthat all retired employees constitute one homogeneous class and therecannot be cut-off date fixed to extend such benefits. All the above saidcases which are referred to and relied on by the High Court are notrelevant and cannot be pressed into service,to decide the issue whicharises on the facts of this case.

16. Though there are long line of cases, where validity of fixationof cut-off date is considered by this Court, we confine and refer to thecase law which is relevant to the facts of the case on hand. In the caseof State of Punjab v. Amar Nath Goyal[5], while examining the validityof cut-off date fixed for grant of benefit of increased quantum of death-cum-retirement gratuity, this Court has held that the financial constraintpleaded by the Government, was a valid ground for fixation of cut-offdate and such fixation was not arbitrary, irrational or violative of Article14 of the Constitution. While differentiating the facts with the case ofD.S. Nakara[1], this Court held in para 29 of the judgment, which readsas under:

“29. D.S. Nakara[1] which is the mainstay of the case of theemployees arose under special circumstances, quite different fromthe present case. It was a case of revision of pensionary benefits 2 1987 (4) SCC 31

3 1992 Supp. (1) SCC 323

4 (2001) 8 SCC 71

5 (2005) 6 SCC 754

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SUPREME COURT REPORTS

Aand classification of pensioners into two groups by drawing a cut-off line and granting the revised pensionary benefits to employeesretiring on or after the cut-off date. The criterion made applicablewas “being in service and retiring subsequent to the specifieddate”. This Court held that for being eligible for liberalised PensionScheme, application of such a criterion is violative of Article 14 ofBthe Constitution, as it was both arbitrary and discriminatory innature. The reason given by the Court was that the employeeswho retired prior to a specified date, and those who retiredthereafter formed one class of pensioners. The attempt to classifythem into separate classes/groups for the purpose of pensionaryCbenefits was not founded on any intelligible dirrerentia, whichhad a rational nexus with the object sought to be achieved.However, it must be noted that even in cases of pension, subsequentjudgments of this Court have considerably watered down the rigidview taken in D.S. Nakara[1] as we shall see later in T.N.Electricity Board v. R.Veerasamy (“Veerasamy”). In any event,Dthis is not a case of a continuing benefit like pension; it is a one-time benefit like gratuity.”

17. In the case of Govt. of Andhra Pradesh & others v. N.Subbarayudu & others[6], by noticing that a rigid view was taken in thecase of D.S. Nakara[1], this Court has considerably watered down theEsame and has held that fixing the cut-off date is an executive functionbased on several factors like economic conditions, financial constraints,administrative and other circumstances. This Court further held that evenif no reason is forthcoming from executive, for fixation of a particulardate, it should not be interfered by Court, unless cut-off date leads toFsome blatantly capricious or outrageous result.

18. In the case of Suchet Singh Yadav and others v. Union ofIndia and others[7], ofwhich one of us is a party, (Hon’ble AshokBhushan,J.), while examining the claim of commissioned officers ofdefence forces, i.e, Army, Air force and Navy, who retired prior toG01.01.1996, for grant of next higher pay scale, on the strength of Orderof Government of India dated 21.11.1997, which was issued inconsequence of implementation of Fifth Pay Commission Report, thisCourt has not accepted the plea of discrimination. In the said judgment, 6 (2008)14, SCC 702H7 (2019)11 SCC 520

it is held that pensioners, for purposes of pension, constitute one classand schemes which classify pensioners on basis of cut-off date areimpermissible unless such classification is founded on some rationalprinciple. On the facts of the case, in the aforesaid judgment it is heldthat the Order which was issued by the Government of India on21.11.1997, is applicable only to existing officers and not retirees. Furtherin the case of All Manipur Pensioners Association by its Secretary v.The State of Manipur and others[8], of which, one of us is aparty,(Hon’ble M.R.Shah,J.), when validity of Office Memorandumdated 21.04.1999, issued for revising the quantum of pension by fixingthe cut-off date on 01.01.1996 is questioned, this Court has held that allpensioners form only one homogeneous class and held that such a fixationof date for extending the benefits of revised benefits to the pensioners,is arbitrary and violates Article 14 of the Constitution.

19. Coming back to the facts of the case on hand, by applying thecase law which is referred above, it is clear that all the members of therespondent-Union, while in service, were governed by ContributoryProvident Fund Scheme. All those employees who retired before05.06.1995, were paid all retiral benefits, applicable to them. As thePension Scheme was not in existence during the relevant time, it wasnot the case of violation of any service conditions either. The PensionScheme is introduced by way of notification dated 06.10.1995, by givingeffect from 05.06.1995, on which date the Cabinet has approved theScheme. The employees who were governed by the ContributoryProvident Fund Scheme and retired prior to 05.06.1995 and the employeeswho were in service and continued after 05.06.1995, of the appellant-Corporation, cannot be treated as a homogeneous class. The retiredemployees, who were governed by the Contributory Provident FundScheme, on their retirement had already received the benefits of suchScheme, constitute different class than those employees who were inservice as on 05.06.1995. There is a valid reason for giving effect to thePension Scheme from 05.06.1995, though the notification was issued on06.10.1995. The cut-off date, i.e, 05.06.1995 is fixed on the ground thatthe Cabinet has approved the Scheme from such date. As already noticedabove, it is always open for the employer to introduce new Schemes andbenefits, having regard to financial health of the employer. Wheneversuch new benefit is extended for the existing employees, retired employees AB

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Acannot seek such benefit, merely on the ground that they too were theformer employees of the Corporation. In spite of specific plea of theappellant-Corporation that the benefit of the Scheme was extended from05.06.1995, in view of approval granted by the Cabinet to the Scheme,the High Court has erroneously recorded a finding that no reason hasbeen assigned to choose such cut-off date. It is true that all pensionersBconstitute one class and whenever, revision is effected, ordinarily suchbenefit is to be extended to all the pensioners but at the same time, thescenario in the case on hand, is totally different. On the facts of thiscase, it is to be noticed that when the members of the respondent-Unionretired, there was no Pension Scheme at all. They were merely governedCby the Contributory Provident Fund Scheme and, on retirement, theywere already granted the benefit of such Scheme. In that view of thematter, only on the spacious plea that all the employees of the Corporationconstitute homogeneous class, cannot question the cut-off date fixed forgrant of Pension Scheme.D20. It is profitable to refer a judgment of this Court, in the case ofState of Rajasthan and Another v. Amrit Lal Gandhi and others[9].The ratio decided in the said case is identical to the issue on hand in thepresent case. In the aforesaid case, pursuant to recommendations madein the year 1986, by a committee appointed by University GrantsCommission, the Syndicate and Senate of the University hasErecommended for introducing a Pension Scheme for the employees ofthe University. The State Government’s approval was sought, whichwas given for introducing the Scheme with effect from 01.01.1990. Whensuch fixation of cut-off date from 01.01.90 was found fault with, by theHigh Court and the High Court issued directions to give effect fromF01.01.1986, while reversing the judgment of the High Court, this Courthas held that fixation of cut-off date from 01.01.1990 cannot be said tobe arbitrary or discriminatory. Relevant paragraph Nos. 16 and 17 of thejudgment, read as under:

“16. Applying the ratio of the aforesaid decisions to the presentGcase, we find no justification for the High Court having substitutedthe date of 1-1-1986 in lieu of 1-1-1990. It is evident that forintroducing a pension scheme, which envisaged financialimplications, approval of the Rajasthan Government was required.

In the letter of 16-4-1991, written to the Vice-Chancellors ofdifferent universities of Rajasthan, it was stated as follows:

“As per the direction in regard to the aforesaid subject, the StateGovernment has decided to introduce Pension Scheme in theUniversities of the State w.e.f. 1-1-1990. In this regard the StateLegislature has passed University Pension Rules and GeneralProvident Fund Rules. Therefore, by enclosing a copy ofUniversity Pension Regulations and General Provident FundRegulations with this letter, it is requested that by obtaining approvalof the competent body or Syndicate of the University, theseRegulations be implemented in the University together andnecessary information regarding implementation be intimated.”

17. The Syndicate and Senate of the University, when they hadforwarded their recommendations in 1986, did not contain a specificdate with effect from which the pension scheme was to be madeapplicable. Their recommendations were subject to approval. Theapproval was granted by the Government, after the StateLegislature had passed the University Pension Rules and GeneralProvident Fund Rules. The Government had stated in its affidavitbefore the High Court that the justification of the cut-off date of1-1-1990 was “wholly economic”. It cannot be said that the payingcapacity is not a relevant or valid consideration while fixing thecut-off date. The University could, in 1991, validly frame PensionRegulations to be made applicable prospectively. It, however, choseto give them limited retrospectively so as to cover a larger numberof employees by taking into account the financial impact of givingretrospective operation to the Pension Regulations. It was decidedthat employees retiring on or after 1-1-1990 would be able toexercise the option of getting either pension or provident fund.Financial impact of making the Regulations retrospective can bethe sole consideration while fixing a cut-off date. In our opinion, itcannot be said that this cut-off date was fixed arbitrarily or withoutany reason. The High Court was clearly in error in allowing thewrit petitions and substituting the date of 1-1-1986 for 1-1-1990.”

21. The High Court, without noticing the difference of factualbackground, in the cases relied on by the respondent-writ petitioner andwithout independently considering the issue in question, has allowed the AB

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Awrit petition. In view of the same, we are of the view that judgment ofthe High Court deserves to be set aside.

22. Accordingly, this civil appeal is allowed. Judgment of theHigh Court dated 08.01.2009, passed in Civil Writ Petition No. 1362 of2001 is set aside, consequently said writ petition stands dismissed, with Bno order as to costs.

Devika Gujral

Appeal allowed

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