Supreme Court Upholds Pension Calculation Based on Last Held Post: Union of India vs. R. Sethumadhavan (2018)

Date of the Judgment: 22 March 2018

Citation: Civil Appeal No. 3173 of 2018 (Arising out of S.L.P. (CIVIL) No. 5456 OF 2018)

Judges: Madan B. Lokur, J., Deepak Gupta, J.

Can a retired government employee claim a higher pension based on a post re-designated after their retirement? The Supreme Court of India recently addressed this question in a case involving a retired railway employee. The court clarified that pension benefits should be calculated based on the post held by the employee at the time of retirement, not on any subsequent re-designation of the post. This judgment settles a dispute over pension calculations and emphasizes the importance of the post last held by the employee.

The judgment was delivered by a division bench comprising Justice Madan B. Lokur and Justice Deepak Gupta. The opinion was authored by Justice Madan B. Lokur.

Case Background

The respondent, R. Sethumadhavan, retired as a Train Examiner with the Indian Railways on 31st March, 1991. At the time of his retirement, he was in the pay scale of Rs. 1400–2300. After the implementation of the 5th Central Pay Commission, the replacement pay scale for the post of Train Examiner was revised to Rs. 4500-7000. The respondent contended that the post of Train Examiner was re-designated as Junior Engineer Grade-II, with a revised pay scale of Rs. 5000-8000. This difference in pay scales led to a dispute over his pension entitlement, with the respondent claiming a higher pension based on the Junior Engineer Grade-II pay scale.

Timeline:

Course of Proceedings

The respondent filed an Original Application before the Central Administrative Tribunal (CAT) seeking a higher pension. The CAT referred the matter to a larger bench due to conflicting views on the issue. The Tribunal held that the respondent’s pension was correctly fixed based on the pay scale of the post of Train Examiner (Rs. 4500-7000) and not the pay scale of Junior Engineer Grade-II (Rs. 5000-8000). The Tribunal relied on the Supreme Court’s decision in K.S. Krishnaswamy & Ors. v. Union of India & Anr. [2006] 13 SCC 215.

Aggrieved by the Tribunal’s decision, the respondent filed a writ petition before the High Court of Judicature at Madras. The High Court allowed the writ petition and quashed the Tribunal’s order, accepting the respondent’s claim that the post of Train Examiner was re-designated as Junior Engineer Grade-II.

Legal Framework

The case revolves around the interpretation of the following:

• Policy Resolution of the Government of India dated 30th September, 1997, relating to the acceptance of the recommendations of the 5th Central Pay Commission.
• Office Memorandum dated 17th December, 1998, which stated that “pension of all pensioners irrespective of their date of retirement shall not be less than 50% of the minimum pay in the revised scale of pay introduced w.e.f. 1.1.1996 of the post last held by the pensioner.”
• Office Memorandum dated 11th May, 2001, which clarified that the term “post last held” means “pension of all pensioners irrespective of their date of retirement shall not be less than 50% of the minimum of the corresponding scale as 01.01.96, of the scale of pay held by the pensioner at the time of superannuation/ retirement.”

The core issue is whether the clarification dated 11th May, 2001, overrides the earlier Office Memorandum dated 17th December, 1998.

Arguments

The respondent argued that:

• The post of Train Examiner was re-designated as Junior Engineer Grade-II.
• His pension should be calculated based on the revised pay scale of Junior Engineer Grade-II (Rs. 5000-8000), not the replacement scale of Train Examiner (Rs. 4500-7000).

The Union of India argued that:

• The Office Memorandum dated 11th May, 2001, clarified that pension should be based on the pay scale of the post held by the pensioner at the time of retirement.
• The respondent retired as a Train Examiner, and his pension was correctly fixed based on the replacement scale of that post.
• There was no evidence to suggest that the post of Train Examiner was re-designated as Junior Engineer Grade-II.
• The Supreme Court in K.S. Krishnaswamy & Ors. v. Union of India & Anr. [2006] 13 SCC 215 had already settled the issue.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section but addressed the core question of whether the respondent’s pension should be based on the pay scale of the re-designated post or the post last held at the time of retirement.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

• K.S. Krishnaswamy & Ors. v. Union of India & Anr. [2006] 13 SCC 215 – Supreme Court of India: The Court relied on this case, which dealt with the same issue of pension calculation based on the Office Memorandums of 1998 and 2001.

The Court also considered the following legal provisions:

• Policy Resolution of the Government of India dated 30th September, 1997
• Office Memorandum dated 17th December, 1998
• Office Memorandum dated 11th May, 2001

Judgment

The Supreme Court held that the High Court erred in assuming that the post of Train Examiner was re-designated as Junior Engineer Grade-II. The Court found no evidence to support this claim. The Court also held that the High Court failed to consider the decision in K.S. Krishnaswamy, which had already settled the issue.

The Court stated that the Office Memorandum dated 11th May, 2001, was merely a clarification of the earlier Office Memorandum dated 17th December, 1998, and did not override it. The Court reiterated that pension should be calculated based on the post last held by the employee at the time of retirement.

The Court stated that, “the recommendations of the Fifth Pay Commission were accepted by a Policy Resolution dated 30-9-1997 that the ceiling on the amount of pension will be 50% of the highest pay in the Government. The pension of all pre-1-1-1996 retirees including pre-1986 retirees shall be consolidated as on 1-1-1996, but the consolidated pension shall not be brought on to the level of 50% of the minimum of the revised pay of the post held by the pensioner at the time of retirement.”

The Court further stated that, “the subsequent OM dated 17-12-1998 clarified the Policy Resolution dated 30-9-1997 by executive instructions in OM dated 17-12-1998 and further clarified in the form of OM dated 11-5-2001 clarifying the contents of Policy Resolution of the Government dated 30-9-1997. They are both complementary to each other. Both clarify the government Policy Resolution dated 30-9-1997.”

The Supreme Court set aside the judgment of the Madras High Court and upheld the decision of the Central Administrative Tribunal.

The Court also held that, “the view taken by the Madras High Court that the clarificatory executive instructions in OM dated 11-5-2001 are an integral part of the OM dated 17-12-1998 clarifying the policy resolution of the Government dated 30-9-1997 and do not override the original OM dated 17-12-1998 is correct law and it is, accordingly, affirmed.”

What weighed in the mind of the Court?

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

• The binding precedent set by the Supreme Court in K.S. Krishnaswamy, which had already settled the issue of pension calculation based on the Office Memorandums of 1998 and 2001.
• The lack of evidence to support the respondent’s claim that the post of Train Examiner was re-designated as Junior Engineer Grade-II.
• The interpretation of the Office Memorandums, where the Court held that the clarification of 2001 did not override the earlier Office Memorandum of 1998.

The Court’s reasoning followed a logical path:

Key Takeaways

• Pension benefits for retired government employees should be calculated based on the pay scale of the post they held at the time of retirement.
• Subsequent re-designations or revisions of pay scales for the post do not affect the pension entitlement of those who have already retired.
• The Office Memorandum dated 11th May, 2001, is a clarification of the Office Memorandum dated 17th December, 1998, and does not override it.
• The Supreme Court’s decision in K.S. Krishnaswamy remains the binding precedent on this issue.

Directions

The Supreme Court directed that if any payments have been made to the respondent based on the High Court’s order, there will be no recovery of those amounts.

Specific Amendments Analysis

There was no discussion on specific amendments in the judgment.

Development of Law

The ratio decidendi of this case is that the pension of a retired government employee should be calculated based on the pay scale of the post held by the employee at the time of retirement, and not on any subsequent re-designation of the post. This judgment reaffirms the position of law established in K.S. Krishnaswamy and clarifies that the Office Memorandum dated 11th May, 2001, is merely a clarification of the Office Memorandum dated 17th December, 1998, and does not override it. There is no change in the previous position of law.

Conclusion

The Supreme Court’s judgment in Union of India vs. R. Sethumadhavan & Anr. clarifies the method for calculating pension benefits for retired government employees. The Court held that pension should be based on the pay scale of the post last held by the employee at the time of retirement, and not on any subsequent re-designation of the post. The Court upheld the decision of the Central Administrative Tribunal and set aside the judgment of the Madras High Court. This decision reinforces the importance of the post last held at the time of retirement for pension calculations.