Thursday, December 1, 2011

OA 328/2009 pronounced on 25-11-2011






P.S. Venkateswaran,
S/o A.R.S. Mani, Aged 74 years,
Retd. Controller of Administration of
CECRI, Karaikudi,
Now R/at Johore House,
Flat No.004, 18th Cross,
Malleswaram, Bangalore – 560 055. ... Applicant

(By Advocate Shri H.R.S.Rao)

1. Union of India, rep. By
the Secretary to Govt. o India,
Ministry of Personnel, Public Grievances
and Pensions (Dept.of Pension and
Pensioner's Welfare),
Lok Nayak Bhavan, Floor No.3,
New Delhi – 110 003.

2. Director General,
(Scientific & Industrial Relations),
Council of Scientific & Industrial Research,
Anusandhan Bhavan, No.2, Rafi Marg,
New Delhi – 110 001.

3. Finance Advisor to CSIR,
Council of Scientific & Industrial Research,
No.2, Rafi Marg, New Delhi – 110 001.

4. Finance & Accounts Officer,
Central Electro-Chemical Research Institute,
Karaikudi, Tamil Nadu.

5. Controller of Finance & Accounts,
National Aerospace Laboratories,
Airport Road, Bangalore – 560 047. ... Respondents

(By Advocate Shri M.V. RAO, Sr. CGSC)

Hon'ble Smt. Leena Mehendale, Member (A) :

The crux of the case is that the Central Government employees were allowed at the time of retirement to commute 1/3rd portion of their pension, i.e., to get a lumpsum money in lieu of 1/3rd pension, and would continue to get only 2/3rd pension. In Common Causes Vs. Union of India – 1987 1 SCR 491, it was held that such a capitalisation can be considered as fully eroded in 15 years and hence this 1/3rd pension will be restored. In case of PSU employees, the Govenment had, in addition to the commutation of 1/3rd pension, also alowed commutation of remaining 2/3rd at the time of retirement. In Welfare Association of Absorbed Central Government Employees in Public Enterprises and Ors. Vs. Union of India & Anr., the Supreme Court held the two portions of commuted pension on different footings and ordered that the first part of 1/3rd commutation is at par with the 1/3rd commutation allowed to normal Central Government servants, therefore, to be restored after 15 years. The question therefore, arises as to how the pay revision and other incumbent benefits affect this 1/3rd restoration of pension to PSU employees.
This OA is filed on 04.07.2009 under Section 19 of the Administrative Tribunals Act, 1985 agitating a short point that the Respondent department has failed to properly calculate the commutted Pension, the Dearness or merged Pension (DP) and the Dearness Relief (DR) after the V Central Pay Commission (CPC) resulting in financial loss to the applicant who is now above 80 years of age. The loss is further continued after VI CPC.

2. Briefly stated, the applicant served for 36 years in CECRI (Central Electro-Chemical Research Institute), Karaikudi, and technically resigned on 31.07.1998 with permission dated 29.07.1988 (Annexure-A/1) and joined the Institute of Sciences, Bangalore. Thus, having completed more than 33 years of qualifying service at CECRI, he is entitled for full pensionary benefits. For the sake of mutual convenience, the applicant's pension is being disbursed not by CECRI, Karaikudi, but by NAL, Bangalore, both being units of CSIR.

3. He commuted 100% Pension of Rs.2082/- as per the extant rules. This implies that he would get a lumpsum commuted value of Pension of Rs.2082 X 12 X 15 at the time of technical resignation. Further, in view of Supreme Court judgment dated 15.12.1995 in Welfare Association of Absorbed Central Government Employees in Public Enterprises and Ors. Vs. Union of India & Anr. - AIR 1996 SC 1201, 1/3rd of the commuted value of pension will be restored to him 15 years later as monthly pension. Govt. of India OM No.4/59-97-P&PW(D), dated 14.07.1998 gives effect to the above judgment and the modality of calculation of 1/3rd pension. Thus, from August 2003, he would get a monthly pension of 1/3rd value. It is not disputed that no terms and conditions were stipulated by CECRI for his relief to join the Institute of Sciences, Bangalore, hence his claim to 1/3rd pension is also undisputed. The dispute comes on how to implement the V CPC revision.

4. On the implementation of V CPC (Central Pay Commission) pay scales, the earlier pay scale of the applicnt of Rs.3700-5000/- was revised to Rs.12,000-16500/- from 1.1.1996. As per the CPC guidelines, the applicant having been granted retirement pension for full service rendered in the pre-revised scale, should not get "less than the minimum guaranteed basic pension of ½ the revised scale of Rs.12,000-16500/-." which comes to Rs.6,000/- per month. Further, in terms of OM No.4/29/99-P&PW(D), dated 12.07.2000, (Annexure-A/2), irrespective of his quantum of pension, the DR has to be paid on full pension. The OM reads as:-
"2. The modalities of implementing Supreme Court Judgement dated 26.4.2000 has been under active consideration of the Government. The President is now pleased to decide that Govt. servants who had drawn lumpsum payment on absorption in a PSU/Autonomous Body and have become entitlted to the restoration of 1/3rd commuted portion of pension in terms of the Supreme Court Judgement dated 15.12.1995 shall, apart from the payment of revised restored amount of 1/3rd commuted portion of pension, be also entitled to the payment of dearness relief on full pension from the date of restoration, instead of dearness relief on the revised restored amount of 1/3rd commuted portion of pension".

5. Thus, his entitlement was taken as Rs.2000/- as Restored Pension (being 1/3rd of full basic pension plus DR on Rs.6000/- with effect from 14.09.2003. When the DR crosses 50%, it is to be merged as DP. Accordingly, his entitlement with effect from 1.4.2004 was revised on 15.4.2004 as at Annexure-A/3 and he was granted Pension as below.
Effective from 01.04.2004
Pension : 6000
Dearness Pension for
for purpose of DR : 3000
Total Pension : 9000
DA @ 11% on total pension 990(11% being the rate on

Minus Commutation OF 2/3rd
pension : - 4000

Net Pension : 5990

As mentioned in para 4(3) of the OA, this Pension fixation from 14.09.2003 to 31.3.2004 and subsequently from 1.4.2004 onwards got fixed in the manner as mentioned above because of the fact that the issue of 1/3rd and 2/3rd value of pension was under litigation and was unclear at that point of time. This clarity was brought in by the Andhra Pradesh High Court judgment dated 24.12.2003 in Writ Petition No.8532 of 2003, followed by the Supreme Court judgment dated 29.11.06 in Civil Appeal No.5269 of 2006 arising out of SLP Nos.21647-648 of 2005 and the Supreme Court judgment dated 24.07.07 in Review Petition No.643 of 07, which all are the basis of Annexure-A/4 which is the OM No.4/79/2006-P&PW(D), dated 06.09.2007,

6. As a result of this OM, the respondents have fixed the pension once again on 14.12.2007 as at Annexure-A/5, which is the impugned order. The applicant relies on the judgment of the Hon'ble Supreme Court quoted above and especially in Review Petition No.643 of 2007. It is his claim that the same has not been properly followed while issuing Annexure-A/5.

7. Before proceeding to the claims of both sides, we find it necessary to refer to some salient point brought out by the Supreme Court in the case of Welfare Association of Absorbed Central Government Employees in Public Enterprises and Ors. Vs. Union of India & Anr. - AIR 1996 SC 1201 and we quote:
"2. .... Government of India some years ago decided to start public undertakings/enterprises in the core sector of industries. To start with, the Government of India, sent some of their officers to the public undertakings, on deputation. ..... The Government offered to deem their retirement as retirement in 'public interest.' .... thus they were offered retiral benefits. They were offered the usual facility of commuting one third of their original pension under Civil Pensions (Commutation) Rules and were also offered additional facility of commuting the balance two-thirds pension also. This facility therefore creates three categories of these persons:

(1) the persons who have not commuted their pension and therefore draw full monthly pension from the Government;

(2) the persons who have commuted one third of the pension and therefore will draw a sliced monthly pension, reduced to the extent of commuted amount,

(3) the persons who have commuted the full pension and who will not be given any monthly pension by deeming monthy pension to have been reduced to NIL......

3. The above-mentioned second category of the retired Government servants namely, those who got one third pension commuted moved this Court for restoration of their one-third pension by filing a writ petition under Article 32 of the Constitution of India, (Vide "Common Cause" v. Union of India (1987) 1 SCR 491). The contention put forward in support of their claim for restoration of the one-third pension was that the lump sum amount paid gets adjusted by about 10 or 12 years and therefore, the Government must be directed to restore the commuted portion of one-third pension. ..... When the matter came up before this Court, a suggestion was made to the Government to give a new look to the matter. .....

..... accepting the 15 years rule, .... it is sufficient to indicate that on the expiry of fifteen years from the period of retirement, such restoration (of 1/3rd commuted pension) would take place.

7. To appreciate the claim of the petitioners, it is necessary to set out two relevant rules in the C.C.S. Pension Rules 1972. Rule 37 and 37A read as follows:-

Rule 37-A. : Payment of lump sum amount to person on absorption in or under a Corporation, company or body.

1) Where a Government servant referred to in Rule 37 elects the alternative of receiving the (retirement gratuity) and a lump sum amount in lieu of pension he shall in addition to the (retirement gratuity) be granted:-

a) on an application made in this behalf, a lump sum amount not exceeding the commuted value of one-third of his pension as may be admissible to him in accordance with the provisions of the Civil Pensions (Commutation) Rules, and

b) terminal benefits equal to the commuted value of the balance amount of pension left after commuting one-third of pension to be worked out with reference to the commutation tables obtaining on the date from which the commuted value becomes payable subject to the condition that the Government servant surrenders his right of drawing two-thirds of his pension."

8. ..... a clear-cut distinction is made in Rule 37-A itself between one-third portion of pension to be commuted without any condition attached and two-third portion of pension to be received as terminal benefits with condition attached with it...."

8. In short, the effect of the above quoted judgment is that the employees of PSUs will be treated on par with the Central Government pensioners to the extent of restoration of one-third portion of commuted pension after 15 years. It emphasises that the 2/3rd part of pension representing the lump sum payment for commuting additional two-thirds pension will not be restored but, one-third commuted pension will be restored on par with other Central Government employees. This is the genesis of the deduction of Rs.4000/- shown in the chart at Annexure-A/3 which is quoted in para 5 above.
Now, we come to analyse Annexures-A/4 and A/5.

9. Annexure-A/4 is the OM issued by DoPT on 6.9.2007 after the directions of the Supreme Court in the cases mentioned above. It reiterates some portions from the judgment and specifically mentions that the PSU employees, on restoration of 1/3rd pension shall get Dearness Relief, Interim Relief, etc., on full basic pension. It explains the modality of fixation of consolidation of pension and consolidation of 1/3rd restored pension. It states as under:
"As on 01.01.1996
(a) The full pension of the absorbees shall be notionally revised w.e.f. 1.1.1996 based on full pension as on 31.12.1995 in accordance with the instructions for revision of pension, issued for implementing the 5th Pay Commission recommenda- tions.

(b) The restorable 1/3rd pension shall be the sum of the following:

I. 1/3rd of full pension as on 31.12.1995.

II. Dearness Relief on full pension as on 31.12.1995

III. IR-1 and IR-II

IV. Fitment @ 40% of the full pension as on 31.12.1995.

Payment of DR shall be on full pension..."

This paragraph can be seen as containing three issues:-

The first issue is the modality for fixing the full pension as on 31.12.1995. The second issue is that based on this calculation of pension on 31.12.1995, the full pension of the absorbee shall be notionally revised with effect from 1.1.1996 as per the instructions for revision of pension issued for implementing the 5th Pay Commission recommendation. On that basis, the restorable 1/3rd pension shall be fixed. Third issue states that the Dearness Relief shall be paid on the full pension.

10. The respondents at Annexure-A/5, dated 14.12.2007, have tried to calculate the commuted value of pension as per the instructions in the OM at Annexure-A/4. This Annexure mentions three charts.

Consolidation of full pension:-
Pension as on
31.12.1995 : Rs.2082.00
DR @ 111%
(min 2590) Rs.2590.00
I – IR : Rs. 50.00
II- IR : Rs. 209.00
40% Fitment of
(2082) : Rs. 833.00
Total : Rs.5764.00

Consolidation of 1/3rd portion of pension:

Pension as on
31.12.1995 : Rs. 694.00
DR @ 111%
(min 2590) : Rs.2590.00
I – IR : Rs. 50.00
II- IR : Rs. 209.00
40% Fitment
of (2082) : Rs. 833.00 --------------------
Total : Rs.4376.00

The first chart calculates his consolidated full pension at Rs.5,764/-. The second chart which is meant for consolidation of 1/3 portion of pension shows him to be entitled for a pension of Rs.4,376/-.
Accordingly, the chart 3 prepared by the respondents show his entitlement:
Consolidation of 1/3rd
of Pension Rs. 4376.00
DP 50% OF BP of 5764 Rs. 2882.00
Rs. 7258.00
DR @ 41% of Rs. 3545.00
(5764+2882=8646) ... ... (41% being the rate applicable from 1.1.2008)
(5764+3000=8764) -----------------------------------------------
Total Rs.10803.00

11. The applicant relies on the second issue above to contend that this calculation is as on 31.12.1995 only. The scene changes on 1.1.1996 when the recommendations of the V CPC becomes applicable and the full pension of the applicant has to reach Rs.6000/-. It is therefore, his contention that an amount of Rs.236/- should be added to the total in both the charts, thus, bringing his pension notionally to Rs.6000/- and the consolidation of 1/3rd part of the pension would come to Rs.4612/-.

Further the DP should be 50% of Rs.6000/-. Similarly, the DR should be 41% of Rs.9000/- (being equal to the sum of minimum full pension of Rs.6000/- + DP of Rs.3000/-). The principle applied for the calculation of DP at Rs.3000/- and DR at 41% of Rs.6000 + 3000 DR is that in terms of Hon'ble Supreme Court decision dated 29.11.2006 (also referred in above OM) "anything which is not part of the pension commuted by him in 1988, has to be paid in full".
12. The chart 3, therefore, gets modified as under:
Consolidation of 1/3rd
of Pension Rs. 4612.00
DP 50% OF BP of 6000 Rs. 3000.00
Total (not relevant)
DR @ 41% of Rs. 3690.00
Total Rs.11302.00

13. The reply statement has been filed by the respondents and argued by the learned counsel. The respondents have disputed granting Dearness Pension of Rs.3000/- and Dearness Relief on Rs.9000/- which according to the respondents is only notional. Similarly, the Dearness Relief ;of 41% is also not due on Rs.9000/- which again is notional. Hence they claim that the calculations done at Chart-3 in Annexure-A/5 is correct and the applicant is entitled only for Rs.10,803 as at Annexure A5. On the similar lines as in Annexure A5, the respondents have calculated the effect of 6th Pay Commission revision thus justifying the order pased at Annexure A15.

14. We cannot agree with this argument. As per their own statement filed by way of reply, it is mentioned at para 6 that they have paid the Dearness Relief on full pension of Rs.6000/- thereby implying that they agree to this DR entitlement. We actually find that they did pay the Dearness Relief on basic pension of Rs.6000/- for the period 14.9.2003 to 31.3.2004. Their own order at Annexure-a/3 shows that they have merged Dearness Pension of Rs.3000/- and have calculated Dearness Relief at the rate of 11% on Rs.9000/- (11% being the prevalent rate then). Annexure-A/8 is also a letter dated 14.2.2008 issued by CSIR with the approval of Financial Adviser of CSIR to the Finance and Accounts Officer of CECRI, which reads as under:
"... it is clarified that Sh.P.S. Venkateswaran's restored amount of 1/3rd commuted portion of pension could be regulated in terms of provisions of OM No.45/10/98-P&PW(A), dated 17.12.1998 and other related instruc-tions on the subject by which his basic pension as on 1.1.96 may be revised to Rs.6000/-."

These take care of the issue of DP and DR.

15. At para 5 of the reply statement, the respoindents have stated that the applicant has received a capitalised value equivalent to 100% of pension and therefore, his minimum pension in the revised scale cannot be taken as Rs.6000/-, but, will have to be restricted to Rs.5764/- even for the purpose of calculating the Dearness Pension and Dearness Relief. We do not agree with this contention. As brought out clearly in the Supreme Court judgment in Welfare Association of PSUs case (para 7 supra), a clear-cut distinction has to be understood between the actions of commutiung 1/3rd pension and the 2/3rds pension. The capitalisation has happened only on the 2/3rd part of the commuted pension, but, all the benefits incumbent upon the remaining 1/3rd part will continue. Therefore, we agree fristly that the Dearness Pension must be taken as Rs.3000/-, Dearness Relief must be paid for Rs.9000/- at the applicable rate. For the same reason, we agree with the contention of the applicant that an additional fitment allowance of Rs.236/- must get added to chart No.1 and 2 of Annexure=A/5, thus, bringing the consolidation of 1/3rd of his pension to Rs.4612/- instead of Rs.4376/-. The word "notional" used in Annexure-A/4 is only to indicate that on 31.12.2005, the pension was notional as what was due to be paid was only 1/3rd consolidated value of it.

16. We, therefore, direct that the respondents shall work out the revised pension alongwith Dearness pension and Dearness Relief as above as far as V CPC is concerned. They will also calculate the revised pension, Dearness pension and Dearness Relief for the purpose of VI Pay Commission effective from 1.1.2006 on similar lines. All these calculations will be completed by the respondents in a period of 3 months from the date of this order and payment of all the arrears shall be made within a period of 6 months from the date of this order. No order as to costs.


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