Gist of my speech in OB/EC meeting held on 17 & 18 Aug. 2022 at Ahmedabad
From a number of messages floating on WhatsApp platform as also telephonic queries in respect of our court cases on DR disparity and Pension Updation, it appeared that the issues of the case and preparation done by AIRIEF was not fully known to a majority of members. So, in the OBs/EC meeting held at Ahmedabad on 17th and 18th Aug. 2022, I preferred to talk on these issues.
SC Judgment dated 31/03/2016
SC directed DHC to decide constitutional validity of Para 3A keeping in view the Dearness Relief (DR) paid to pre-aug.1997 pensioners and also to deal with the case of the persons who have retired after 1/8/1997 and who are not being given the requisite dearness relief based on subsequent pay revisions. (Para 17,19, 23 of SC judgment). Thus, the following issues were to be considered by the DHC:
i. DR anomaly to Pre-Aug 1997 pensioners, and
ii. Pension disparity as the requisite DR based on subsequent pay revision is not paid.
DR disparity:
As per para 1 of Appendix IV, applicable to pensioners retired before 1st Aug '92, full neutralisation of DR (@ 0.67%) is given only to those who receive Basic Pension of Rs. 1250/- or less. For others there is tapering rate of DR viz. 0.55%, 0.33%, 0.17% (which is not full neutralisation), depending upon their Basic Pension in excess of Rs 1250.
As per para 2 of Appendix IV, applicable to pensioners retired between the period from 1/8/1992 to 31/7/1997, full neutralisation of DR (@ 0.35%) is given up to Basic Pension of Rs. 2400/- only. Thereafter, tapering rate of DR viz. 0.29%, 0.17%, 0.9%, (which is not full neutralisation) depending on the Basic Pension in excess of Rs 2400/- is paid.
As per Para 3A of Appendix IV, full neutralisation of DR (@ 0.23%) is paid to all irrespective of their Basic Pension.
Formula of calculating Rate of DR per slab for Full neutralisation at a given CPI (slab of 4 points)
Rate of DR = 100 / No. of Slabs
Thus, rate of DR for full neutralisation for various CPI are as under:
| Wage RevisionPeriod | CPI | No. of Slabs | Rate of DR(100/No. of Slabs) |
| 1983 – 1987 (for those who retired from 1/1/1986 to 31/7/1987) | 332 | 83 | 100/83 = 1.20% |
| 1987 - 1992 | 600 | 150 | 100/150 = 0.67% |
| 1992 - 1997 | 1148 | 287 | 100/287 = 0.35% |
| 1997 – 2002 | 1740 | 435 | 100/435 = 0.23% |
(1.20% is the full neutralisation rate of DR for the wage revision period ending on 31/7/1987 and CPI for the said wage revision was 332 as per wage revision notification dated 12/04/1985 para 9)
Para 3A of the same Appendix provides for full neutralisation to all the pensioners irrespective of Basic Pension whereas Para 1 and 2 provide tapered neutralisation as explained hereinabove, hence only a small section of pensioners drawing low basic pension benefits from full Rate of DA neutralization. Thus, the Para 3A is discriminatory as it leaves out Pensioners retired before 1st August 1997. This discrimination would be removed only when earlier pensioners covered in Para 1 and 2 of the Appendix IV are also given the benefit of full neutralisation of DR irrespective of their Basic Pension.
Discrimination caused due to Rule 35 (1)
Rule 35 (1) states that in respect of employees who retired during the period from 1/1/1986 to 31/7/1987, Basic Pension will be updated by merging DR as per the formula provided in Appendix III. At the time of retirement of such employees rate of DA was 1.20% (maximum) at CPI 332. With updation of their Basic Pension as per the formula in Appendix III, Rate of DR allowed to them was 0.67% (Maximum) at CPI 600 (not 1.20% at CPI 332 at which their Pay Scales were determined). Thus, they were brought at par with the employees who retired during subsequent wage revision period (i.e. from 1/8/1987 to 31/7/1992).
The provision of updating the Basic Pension with subsequent wage revisions should have continued as was proposed by LIC vide the Board Resolution dated 24/11/2001. (Merger of DR payable first at CPI 1148 and then at CPI 1740 for those covered in Para 1 and at 1740 for those covered in Para 2 and giving the then latest rate of DR @ 0.23% uniformly to all ensuring full neutralisation of DR to all.)
The provision should have been continued with every subsequent wage revision, providing uniform and the latest rate of DR to all the pensioners.
DHC Judgment dated 27/04/2017
A. DHC erred, while observing vide Para 8 of the judgment that Para 3A is not the issue but the demand of the petitioners' pensioners is enforcement of the precept of OROP. DHC has travelled beyond the direction of SC. As stated in our WP (C) vide para 15 and 16 our issues were:
i. DR anomaly – caused to the pre-Aug. 1997 retired pensioners who are not getting full neutralisation of DR whereas those retired after 1/8/1997 are getting full neutralisation,
ii. Pension anomaly – caused to those also, who are retired after 1/8/1997 and whom full neutralisation of DR is given but not as per the formula in operation in the Corporation. With every wage revision the formula of DA/DR is revised, but earlier retiree pensioners are not given DR at the current rate in operation.
B. DHC erred (vide Para 10) stating that the Pension Rules were based upon consensus and understanding between the Corporation, the Central Government and the Employees' Unions. The Pension Rules are made by the Central Government exercising its power given in Sec 48 (2) (cc) of LIC of India Act, 1956. The employees' unions had not signed any MOU or settlement as the powers of bargaining by the employees were withdrawn from the employees by amending Sec 48 of LIC of India Act, 1956. Sub-section (2B) and (2C) of Sec 48 of LIC of India Act, 1956 specifically provided that the Service Rules and Pension Rules made by the Central Government will be beyond the scope of any labour laws including ID Act.
C. DHC has erred vide Para 21 of the judgment dated 27/4/2017 by not considering the anomaly created by 35 (1) on the plea that formula given in Appendix-III was not challenged and therefore need not be examined. We demanded for pension updation by merger of DR as is done vide Rule 35 (1). We did not want to challenge the matrix of merger of DR as it was already proposed by LIC vide the Board Resolution and was never disputed by us.
D. DHC erred vide para 35 to conclude that the principle of dearness relief acknowledges that basic pension would remain static and not account for the future increase in salary of in service employees. It is not so as the Rule 35 (1) itself provides for updation of pension with wage revision. Para 1 of the Appendix IV, provides for the same rate of DR at CPI 600 to the employees who retired during the period from 1/1/1986 to 31/10/1992, which covers the employees who retired in following three wage revision periods:
| Wage Revision Period | CPI at which rate of DA calculated | Rate of DA (Maximum) |
| 1983* - 31/07/1987 | 332 | 1.20 |
| 1/8/1987 - 31/07/1992 | 600 | 0.67 |
| 1/8/1992 - 31/10/1992# | 1148 | 0.35 |
• For Class 1 Officers effective date is 1/10/1983, for Class 2 Officers 2 effective date is 1/4/1988 and for Class 3 and Class 4 effective date is 22/2/1983.
#. This group was allowed rate of DR at CPI 1148 on revised basic because of wage revision vide notification dated 22/04/1997 (Para 3).
Thus, the observation of DHC is not correct.
E. DHC, (para 76) held the provisions of Para 3A violative of Art. 14. Prescribing a solution, DHC 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." 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 on rate of dearness relief are erroneous as explained herein below:
Rate of DR is calculated on the CPI at which revised pay scales are determined. Dearness Relief is added/reduced on every four point above the given CPI. So, consideration of number of slabs of each four points each above the said CPI are is also relevant and hence essential.
DR = Basic Pension x rate of DR x No. of slabs
So, rate of DR, number of slabs and Basic Pension have to be on linked to the same CPI at which pay scales were determined.
DR @ 0.23% cannot be applied to the pensioners covered in Para 1 and Para 2 of Annexure IV, unless their Basic Pension is updated by merging the DR up to CPI 1740.
DHC held Para 3 A discriminatory to the pensioners covered under Para 1 and 2 and intends intended to give the benefit of DR equalization (similar treatment to all) to them at par with 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 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.
In addition to the issues of our SLPs., as described above, the following points were also discussed:
A. We have approached the courts to challenge the faulty rules which are creating grave discrimination and violating Art. 14 of the Constitution. By challenging a rule does not mean that it is to be quashed but to eliminate the discrimination by allowing same benefit to others (like hundred percent neutralisation of DR to all Pre-Aug. 1997 retiree pensioners, as is given to post 1997 retiree pensioners, and updation of pension with every wage revision to those retired after 1/8/1987, as given to those who retired from 1/1/1986 to 31/7/1987)).
B. DHC has erred to treat the contribution to Pension Fund as the Pension Pay out. Pension is paid monthly till the regular pensioner and after him/her, the family pensioner survives. So, the actual amount paid to the retiree pensioners is the amount of Pension Pay out. LIC does not talk about the actual payment of pension/family pension paid to the retired employees but talk about the projected liability provided for payment of pension to the employees who are to retire in future. Following figures on payment of pension for the year 2020-21 may be analysed to know the correct position:
Pension paid to the retired employees who have opted for pension: Rs. 2214.00 Crs.,
Contribution: Rs.10070.74 Crs.,
Benefits paid: Rs. 4298.57 Crs.
LIC treats the contribution of Rs. 10070.74 Crs. as the cost of 'pension pay-out' whereas the amount of pension paid is Rs. 2214.00 Crs. only. LIC Pension Scheme is the main retirement benefit given to the employees by LIC. The Pension Scheme is not a contributory or restricted fund scheme. It is a Funded Scheme with the provision for adding contribution for upward revision of the Pension. As per the various assumptions, to calculate the fair Asset Value of the Scheme, one assumption is about the Expected average remaining working lives of Employees (years), which restricts the term of refurbishment of the Fund (as on 31.3.2021 it is taken as 7.9 yrs) whereas the pension is to be paid for a much longer duration. So, it is not fair to treat the 'contribution' as 'pension pay-out' for the existing pensioners.
C. The back ground of AIRIEF's becoming the party was also discussed.
D. In addition to the court proceedings, efforts for negotiations with LIC management, Finance Minister and Officials of DFS were also discussed where the LSG help the Negotiating Committee to prepare the representations, follow up letters keeping in view the Rules, etc. Contribution of Shri A V Tyagi, as a very effective instrumentality in arranging these meetings was shared with the participants who applauded the efforts of Shri Tyagi Ji and expressed sincere gratitude to him.
E. Efforts made by AIRIEF to have a joint front of all the Pensioners Associations and petitioners in the legal case, were discussed in brief, which includes Chennai Meeting of the joint front held on 2/2/ 2019, meeting with the then MoS (Finance), Additional Secretary (Financial Services – Insurance), Chairman LIC, etc.
In the end of my address, suggestions and queries from the house were invited and explanations, wherever necessary were given.
M P Agnihotri. 07/09/2022
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