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Fixing Cut-Off Date for Pension Scheme not against A.14 in Certain Cases: SC

As for the grounds of fixing the date as 05.06.1995, this Court held that there is a valid ground, such that the Cabinet had approved the scheme on this date. As has been noted above, it is open for the employer to introduce new benefits and schemes, and retired employees cannot seek such benefit, merely on the ground that they too were the former employees of the Corporation. It is to be noticed that when the members of the respondent-Union retired, there was no Pension Scheme at all. They were merely governed by the Contributory Provident Fund Scheme and, on retirement, they were already granted the benefit of such Scheme. In that view of the matter, only on the spacious plea that all the employees of the Corporation constitute homogeneous class, cannot question the cut-off date fixed for grant of Pension Scheme.[Para 19].



Himachal Road Transport Corporation & Anr. V. Himachal Road Transport Corporation Retired Employees Union

[Civil Appeal No. 7230 of 2012]

Decided on February 22, 2021.


This case is decided by the bench consisting of Justice R Subhash Reddy, Justice Ashok Bhushan and Justice MR Shah.

The facts of the case are that the Himachal Pradesh Road Transport Corporation issued a new Pension Scheme in 1995, based on the Central Civil Service (Pension) Rules, 1972. The scheme was given effect from 05.06.1995. The employees in service were given the option between the Pension Scheme and the Contributory Provident Fund Scheme.

The respondent-Union, consisting of employees who retired prior to 05.06.1995 approached the Administrative Tribunal demanding that the cut-off date for grant of pension be quashed by the Corporation, as it was illegal, unjust, unreasonable and arbitrary, and violative of Articles 14, 16 and 21 [Para 3].


The Union relied on the judgment of the Supreme Court given in DS Nakara & Ors. V. Union of India, concluding that the cut-off date was arbitrary and discriminatory, as the Pension Scheme was available to a certain group of employees, and not the others.


The appellants contested the application, pleading that all employees who retired prior to the cut-off date had already been paid the retiral benefits. Moreover, the date fixed was when the Cabinet had approved the Scheme. Therefore, it was not discriminatory.


The Tribunal allowed the appellants’ plea, holding that it is not discriminatory. The High Court of Himachal Pradesh, hearing the CWP No. 1362 of 2001, quashed the cut-off date, on its arbitrariness. Aggrieved by the order of the High Court, dated 08.01.2009, the Corporation filed an appeal to the Supreme Court.


Learned counsel, Shri Himanshu Tyagi, appears for the appellant-Corporation, and learning counsel, Sri MC Dhingra, appears for the respondent-applicant.

Shri Himanshu Tyagi contended that the High Court quashed the cut-off date without providing any valid reasons. He argued that the employees that retired before the cut-off date belong to a separate class of employees. They had already availed the Provident Fund Scheme. It was submitted that it is always open for the employer to extend further benefits to the employees prospectively [Para 9].

Shri MC Dhingra argued that all the employees constitute one homogeneous class, and no distinction shall be made among them. No valid reasons were given by the opposite party in setting the cut-off date, making the High Court order valid.

Further, Mr. Dhingra also pointed out that though the Pension Scheme was notified vide Notification dated 06.10.1995, same was given effect to retrospectively from 05.06.1995, as such there is no reason for not extending such benefit to the employees who retired prior to 05.06.1995 also [Para 10].


This Court, in deciding the case, referred to several cases, which are going to be examined hereafter. In the case of DS Nakara, this Court had quashed the arbitrary differentiation between two classes of pensioners. The reason was that all pensioners formed a homogeneous class.


In RL Marawaha V. UOI, it was held that fixing a date for grant of benefit must have nexus with the object sought to be achieved [Para 15].

In the cases of UOI V. Deoki Nandan Aggarwal and Subrata Sen and others V. UOI, it was held that the cut-off date fixed was invalid, and all retired employees constitute a homogeneous class. This Court held that these cases referred to by the High Court are not relevant and cannot be used for the facts of this case [Para 15].


For the purpose of this case, State of Punjab V. Amar Nath Goyal, was one of the cases relied on. In this case, the cut-off date for a gratuity was fixed on the grounds of financial constraints. This was held to be valid and non-violative of Article 14.


This Court, in the above case, also noted the rigidity of the DS Nakara case. In the case of Govt. of AP & others V. N Subbarayudu & others, this Court diluted the rigidity of the DS Nakara case, by ordering that the cut-off date is a function of the executive, based on several factors like economic conditions, financial constraints, administrative and other circumstances. Even if no reason is given by the executive, it should not be interfered by Court, unless it leads to some blatantly outrageous result [Para 17].

In the case of Suchet Singh Yadav and others V. UOI, the Court had held schemes that classify pensioners into different classes on the basis of cut-off date are impermissible, unless based on some rational principle.


Further, in the case of All Manipur Pensioners Association V. State of Manipur, this Court held that all pensioners form only one homogeneous class, and the cut-off date was arbitrary and violative of Article 14, as it extends benefits to the pensioners without any rationale.

Coming to the current case, all Union members, while in service, were governed by the Provident Fund Scheme. All the employees who retired before 05.06.1995 were paid all retiral benefits. The Pension Scheme was not in service then.


This Court stated that the employees who retired before 05.06.1995, and those who were in service after, were not a homogeneous class. The retired employees had already received their benefits, and constitute a different class.


As for the grounds of fixing the date as 05.06.1995, this Court held that there is a valid ground, such that the Cabinet had approved the scheme on this date. As has been noted above, it is open for the employer to introduce new benefits and schemes, and retired employees cannot seek such benefit, merely on the ground that they too were the former employees of the Corporation. It is to be noticed that when the members of the respondent-Union retired, there was no Pension Scheme at all. They were merely governed by the Contributory Provident Fund Scheme and, on retirement, they were already granted the benefit of such Scheme. In that view of the matter, only on the spacious plea that all the employees of the Corporation constitute homogeneous class, cannot question the cut-off date fixed for grant of Pension Scheme.[Para 19].


This Court agrees that all pensioners constitute one class, and whenever a revision is granted, it is to apply to all pensioners. However, when the Union members were employed, there was no Pension scheme.


The Court also referred to the case of State of Rajasthan and another V. Amrit Lal Gandhi and others, wherein the cut-off date was fixed retrospectively for a Pension scheme, based on financial capacity of the University. The employees in service were given the option of choosing either the pension or the provident fund. This was held to be valid, and non-arbitrary.


In conclusion, this Court quashed the argument that there was no rationale behind the cut-off date fixed. It also clarified that the pensioners and the retired employees, in this case, do not constitute a homogeneous class, as different schemes apply to them.

This Court, thus, set aside the judgment of the High Court, as it failed to notice the difference in the factual background of the present case, and the cases relied upon by the Union. It did not consider the issue in question, and allowed the writ petition.

Accordingly, this Court allowed this civil appeal.



Navyaa Shukla

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