Respected Shri Mahadevan Sahab,
I have gone through your observations on interpretation of Para 3A of Annexure IV to LIC Pension Rules. You have rightly pointed out that discrimination caused by Para 3A has to be pleaded with due precaution. Various experts/activists interpret the discrimination caused by Para 3A in different manner and suggest various solutions to remove their perceived discrimination. But, if all such approaches, if pleaded in the SC, would create confusion and even defeat the very purpose. For sake of clarity, I give below excerpts from my note on Para 3A, which I shared with the participants in AIRIEF's meeting held at Bhopal:
" Q.2 What type of discrimination is caused by Para 3A?
Ans. Discrimination caused by Para 3A is interpreted in following three manners:
1. Same rate of DR to employees covered under para 1 and 2 as the rate of DA paid to in service employees during the period covered by para 1 and para 2. This interpretation was taken in WP No. 6676 of 1998.
2. Para 3A allows hundred percent neutralization of dearness relief. So the pensioners who retired on or before 31/7/1998 should also be allowed hundred percent neutralization.
(Calculation: Para 3A deals with DR at 1740 CPI. 100*4/1740=0.23%)
Para 1 allows 100% neutralization up to Basic Pension 1250 at 600 CPI (100*4/600=0.67%) and thereafter it is gradually reducing for all the slabs of Basic Pension.
Similarly, Para 2 also allows hundred percent neutralization up to Basic Pension 2400 only at CPI 1148 CPI (100*4/1148=0.35%), After 2400 Basic Pay rate of DR are reducing.
For hundred per cent neutralization of DR, uniform rate of DR i.e. 0.67% for all the pensioners covered under Para 1 and 0.35% for all the pensioners covered under para 2 should be given.
3. Para 3A provides for uniform rate of DR to all pensioners similar to in service employees, as well as hundred per cent neutralization. Before 31/7/1997, there was discrimination in payment of DA to in service employees also as there was no hundred percent neutralization of DA after a given slab of Basic Pay. Discriminatory payment of DA prior to 31/7/1997 was thus resolved. When the discrimination of rate of DR, in case of the pensioners, was brought to the notice of LIC authorities, LIC proposed to resolve the discrepancy on the same line, by revising the pension of pre-Aug. 1997 pensioners, as per the pay scales calculated at 1740 CPI and applicable from 1/8/1997 and then allowing the same rate of DR to pre-Aug 1997 pensioners (0.23%) vide the Board Resolution dated 24/11/2001.
In the AIRIEF's WP we have challenged Para 3A as per interpretation given in (3) above. Interpretation given in (1) above does not provide correct solution as it would give a small benefit only (We have calculated the difference at maximum of scale of ED: for para 1 it is 10397 pm and for Para 2 it is 10179 pm as on 1/2/2018, for earlier periods its quite low). Interpretation in (2) above lacks strong grounds (hundred percent neutralization was not given even to in service employees). Bank Pensioners have lost the similar case in SC in May 2018. (United Bank of India Retirees Welfare Association have raised the issue of 100% neutralization of DR which reached SC as CA no.005252 of 2018 in the SC, and decided against the pensioners).
Apart from above interpretations, Delhi High Court has given another interpretation. In para 76 of the judgement, DHC states ".... Thus, grant of higher equalization @ 0.23% of basic pension in paragraph 3(A), without extending this benefit to those in paragraph 1 and 2 is unreasonable and discriminatory violating Article 14." Prescribing a solution, DHC further states in the same para, "Retired employees covered under paragraphs 1 and 2 are entitled to neutralization at ratio/scale as applicable and given to employees retiring post 31st July, 1997." Accordingly, in para 79 DHC directed that the rate of DR on amounts above Rs. 2130 /- till Rs. 3850/- fixed in paragraph 1 at 0.17 of basic pension shall be enhanced to the rate of 0.29% as specified in clause (ii) of paragraph 2. Further, for pension in excess of Rs. 2130 (it should be 3850) rate of 0.23% of basic pension as stated in paragraph 3 (A) would apply with effect from applicable date.
Both the above stated conclusions of DHC are erroneous as explained hereinbelow:
Rate of DR is calculated on a particular CPI at which a given pay scale is fixed. So, Rate of DR is relevant to the CPI and Pay scale corresponding to the given CPI. DHC has not taken into account this basic principle and applied incompatible rates of DR to the basic Pension based on different pay scales.
While challenging Para 3 A as discriminatory, it is not meant that it should be quashed. It is very much relevant and applicable to the employees who retired between the period from 1/8/1997 to 31/7/2002. It has provided rate of DR to all pensioners similar to in service employees, which was not provided to the pensioners who are covered under Para 1 and 2 of the Appendix IV. DHC holds Para 3 A discriminatory to the pensioners covered under Para 1 and 2 and intends to give the benefit of DR equalization (similar treatment to all) to them at par the pensioners covered under Para 3A. But it has to be done in a logical manner. As stated in earlier para, a given rate of DR is relevant to a particular CPI and corresponding pay scales. By comparing and applying the rate of DR @ 0.23% (which is for the pay scales existing as on 1/8/1997 and at CPI 1740) with/to the pay scales existing as on 1//1/1993 at CPI 1148 is neither logical nor mathematically correct. Similarly applying the rate of DR @ 0.29 to some categories of the pensioners covered in para 1 is also illogical and inaccurate.
The discrimination observed by DHC, caused due to Para 3A can be resolved logically only by bringing the pay scales of the pensioners covered under Para 1 and 2 at the level equivalent to those existing as on 1/8/1997 and then applying the rate of DR @ 0.23%.
The Board Resolution dated 24/11/2001 was passed by the Board of LIC to resolve the DR anomaly by upgrading the basic pension as per the formula applied to in service employees. Central Government had kept the resolution pending so it could not become rule; but it proves that solution of pensioners' grievances is revision of pension on the lines of CCS pensioners. Thus, there cannot be any other manner of resolving the discrimination.
Para 3B, authorized the Corporation to decide the rate of DR corresponding to the CPI at which basic is fixed in case of retirees after future wage revisions, so Central Government has not to amend Para IV each time by issuing notifications in respect of future wage revisions.
We have challenged the judgement of DHC on relief given in respect of discrimination caused by Para 3A and pleaded that the discrimination can be removed only by updating the pension with every wage revision, as is allowed to CCS Pensioners.
Though, board resolution dated 24/11/2001 is not enforceable till it is approved by Central Government; but it provides the correct solution to remove the disparity. LIC has adopted almost the same procedure while making payment of arrears of 40% as per interim order dated 31/3/2016 of the Supreme Court.
The said Board Resolution is almost in tune with the principles adopted by VII CPC with regard to Pension Parity among CCS Pensioners, which are fully approved by the Central Government.
One more point I would like to add is that updation of Basic Pension cannot be pleaded on the basis of para 3A of appendix IV alone. Simultaneously, we have to point out that discrimination in pension is caused because wage revision notification (amended service rules) revises basic pay of all the in service employees but restricts basic pension revision only to those who retired on or after the date from which the notification is effective excluding all past pensioners. So, we have to challenge the relevant provision of the wage revision notification, which usually happens to be para 1 (3), requesting for specific mention that the wage revision notification will also be applicable to past pensioners, prescribing thereby a suitable matrix for pension revision, as is done in case of CCS pensioners. It may be kept in mind that the term 'employee' defined in Pension Rules takes into consideration both -the in service employees as well as retired employees who opted for pension and are governed by the Pension Rules. We may also point out that Rule 35 (2) may be amended suitably to include revision of basic pension calculated at the time of retirement with every wage revision. In AIRIEF's SLP these aspects are covered. It has to be done in the light of SC Judgement dated 31/3/2016, wherein para 26 states that the case was not considered by them as the pleadings were not adequate. Clarifying the statement it is stated, "we have no option as the pleadings are not adequate as it should have been while assailing a constitutional validity of a provision. It is well settled in law that he who assails the constitutional validity of a statutory provision or a rule, has to specially assert the grounds for such challenge. [See State of Uttar Pradesh v. Kartar Singh11, State of Andhra Pradesh and another v. K. Jayaraman and others12, Union of India v. E.I.D.Parry (India) Ltd.13, State of Haryana v. State of Punjab & another14]."
Provisions of Rule 55 B and 56 are also there to support our claim.
In addition to above, there are several other strong arguments for pension parity in respect of LIC Pensioners also, as are given in our SLP/Rejoinder.
Coming to Para 3A of Annexure IV to Pension Rules again, I may refer to para 17 of the SC Order dated 31/3/2016 wherein it is stated that petitioners of writ petition No.184 of 2007 in the High Court of Delhi (Federation of Retd LIC Cl 1 Officers Associations), have filed the said WP assailing the constitutional validity of Para 3A of the Appendix to the Rules contending, inter alia, that the said Para is violative of Article 14 of the Constitution. Since DHC had given the judgement on the basis of the Judgement of Jaipur HC on similar petitions of Shri Asthana, which was set aside by SC; the case was remanded to DHC along with other WPs for assailing the constitutional validity of Para 3A. It was with regard to DR disparity caused to Pre-Aug 1997 retiree pensioners. Similarly, in Para 19, it is stated that there are certain employees who have retired after the cut-off date stipulated in Para 3A of the Appendix, but they are not being given the requisite dearness relief based on subsequent pay revisions. This is with regard to pension updation. So, we have to challenge the rules/provisions which cause discrimination in payment of DR to pre-aug 1997 retiree pensioners as well as the discrimination in payment of pension based on date of retirement.
By disputing a rule or any provision of rule does not mean to get the same quashed. In para 50 of SC judgement in DS Nakara Case, meaning of disputing the rule is explained reading as under:
"While examining the case under Art 14, the approach is not: either take it or leave it, the approach is removal of arbitrariness and it that can be brought about by serving the mischievous portion the Court ought to remove the discriminatory part retaining the beneficial portion. The pensioners do not challenge the liberalized pension scheme. They seek the benefit of it. Their grievance is denial to them of the same by arbitrary introduction of words of limitation."
M P Agnihotri
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