2022 (8) TMI 1577 - SC - Indian Laws

Supreme Court upholds Rule 3(3) of Tripura Pension Rules 2009 against arbitrariness challenge

The State of Tripura & Ors. Versus Smt. Anjana Bhattacharjee & Ors.

SC allowed the appeal and quashed HC's judgment striking down Rule 3(3) of Tripura State Civil Services (Revised Pension) Rules, 2009. HC had held the ... Constitutional validity of Rule 3(3) of the Tripura State Civil Services (Revised Pension) Rules, 2009 - direction to pay the original writ petitioner the arrears of pension for the period from 01.03.2007 to 31.12.2008 - HELD THAT:- Rule 3(3) of the Pension Rules, 2009 has been struck down by the High Court by holding that the same is arbitrary and violative of Article 14 of the Constitution of India. Before the High Court, it was the specific case on behalf of the State that because of heavy financial burden and there being financial constraints, the State is not in a position to bear the heavy burden of additional revised pension and therefore, the State formulated a policy decision to the effect that the revised pension shall be paid from 01.01.2006 to 31.12.2008 notionally and actual revision of pension shall be disbursed from 01.01.2009 only. A detailed affidavit was filed on behalf of the State justifying the above policy decision providing/granting the revision of pay from 01.01.2009 only and to grant the benefit of revised pension notionally from 01.01.2006 or from the date of retirement till 31.12.2008. When specific statistics were provided before the High Court justifying its policy decision and the financial crunch/financial constraint was pleaded, there was no reason for the High Court to doubt the same. As such the findings recorded by the High Court in the impugned judgment and order is contrary to the averments made in affidavit filed on behalf of the State Government. From the affidavit filed before the High Court reproduced hereinabove, we are satisfied that a conscious policy decision was taken by the State Government to grant the benefit of revision of pension notionally from 01.01.2006 or from the date of superannuation till 31.12.2008 and to pay/grant the benefit of revision of pension actually from 01.01.2009, which was based on their financial crunch/financial constraint. Thus, for the grant of additional benefit, which had financial implications, the prescription of a specific future date for conferment of additional benefit, could not be considered arbitrary. Conclusion - The impugned judgment and order of the High Court striking down Rule 3(3) of the Pension Rules, 2009 is unsustainable and accordingly quashed The impugned judgment and order passed by the High Court striking down Rule 3(3) of the Tripura State Civil Services (Revised Pension) Rules, 2009 is unsustainable and the same deserves to be quashed and set aside and is accordingly quashed and set aside - Appeal allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court were:Whether Rule 3(3) of the Tripura State Civil Services (Revised Pension) Rules, 2009, which provides for notional computation of revised pension from 1st January 2006 but actual financial benefit only from 1st January 2009 or date of retirement, is arbitrary and violative of Article 14 of the Constitution of India.Whether the State's policy decision to defer payment of revised pension arrears due to financial constraints and to fix a cut-off date for actual payment is constitutionally permissible.Whether the High Court was justified in striking down Rule 3(3) on the ground that the financial crunch pleaded by the State was not a valid reason and thus the Rule was discriminatory and arbitrary.Whether financial constraints can constitute a valid ground for fixing a cut-off date for grant of pension benefits retrospectively.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Validity of Rule 3(3) of the Pension Rules, 2009 and Alleged Violation of Article 14Relevant legal framework and precedents: The constitutional guarantee under Article 14 prohibits arbitrary discrimination and mandates equality before law. However, classification is permissible if it is founded on an intelligible differentia and has a rational nexus to the object sought to be achieved. The Court referred to precedents including Amar Nath Goyal and Bihar Pensioners Samaj, which recognized financial constraints as a valid ground for fixing cut-off dates in pension benefits.Court's interpretation and reasoning: The Court examined the challenged Rule 3(3) which allowed notional revision of pension from 1.1.2006 but actual payment only from 1.1.2009 or retirement date, whichever was later. The State justified this as a policy decision due to financial constraints. The High Court struck down the Rule as arbitrary and violative of Article 14, rejecting the financial crunch plea because the Central Government was to bear 80% of the financial burden during the relevant period.The Supreme Court analyzed this reasoning and found that the High Court failed to give cogent reasons for doubting the State's financial constraint plea. The State produced detailed affidavits explaining the shortfall in funding from the Finance Commission, the underestimation of pension liabilities, and the resultant financial burden on the State exchequer. The Court held that the financial constraint was a rational and valid basis for the policy decision and thus for fixing the cut-off date.Key evidence and findings: The State's affidavit detailed the shortfall in financial assistance from the Central Government, the increased pension liabilities, and the impact on the State's finances. The notification dated 2.2.2010 confirmed that 80% of the financial requirement was to be borne by the Central Government only till 31.3.2010, but actual expenditure exceeded projections significantly.Application of law to facts: The Court applied the principle that financial constraints can justify classification and cut-off dates in pension benefits. It found that the policy decision embodied in Rule 3(3) was reasonable, non-arbitrary, and had a rational nexus to the object of maintaining financial stability of the State.Treatment of competing arguments: The High Court's rejection of financial constraint as a valid ground was found to be without sufficient basis. The State's argument that the policy decision was within its domain and not subject to interference unless arbitrary or unconstitutional was accepted. The Court emphasized that courts do not normally interfere with policy decisions unless they violate constitutional provisions.Conclusion: Rule 3(3) is constitutionally valid and not arbitrary or violative of Article 14.Issue 2: Whether Financial Constraints Can Justify Fixing a Cut-Off Date for Pension Revision BenefitsRelevant legal framework and precedents: The Court extensively relied on its earlier decisions in Amar Nath Goyal and Bihar Pensioners Samaj, which upheld that financial and economic implications are germane to government policy decisions regarding pension benefits. These precedents held that fixing a cut-off date based on financial constraints is not arbitrary if supported by rational considerations.Court's interpretation and reasoning: The Court reiterated that financial crunch is a valid ground for fixing a cut-off date for pension revision benefits. It observed that the policy decision to grant actual pension revision benefits only from 1.1.2009 was a conscious and rational decision to maintain financial equilibrium in the State. The Court noted that the High Court erred in ignoring this rationale.Key evidence and findings: The financial data submitted by the State demonstrated the increased pension expenditure and the shortfall in funding by the Central Government. The Court found this evidence credible and sufficient to justify the policy decision.Application of law to facts: Applying the principles from the precedents, the Court held that the cut-off date fixed by the State was based on valid financial considerations and was not discriminatory or arbitrary.Treatment of competing arguments: The Court rejected the argument that because the Central Government bore 80% of the financial burden, the State could not claim financial constraints. It clarified that actual expenditure and shortfall in funding justified the State's position.Conclusion: Financial constraints can validly justify fixing a cut-off date for pension benefits, and the State's policy in this case was reasonable.Issue 3: Whether the High Court Was Justified in Striking Down Rule 3(3)Relevant legal framework and precedents: Judicial review of policy decisions under Article 226 is limited and courts do not ordinarily interfere with policy decisions unless they are arbitrary, discriminatory, or violate constitutional provisions.Court's interpretation and reasoning: The Supreme Court found that the High Court failed to appreciate the financial evidence and the rationale behind the policy decision. The High Court's conclusion that the financial crunch plea was not satisfactory was without cogent reasons and contrary to the State's affidavits. The Court emphasized that the High Court's role is not to substitute its own view on policy but to ensure the policy is not arbitrary or unconstitutional.Key evidence and findings: The affidavit and notifications produced by the State were detailed and specific, demonstrating the financial crunch and the rationale for the policy decision.Application of law to facts: The Court applied the principle of limited judicial review and held that the High Court erred in striking down the Rule.Treatment of competing arguments: The Court rejected the High Court's reasoning that the State's policy was arbitrary on the ground that the Central Government bore 80% of the financial burden, noting that actual expenditure and shortfall justified the policy.Conclusion: The High Court's order striking down Rule 3(3) is unsustainable and is set aside.3. SIGNIFICANT HOLDINGSThe Court held:'Financial constraint can be a valid ground for fixation of cut-off date for grant of benefit of increased quantum of death-cum-retirement gratuity... Financial and economic implications are very relevant and germane for any policy decision touching the administration of the Government...''The foundation i.e., the financial crunch has not satisfied the Court at all' - observation of the High Court was found to be without cogent reasons and contrary to the affidavit evidence filed on behalf of the State.'The policy decision embodied in Rule 3(3) of the Pension Rules, 2009 is based on rational and valid grounds and is not arbitrary or violative of Article 14 of the Constitution of India.''Fixing of a cut-off date for granting of benefits is well within the powers of the Government as long as the reasons therefor are not arbitrary and are based on some rational consideration.'The Court concluded that the impugned judgment and order of the High Court striking down Rule 3(3) of the Pension Rules, 2009 is unsustainable and accordingly quashed and set aside the same. However, since the arrears had already been paid to the original writ petitioner pursuant to an interim order, no recovery would be made from her.