2006 (5) TMI 514 - SC - Indian Laws

Retired Teachers Entitled to Pension Benefits from Revised UGC Pay Scales; 1998 Cut-off Ruled Arbitrary by Court.

U.P. Raghavendra Acharya and Ors. Versus State of Karnataka and Ors.

The SC set aside the Division Bench's judgment of the Kar. HC, ruling that the appellants, retired teachers, were entitled to pensionary benefits based on ... Pension Scheme - retirement benefits - Challenged the Notifications issued on 22.7.2000 and 8.8.2000 - discrimination between the teachers working in the Government Colleges and the teachers working in the Non- Government Colleges - whether at the given time, such vested or accrued rights can be divested with retrospective effect by the Rule making authority? - HELD THAT:- It is now well settled that a notification can be issued by the State accepting the recommendations of the Pay Revision Committee with retrospective effect as it was beneficent to the employees. Once such a retrospective effect is given to the recommendations of the Pay Revision Committee, the concerned employees despite their reaching the age of superannuation in between the said dates and/or the date of issuance of the notification would be deemed to be getting the said scales of pay as on 1.1.1996. By reason of such notification as the appellants had been derived of a vested right, they could not have been deprived therefrom and that too by reason of executive instructions. The contention of the State that the matter relating to the grant of pensionary benefits vis-a-vis the revision in the scales of pay stands on different footing, thus, must be rejected. Pension, as is well known, is not a bounty. It is treated to be a deferred salary. It is akin to right of property. It is co-related and has a nexus with the salary payable to the employees as on the date of retirement. The impugned orders furthermore is opposed to the basic principles of law inasmuch as by reason of executive instructions an employee cannot be deprived of a vested or accrued right. Such a right to draw pension to the extent of 50% of the emoluments, computed in terms of the rules, w.e.f. 1.1.1996, vested to the appellants in terms of Government notification read with Rule 296 of the Rules. As the amount calculated on the basis of the revised scales of pay on and from 1.1.1996 to 31.3.1998 have not been paid to the appellants by the State of Karnataka as ex gratia, and in fact was paid by way of emoluments to which the appellants became entitled to in terms of their conditions of service, which in turn are governed by the statutory rules, they acquired a vested right therein. If the appellants became entitled to the benefits of the revised scales of pay, and consequently to the pension calculated on the said basis in terms of the impugned rules, there would be reduction of pension with retrospective effect which would be violative of Articles 14 and 16 of the Constitution of India. The appellants had retired from service. The State therefore could not have amended the statutory rules adversely affecting their pension with retrospective effect. Thus, the impugned judgment cannot be sustained and is accordingly set aside. Issues Involved:1. Applicability of revised UGC pay scales for pensionary benefits.2. Discrimination between teachers of Government Colleges and Non-Government Colleges.3. Validity of cut-off dates for pensionary benefits.4. Vested rights of retirees regarding pensionary benefits.Issue-wise Detailed Analysis:1. Applicability of Revised UGC Pay Scales for Pensionary Benefits:The appellants, retired teachers from University and Private Aided Colleges, were subject to UGC pay scales. The Government of Karnataka had extended the UGC pay scales to them with effect from 1.1.1996. It was clarified that the last pay drawn under the UGC scales would be treated as emoluments for pensionary benefits. Despite this, the State of Karnataka issued notifications stating that for those who retired between 1.1.1996 and 31.3.1998, the revised pay would not be considered for pensionary benefits, which would only be revised from 1.4.1998.2. Discrimination Between Teachers of Government Colleges and Non-Government Colleges:The learned Single Judge of the Karnataka High Court held that the notifications were arbitrary and discriminatory, resulting in unequal treatment between teachers of Government Colleges and Non-Government Colleges. The Division Bench, however, upheld the notifications, stating that the cut-off date of 1.4.1998 for revised pensionary benefits was not arbitrary or discriminatory, as it applied uniformly to all categories of pensioners.3. Validity of Cut-off Dates for Pensionary Benefits:The State of Karnataka argued that the cut-off date for revised pensionary benefits was set at 1.4.1998 due to financial implications and policy decisions. The Supreme Court, however, noted that the appellants had been given the benefit of revised pay scales from 1.1.1996, and thus, their pensionary benefits should also be computed from that date. The Court held that fixing a cut-off date of 1.4.1998 was arbitrary and violated Articles 14 and 16 of the Constitution.4. Vested Rights of Retirees Regarding Pensionary Benefits:The Supreme Court emphasized that pension is not a bounty but a deferred salary, akin to a right of property. The appellants had a vested right to have their pension computed based on the last pay drawn under the revised UGC scales from 1.1.1996. The Court held that the State could not deprive the appellants of this vested right through executive instructions.Conclusion:The Supreme Court set aside the impugned judgment of the Division Bench of the Karnataka High Court, holding that the appellants were entitled to have their pensionary benefits computed based on the revised UGC pay scales from 1.1.1996. The appeals were allowed with costs, and the Court assessed the counsel fee at Rs. 5,000/- in each appeal.