Wednesday, 16 May 2018


What is prayed for is also not the same rate but the

same principle, namely, flat rate be made applicable to pre 01.11.2002

retirees as well but at a rate of 0.24%.

24. Would that be the correct approach? The tapering formula

undoubtedly begins with 0.24% for the first segment of Rs.3550/- of basic

pension and then progressively steps down and finally reaches the level of

0.06% where the basic pension is in excess of Rs.6010/-.

25. In our view any attempt to tinker with either the formula or the rate

would make the whole scheme unworkable as was cautioned by this Court in

the case of P.N. Menon and Others (supra). As held in the case of Indian

Ex-Services League and Others (supra) the decision of this Court in D.S.

Nakara (supra) is one of limited application and there is no scope for

enlarging the ambit of that decision to cover all schemes made by the

retirees or a demand for an identical amount of pension irrespective of the

date of retirement. The reliance on the resolutions/circulars issued by

Reserve Bank of India was also misplaced. It is true that the tapering

formula was done away with by Reserve Bank of India but that by itself

cannot entitle the retirees prior to 01.11.2002 either to be conferred the

advantage at the same rate made applicable by Reserve Bank of India or at

the flat rate of 0.24% as was sought to be projected.

In our considered view, the assessment made by the Division Bench of

the Madras High Court was absolutely correct. The settlement has to be

taken as a package deal and it would be impossible to hold certain parts

good and acceptable while finding other parts to be bad. Moreover, the

recitals D, E and F in the Bipartite settlement dated 02.06.2005 (quoted

hereinabove) show that a package deal was entered into and Rs.1288 crores

per annum towards all the benefits was set apart for the benefit of the

employees. Any stepping up of benefit for a section of employees is bound

to inflate the figure of Rs.1288 crores per annum though that by itself is not

a ground that weighs with us. In our view both the categories of retirees,

namely, pre November 2002 and post November, 2002 stand on different

footing, the parameters which govern the computation of dearness relief are

also on a different level. The decisions rendered by the Single Judge as well

as by the Division Bench of the High Court failed to appreciate these aspects

and in our view, the said decisions are completely erroneous.

26. It may also be noted that the decision of the Division Bench of the
Madras High Court having been confirmed by this Court, the matter stands
concluded. As has been observed in paragraphs 32, 41 and 44 of

Kunhayammed and Others v. State of Kerala and Another11, once leave to

appeal had been granted and the appellate jurisdiction of this Court was

invoked the order passed in appeal would attract the doctrine of merger. Be

that as it may, we are satisfied that the Bipartite Settlement did not create

any distinction which was inconsistent with the principles laid down by this


27. We therefore allow these appeals, set aside the judgments and orders

passed in the appeals and dismiss Writ Petition No.507 of 2012 preferred by

respondent Nos.1 to 4 herein. No order as to costs.
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