Supreme Court Upholds One Rank One Pension Policy with Periodic Revision: Indian Ex Servicemen Movement vs. Union of India (2022) INSC 244

Introduction

Date of the Judgment: 16 March 2022

Citation: (2022) INSC 244

Judges: Dr. Dhananjaya Y Chandrachud, J, Surya Kant, J, and Vikram Nath, J.

Can the government revise pension schemes for ex-servicemen periodically, or should revisions be automatic? The Supreme Court of India recently addressed this critical question in a case concerning the One Rank One Pension (OROP) policy. This judgment clarifies the extent to which the government can implement policies affecting the pensions of armed forces personnel. The Court examined whether the current implementation of OROP, which includes periodic revisions, is fair and non-discriminatory, particularly in light of the constitutional principles of equality under Articles 14 and 21 of the Constitution. The three-judge bench, comprising Justices Dr. Dhananjaya Y Chandrachud, Surya Kant, and Vikram Nath, delivered a unanimous decision.

Case Background

The case revolves around the implementation of the “One Rank One Pension” (OROP) policy for ex-servicemen. The demand for OROP was initially examined by Parliament in 2010-11. The Rajya Sabha Committee on Petitions, known as the Koshyari Committee, submitted its 142nd Report on 19 December 2011, recommending the implementation of OROP. The Committee defined OROP as a uniform pension for armed forces personnel retiring in the same rank with the same length of service, irrespective of their retirement date. It also stated that any future enhancements in pension rates should be automatically passed on to past pensioners. This was the practice till 1973 when the Third Central Pay Commission revoked it.

On 17 February 2014, the Finance Minister announced the Union Government’s acceptance of OROP in principle, to be implemented prospectively from the financial year 2014-15. The Defence Minister held a meeting on 26 February 2014, where OROP was defined similarly to the Koshyari Committee’s definition. However, the actual implementation of OROP was delayed.

The petitioners argued that a letter dated 7 November 2015 from the Joint Secretary of the Union Government to the Chiefs of the three defence forces introduced a revised definition of OROP. This revised definition stipulated that revisions between past and current pension rates would occur at periodic intervals, not automatically. This change, according to the petitioners, deviated from the original understanding of OROP and was arbitrary and unconstitutional.

Timeline

Legal Framework

The legal framework relevant to this case primarily involves the interpretation of the government’s policy on OROP and its alignment with constitutional principles. The petitioners argued that the revised definition of OROP violated Article 14 of the Constitution, which guarantees equality before the law, and Article 21, which protects the right to life and personal liberty.

The core issue was whether the government’s decision to revise pensions at periodic intervals, rather than automatically, was arbitrary and discriminatory. The petitioners contended that the original understanding of OROP, as recommended by the Koshyari Committee, mandated automatic revisions to ensure that past pensioners receive the same benefits as current pensioners.

The government, on the other hand, argued that the policy was a matter of executive discretion and that periodic revisions were necessary for administrative feasibility. The government also argued that the policy was not discriminatory as it applied uniformly to all pensioners, irrespective of their retirement date. The government also relied on the Modified Assured Career Progression (MACP) scheme, which provides for the grant of higher grade pay to personnel who have not been promoted for a certain number of years of regular service.

Arguments

Petitioners’ Arguments:

• ✓ The petitioners argued that the letter dated 7 November 2015, arbitrarily altered the definition of OROP by changing the revision of pension rates from ‘automatic’ to ‘periodic intervals’. They contended that this was contrary to the definition of OROP arrived at in the meeting held on 26 February 2014.
• ✓ The implementation of the new definition would lead to a situation where the pension of an ex-serviceman who retired earlier would be less than the pension of an ex-serviceman who retired later, until the periodic review is conducted.
• ✓ The new definition creates a class within a class, where ex-servicemen with the same rank and length of service would receive different pensions, which is unconstitutional as per the Supreme Court’s ruling in Union of India v. SPS Vains [(2008) 9 SCC 125].
• ✓ Even if the differential pay is rectified by periodic review, it would cause injustice.
• ✓ The effective date of implementation of OROP was arbitrarily changed from 1 April 2014 to 1 July 2014.
• ✓ The pension of personnel retiring on or after 1 April 2014, is fixed based on the last pay drawn on retirement. However, the pension of soldiers who retired earlier than 2013 is fixed based on the pension of retirees of the calendar year 2013, leading to ‘one rank different pensions’.
• ✓ The pension of past pensioners is lowered by re-fixing it based on the average of the minimum and maximum pension of personnel retiring in 2013. For example, a Sepoy who retired before 31 December 2013, would get a lower pension than a Sepoy who retired after 1 January 2014.
• ✓ The petitioners argued that the Modified Assured Career Progression (MACP) should be given to all past retirees to comply with the judgment of the Supreme Court in SPS Vains (supra).
• ✓ The petitioners also contended that the Union Government has created a confusion by stating that the scheme must be given prospective effect while defining OROP as a benefit for ‘past retirees’.
• ✓ The petitioners submitted that the Union Government has not updated the basic pay of soldiers and did not bring it at par with the 31 December 2015 pay before multiplying it with the factor of 2.57.
• ✓ The reliance placed by the respondents on DS Nakara v. Union of India [1983 AIR 130] is incorrect since it only deals with the general law applicable to civil servants.

Respondents’ Arguments:

• ✓ The respondents argued that the budget for pension has been increased after the implementation of OROP with effect from 1 July 2014.
• ✓ OROP seeks to bridge the gap by taking the maximum and minimum pension within the rank of pensioners holding the same rank and same length of service to determine the average.
• ✓ The OROP scheme has been implemented prospectively with effect from 1 July 2014, and the benefits are to be paid after 1 July 2014 to those who retired prior to 1 July 2014.
• ✓ The OROP scheme envisages revision of pension once in five years, unlike civilian pension schemes which are revised once in ten years. The plea of the petitioners to provide ‘automatic’ adjustment cannot be acceded to as it is impossible to implement it.
• ✓ The respondents submitted that minutes, statements, and inter-ministerial discussions do not have the force of law.
• ✓ The scheme/policy can be challenged on the grounds of arbitrariness but a demand to substitute the policy cannot be made.
• ✓ The disparity alleged by the petitioners in the pensions of the defence personnel with the same rank and same length of service has been wrongly depicted on account of the OROP scheme.
• ✓ The respondents argued that the comparison drawn by the petitioners is a comparison between non-comparables. The pension calculated based on the average pension in 2013 cannot be compared with the actual pension received based on the pension rules.
• ✓ The respondents contended that the MACP regime warranted a service of 6, 16 and 24 years of service by the Sepoy for grouping with the rank of Naik, Havildar and Naib Subedar.
• ✓ The respondents submitted that the Union Government has taken MACP as the base and has applied it across the board to all retirees having the same length of service.
• ✓ The respondents stated that an executive decision of the Union Government on the OROP can only be challenged on legal principles.
• ✓ The respondents relied on Indian Ex -Services League v. Union of India [AIR 1991 SC 1182], KL Rathee v. Union of India [SLJ 1997 (30 207)] and Suchet Singh Yadav v. Union of India [(2019) 11 SCC 520] to support their submission that the decision in Nakara (supra) cannot be enlarged to cover all claims made by pension retirees.
• ✓ The respondents submitted that since the Sixth Pay Commission, the length of service is no longer a criterion for calculating pension.
• ✓ The respondents clarified that the expression ‘automatically’ used in the Koshyari Committee report means that the rates of pension will be passed to the past pensioners without any difficulties, not with reference to any time period.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for adjudication:

1. Whether the revision of the definition of OROP and its implementation in the present form, is arbitrary and violative of Articles 14 and 21 of the Constitution?
2. Whether the policy of the Union Government to revise the pension every five years is arbitrary?
3. Whether the decision of the Union Government to fix the pension of past pensioners on the basis of the average of the minimum and maximum pension of personnel retiring in the calendar year 2013 is arbitrary?

The court also dealt with the sub-issue of whether the expression “automatically” used in the Koshyari Committee report, the minutes of the meeting held on 26 February 2014 and the executive order dated 26 February 2014 defining the OROP scheme follow the expression ‘in the rates of pension to be automatically passed on to the past pensioners’ means that the rates of pension will be passed to the past pensioners without any difficulties or whether it means a time period.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

Legal Provisions:

• Article 14 of the Constitution of India
• Article 21 of the Constitution of India

Judgment

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

How each authority was viewed by the Court?

• The Court distinguished Union of India v. SPS Vains [(2008) 9 SCC 125], noting that the facts were different.
• The Court explained that the case of D.S. Nakara v. Union of India [1983 AIR 130] was about the mode of computation of pension and not about the amount of pension.
• The Court relied on Kalpana Mehta v. Union of India [(2018) 7 SCC 1] to state that the Koshyari Committee Report can be relied upon to indicate the background of the adoption of OROP.
• The Court relied on State of Jharkhand v. Brahmputra Metallics Ltd., Ranchi [2020 SCC OnLine SC 968] to clarify the doctrinal difference between promissory estoppel and legitimate expectations.
• The Court relied on State of Arunachal Pradesh v. Nezone Law House [(2008) 5 SCC 609] to state that the assurances made by the Ministers, were to the effect that OROP has been accepted in principle and the implementation was yet to be worked out.
• The Court relied on Union of India v. Balbir Singh Turn [(2018) 11 SCC 99] to state that the MACP scheme was made operational with effect from 1 January 2006.
• The Court relied on Indian Ex -Services League v. Union of India [AIR 1991 SC 1182] to state that the effect of the judgment in Nakara (supra) was that the same computation according to the liberalised formula must be applicable to pre and post 1 April 1979 retirees and that the decision cannot be construed to mean that the same amount of pension must be receivable.
• The Court relied on K.L. Rathee v. Union of India [SLJ 1997 (30 207)] to state that the rule of computation must be the same.
• The Court relied on Suchet Singh Yadav v. Union of India [(2019) 11 SCC 520] to state that the decision in Nakara (supra) cannot be enlarged to cover all claims made by pension retirees.
• The Court relied on Krishena Kumar v. Union of India [1990 AIR 1782] to state that neither the prescription of a cut-off date nor the creation of two classes of retirees was contrary to the decision of the Constitution Bench in Nakara (supra).
• The Court relied on Col. B.J Akkara (Retd.) v. Government of India [(2006) 11 SCC 709] to summarize the principles relating to pension.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• ✓ The Court recognized that the government has the right to formulate policies and that the judiciary should not interfere in matters of policy unless they are arbitrary or violate constitutional rights.
• ✓ The Court emphasized that the OROP policy was uniformly applicable to all pensioners, irrespective of their retirement date.
• ✓ The Court acknowledged that the cut-off date was used only to determine the base salary for pension calculation and that the government had a range of policy choices in this regard.
• ✓ The Court observed that the expression “to be automatically passed on” signifies that the rates of pension would be passed on to past pensioners without any administrative impediments and not with reference to any period of time for the computation of benefits.
• ✓ The Court considered the financial implications of the OROP policy and the government’s need to balance modernization of the armed forces with financial benefits.
• ✓ The Court clarified that the principle of ‘one rank one pension’ does not necessarily mean that all pensioners of the same rank must receive the same amount of pension.

Final Decision

The Supreme Court dismissed the writ petition and held that the policy of OROP as implemented by the Union Government is not arbitrary or unconstitutional. The Court held that the definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement. The Court also held that the decision of the Central Government to revise the pension every five years cannot be held to violate the precepts underlying Article 14. The court also stated that the Union Government had a range of policy choices including taking the minimum, the maximum or the mean or average. The Union government decided to adopt the average. Persons below the average were brought up to the average mark while those drawing above the average were protected. Such a decision lies within the ambit of policy choices.

The Court directed the Union Government to pay all arrears to the pensioners in accordance with the policy of OROP as implemented by the Union Government.

The Supreme Court did not find any merit in the writ petition and dismissed the same.

Flowchart of the Case