One Rank One Pension – Re-fixation from 01.07.2019 and arrears within three months: Supreme Court Judgement dated 16.03.2022
The Supreme Court on 16.03.2022 (Wednesday) directed on One Rank, One Pension (OROP) for defence forces that a re-fixation exercise shall be carried out from July 1, 2019, upon the expiry of five years and arrears payable to all eligible pensioners of the armed forces shall be computed and paid over within three months.
The court noted that the 2015 communication on OROP states that “in future, the pension would be re-fixed every five years” and said such an exercise has remained to be carried out after the expiry of five years possibly because of the pendency of the present proceedings”.
A three-judge bench presided by Justice D Y Chandrachud which went into the “principles governing pensions and cut-off dates” said there “is not a legal mandate that pensioners who held the same rank must be given the same amount of pension” and that “the varying benefits that may be applicable to certain personnel which would also impact the pension payable need not be equalised with the rest of the personnel”.
Applying the “principles to the facts of the case”, the bench, also comprising Justice Surya Kant and Vikram Nath, said: “We find no constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015…” to the three service chiefs.
The Supreme Court upheld the central government’s decision on One Rank, One Pension (OROP) for defence forces and said that it does not find any constitutional infirmity in the manner in which it is being implemented.
The petitioners had challenged the letter dated November 7, 2015, saying that in the course of implementation, the OROP principle has been replaced by ‘one rank multiple pensions’ for persons with the same length of service. They contended that the initial definition of the OROP was altered and instead of an automatic revision of the rates of pension under which any future enhancement to the rates of pension are automatically passed on to the past pensioners, the revision now would take place at periodic intervals. This deviation from automatic revision, they argued, is arbitrary and unconstitutional under Articles 14 and 21 of the Constitution.
Rejecting the argument, the court held that “OROP definition is not arbitrary”. The court said that the definition of the OROP is uniformly applicable to all pensioners irrespective of the date of retirement.
The cut-off date, the judgement said, is used only to determine the base salary for the calculation of pension. “While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used”.
The Union government had taken a policy decision to enhance the base salary for the calculation of pension “since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage”, said the court.
“Undoubtedly, the Union government had a range of policy choices including taking the minimum, the maximum or the mean or average” but “decided to adopt the average. Persons below the average were brought up to the average mark while those drawing above the average were protected,” the ruling said adding “such a decision lies within the ambit of policy choices”.
One Rank One Pension – Supreme Court Judgement dated 16.03.2022 in Writ Petition (Civil) No. 419 of 2016 Indian Ex Servicemen Movement & Ors. vs Union of India & Ors
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
Writ Petition (Civil) No. 419 of 2016
Indian Ex Servicemen Movement & Ors. … Petitioners
Versus
Union of India & Ors. … Respondents
J U D G M E N T
Dr Dhananjaya Y Chandrachud, J
This judgment has been divided into the following sections to facilitate analysis:
A. Factual Background
B. Submissions of Counsel
C. Analysis
C. 1 Concept and genesis of
C. 2. Plea of Discrimination
C.2.1 ACP-MACP
C.2.2 Financial Implications
C.2.3 Average to Maximum
C.2.4 Periodic revision every five years
47 The policy of OROP adopted by the Union Government stipulates thus:
(i) The benefits will be effective from 1 July 2014;
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(ii) Pensions of past pensioners would be refixed on the basis of the pension of retirees of calendar year 2013;
(iii) Pension for all pensioners would be protected; and
(iv) In future, the pension would be refixed after every five years.
48 The principles governing pensions and cut-off dates can be summarised as follows:
(i) All pensioners who hold the same rank may not for all purposes form a homogenous class. For example, amongst Sepoys differences do exist in view of the MACP and ACP schemes. Certain Sepoys receive the pay of the higher ranked personnel;
(ii) The benefit of a new element in a pensionary scheme can be prospectively applied. However, the scheme cannot bifurcate a homogenous group based on a cut-off date;
(iii) The judgment of the Constitution Bench in Nakara (supra) cannot be interpreted to read the one rank one pension rule into it. It was only held that the same principle of computation of pensions must be applied uniformly to a homogenous class; and
(iv) It is not a legal mandate that pensioners who held the same rank must be given the same amount of pension. The varying benefits that may be applicable to certain personnel which would also impact the pension payable need not be equalised with the rest of the personnel.
49 Applying the above principles to the facts of the case, we find no constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015 for the following reasons:
(i) The definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement. It is not the case of the petitioners that the pension is reviewed ‘automatically’ to a class of the pensioners and ‘periodically’ to another class of the pensioners;
(ii) The cut-off date is used only for the purpose of determining the base salary for the calculation of pension. While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used. Since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage, the Union Government has taken a policy decision to enhance the base salary for the calculation of pension. Undoubtedly, 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;
(iii) While no legal or constitutional mandate of OROP can be read into the decisions in Nakara (supra) and SPS Vains (supra), varying pension payable to officers of the same rank retiring before and after 1 July 2014 either due to MACP or the different base salary used for the calculation of pension cannot be held arbitrary; and
(iv) Since the OROP definition is not arbitrary, it is not necessary for us to undertake the exercise of determining if the financial implications of the scheme is negligible or enormous.
50 In terms of the communication dated 7 November 2015, the benefit of OROP was to be effected from 1 July 2014. Para 3 (v) of the communication states that “in future, the pension would be re-fixed every five years”. Such an exercise has remained to be carried out after the expiry of five years possibly because of the pendency of the present proceedings.
51 We accordingly order and direct that in terms of the communication dated 7 November 2015, a re-fixation exercise shall be carried out from 1 July 2019, upon the expiry of five years. Arrears payable to all eligible pensioners of the armed forces shall be computed and paid over accordingly within a period of three months.
52 The petition is disposed of in the above terms.
53 Pending application(s), if any, shall stand disposed of.
……………………………………………….J.
[Dr Dhananjaya Y Chandrachud]
.……………………………………………….J.
[Surya Kant]
.……………………………………………….J.
[Vikram Nath]
New Delhi; March 16, 2022