Supreme Court Denies Ex-Gratia Compensation to Soldier on Extended Service: Ashok Kumar vs. Union of India (2019)

Introduction

Date of the Judgment: 24 July 2019

Citation: 2019 INSC 732

Judges: Dr. Dhananjaya Y. Chandrachud, J and Indira Banerjee, J

Can a soldier, who is granted an extension of service, claim ex-gratia compensation if they are discharged due to a disability that is not related to their military service? The Supreme Court of India recently addressed this question in a case involving a Havildar who was discharged after suffering a stroke during his extended service. The core issue was whether the soldier’s discharge, due to a disability not attributed to military service, qualifies him for ex-gratia compensation, which is typically granted to those invalidated from service due to service-related disabilities. The judgment was delivered by a two-judge bench comprising Dr. Dhananjaya Y. Chandrachud, J and Indira Banerjee, J, with the opinion authored by Dr. Dhananjaya Y. Chandrachud, J.

Case Background

The appellant, a Havildar in the Indian Army, completed his initial 24 years of service on 27 December 2010. He received a two-year extension, set to end on 26 December 2012, as per the Army Headquarters policy dated 21 September 1998. During this extended period, he suffered a stroke and was categorized as SHAPE-3 (Permanent) with 80% disability. The Release Medical Board determined that his disability was neither caused nor aggravated by his military service. Consequently, he was discharged from service.

Initially, the appellant sought a disability pension from the Armed Forces Tribunal (AFT). The AFT granted the disability pension on 2 July 2014, leaving the issue of rounding off the disability pension open. Later, on 30 October 2014, the AFT allowed a review application, granting the benefit of rounding off the disability from 80% to 100%.

Subsequently, in 2016, the appellant claimed ex-gratia compensation of Rs 9,00,000, based on a policy circular dated 26 December 2011. This claim was rejected by the AFT.

Timeline

Course of Proceedings

The Armed Forces Tribunal (AFT) initially granted the appellant a disability pension on 2 July 2014, but kept the issue of rounding off of the disability pension open. Subsequently, the AFT allowed a review application on 30 October 2014, granting the appellant the benefit of rounding off the disability from 80% to 100%.

However, the AFT rejected the appellant’s claim for ex-gratia compensation in 2016. The AFT held that the claim should have been made in the earlier proceedings. It also held that the claim was barred by limitation, as the appellant was discharged in 2012 and the claim was made only in 2016. Furthermore, the AFT stated that ex-gratia compensation is only for those invalidated from service due to disability, while the appellant was discharged after completing his extended service. The AFT relied on the note appended to Rule 2 of the Pension Regulations for the Army, stating that a person discharged during extended tenure is deemed to have been invalidated only for the purpose of the Entitlement Rules laid down in Appendix 2 to the Regulations.

Legal Framework

The case primarily revolves around the interpretation of the Pension Regulations for the Army, 1961, specifically Regulations 173 and 173-A, and the policy circular dated 26 December 2011, concerning ex-gratia compensation.

Regulation 173 of the Pension Regulations for the Army, 1961, outlines the primary conditions for granting a disability pension:

“173. Unless otherwise specifically provided a disability pension consisting of service element and disability element may be granted to an individual who is invalided out of service on account of a disability which is attributable to or aggravated by military service in non-battle casualty and is assessed at 20 per cent or over. The question whether a disability is attributable to or aggravated by military service shall be determined under the rule in Appendix II.”

Regulation 173-A extends the provision for disability pension to those placed in a lower medical category during extended service:

“173-A. Individuals who are placed in a lower medical category (other than ‘E’) permanently and who are discharged because no alternative employment in their own trade/category suitable to their low medical category could be provided or who are unwilling to accept the alternative employment or who having retained in alternative appointment are discharged before completion of their engagement, shall be deemed to have been invalided from service for the purpose of the entitlement rules laid down in Appendix II to these Regulations. Note. The above provision shall also apply to individuals who are placed in a low medical category while on extended service and are discharged on that account before the completion of the period of their extension.”

The policy circular dated 26 December 2011, provides for ex-gratia compensation:

“3. The President is pleased to decide that such Defence Service personnel, who are disabled, incapacitated in the performance, of their bonafide official duties under various circumstances and are boarded out from service on account of disability/war injury attributable to or aggravated by military service, shall be paid Ex-gratia lump sum compensation amounting to Rs.9 lakhs for 100% disability. For disability/war injury less than 100% but not less than 20%, the amount of Ex-gratia compensation shall be proportionately reduced. No Ex-gratia compensation shall be payable for disability/war injury less than 20%. The proportionate compensation would be based on actual Percentage of disability as certified by the invaliding Medical Board, without applying -board banding provisions as contained in Para 7.2 of this Ministry’s above mentioned letter dated 31.01.2001.”

Arguments

The appellant argued that since he was on an extended tenure of service and was prematurely discontinued due to his disability, he should be treated as having been invalidated out of service. He relied on the judgment in Union of India vs Ram Avtar, where the Supreme Court held that individuals who retire after completing their tenure but suffer from a disability attributable to military service are entitled to the benefit of rounding off of disability pension. On this basis, he argued that he should be entitled to ex-gratia compensation as per the policy circular dated 26 December 2011.

The Union of India contended that the ex-gratia compensation is intended for those who are boarded out of service due to a disability or war injury that is attributable to or aggravated by military service. The Union argued that the appellant was discharged as per the conditions of his extended tenure, which stipulated that individuals placed in a permanent low medical category (except battle casualties) would be discharged under existing rules. The Union further argued that if the policy intended to grant ex-gratia to every person receiving a disability pension, it would have explicitly stated so.

The Union also highlighted that the policy circular dated 26 December 2011, was an extension of the original policy dated 4 June 2010, which provided ex-gratia compensation to the next of kin in cases of death. The extension was specifically for personnel who are disabled or incapacitated in the performance of their duties and boarded out due to a disability attributable to military service.

The innovativeness of the argument by the appellant lies in drawing an analogy between the benefit of rounding off of disability pension and the grant of ex-gratia compensation, arguing that both should be extended to those who are prematurely discontinued from extended service due to disability.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

✓ Whether the appellant, who was discharged from service during his extended tenure due to a disability, is entitled to ex-gratia compensation as per the policy circular dated 26 December 2011.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ The Court used Regulation 173 of the Pension Regulations for the Army, 1961, to explain the conditions for grant of disability pension.

✓ The Court used Regulation 173-A of the Pension Regulations for the Army, 1961, to explain the deeming fiction for disability pension for those on extended service.

✓ The Court used the Policy Circular dated 26 December 2011 to explain the conditions for grant of ex-gratia compensation.

✓ The Court used the Army Headquarters Policy Instruction dated 21 September 1998 to explain the procedure for screening personnel for extension of service.

✓ The Court distinguished Union of India vs Ram Avtar by stating that it dealt with rounding off of disability pension and not ex-gratia compensation.

The Supreme Court held that the appellant did not meet the requirements for ex-gratia compensation as per the policy circular dated 26 December 2011. The court emphasized that the policy specifically requires the individual to be “boarded out of service on account of disability/war injury attributable to or aggravated by military service.” The appellant was discharged due to a stroke, which was not attributed to military service.

The court clarified that while Regulation 173-A of the Pension Regulations for the Army, 1961, provides a deeming fiction that treats individuals discharged during extended service due to low medical category as having been invalidated for the purpose of disability pension, this fiction does not extend to the policy on ex-gratia compensation. The court stated, “The fiction under Regulation 173-A cannot be extended to the policy document dated 26 December 2011.”

The court also noted that if the policy intended to grant ex-gratia compensation to every person who receives a disability pension, it would have explicitly stated so. The court observed, “If the intent of the Policy was to grant an ex-gratia compensation to every person who is granted a disability pension, it would have provided so.”

The court further explained that the appellant was discharged as per the conditions of his extended tenure, which specified that those placed in a permanent low medical category (except battle casualties) would be discharged under existing rules. The court stated, “This indicates that a person who is placed in a permanent low medical category, except a battle casualty or a person wounded in action, and consequently placed in a permanent low medical category during the extended service will be discharged under the existing rules.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the specific conditions outlined in the policy circular dated 26 December 2011, regarding ex-gratia compensation. The court emphasized that the policy clearly states that ex-gratia compensation is for those who are “boarded out of service on account of disability/war injury attributable to or aggravated by military service.” The court found that the appellant did not meet this criterion, as his disability was not related to his military service. The court also highlighted that the deeming fiction in Regulation 173-A of the Pension Regulations for the Army, 1961, is limited to the grant of disability pension and cannot be extended to the ex-gratia compensation policy.

Key Takeaways

• Soldiers on extended service who are discharged due to a disability not attributable to military service are not automatically entitled to ex-gratia compensation.
• The deeming fiction in Regulation 173-A of the Pension Regulations for the Army, 1961, which provides disability pension to those discharged during extended service, does not extend to ex-gratia compensation.
• Ex-gratia compensation is specifically for those who are boarded out of service due to a disability or war injury that is attributable to or aggravated by military service.
• The conditions for ex-gratia compensation must be strictly met as per the policy circular.
• The judgment clarifies the distinction between disability pension and ex-gratia compensation, emphasizing that they are governed by different rules and policies.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of the case is that the deeming fiction in Regulation 173-A of the Pension Regulations for the Army, 1961, which provides disability pension to those discharged during extended service, does not extend to ex-gratia compensation. The judgment clarifies that ex-gratia compensation is specifically for those who are boarded out of service due to a disability or war injury that is attributable to or aggravated by military service. This judgment reinforces the distinction between disability pension and ex-gratia compensation, clarifying that these are governed by different rules and policies.

Conclusion

The Supreme Court dismissed the appeal, affirming the Armed Forces Tribunal’s decision to deny ex-gratia compensation to the appellant. The court held that the appellant did not meet the specific criteria outlined in the policy circular dated 26 December 2011, as his disability was not attributable to military service. The judgment clarifies the limited scope of the deeming fiction in Regulation 173-A of the Pension Regulations for the Army, 1961, and reinforces the distinction between disability pension and ex-gratia compensation.