People Retiring on Different Date cannot be Treated Differently

"Any Classification without reference to the objective sought to be achieved is arbitrary and violative of the protection afforded under Article 14 (equality before law) and Article 16 (equality in public employment) of the Constitution of India."

The Supreme Court of India in Kallakkurichi Taluk Retired Official Association, Tamil Nadu v. State of Tamil Nadu struck down a Tamil Nadu Government Order to the extent that it extended to the employees who retired on/after 1st June 1988, a lower component of 'dearness pay' against those employees who retired prior to 1st June 1988. The Apex court held it to be arbitrary in nature and held it to be violating Articles 14 and 16 of the Constitution of India. The Apex Court said that government employees belonging to the same post retiring on different dates cannot be treated differently in the absence of rational objective behind the said classification.

The Apex Court in this dispute was hearing an appeal petition against the order of Divisional beach of High Court wherein the court had upheld the Government order distinguishing the pensioners retiring on/after 1st June 1988 from those retiring prior to this cut-off date 1st June 1988. The High Court dismissed the claim of the appellants by stating that the pension drawn by employees retiring from the post on/after 1st June 1988 was just trivially less than that was drawn by those retiring prior to the cut-off date and hence cannot be said to be discriminatory and arbitrary in nature.

The Apex Court observed that that quantum of discrimination is irrelevant to the challenge of the plea of arbitrariness under Article 14 of the Constitution of India. The Court said that the question in the concerned case pertains to arbitrariness and discrimination against which rights flows to an individual under Articles 14 and 16 of Constitution of India. The Court observed that the extent to which a benefit or loss affects a person concerned cannot ever be valid justification for the court in either granting or denying the claim on the counts of arbitrariness and discrimination and further said that rejecting of the claim of the appellants by the High Court was just bagging the issue pressed before the High Court.

The Apex Court observed that the state government had not provided in the pleading any reason for the said classification and had only introduced a cut-off date for differential treatment. The Court further said that the government had therefore not disclosed any objective which was sought to be achieved by the said cut-off date. The Court also observed that financial constraints of the State Government were also not described as basis or reason for the classification made in impugned government order and therefore allowing a smaller component of dearness pay to the employees retiring on/after 1st June 1988 as against the employee retired prior to this cut-off date was arbitrary in nature and amounted to discrimination by placing employee retiring on/after 1st June 1988 at a disadvantage position.

The Apex Court thus held that when the government through an order had decided that a particular component of dearness allowance shall be treated as dearness pay then it cannot discriminate between one set of pensioners and another while calculating the pension payable to them. The Court also said that this could have been a valid classification in case where the government had provided or come out with a justification basis for the classification whereby one set of pensioners were distinguished from others.

The Apex Court thus held that the classification in the government order was arbitrary in nature and struck down to the extent that it provided different level of dearness pay to be payable to those employees retiring on/after and prior cut-off date.

The Court also observed that a valid classification is truly a valid discrimination in case where the distinction is based on classification which is founded on intelligible differentia which in turn is having a rational relationship with the objective that is sought to be achieved by the said classification. The Court said that overall objective of treating dearness allowance as dearness pay was to balance the effects of on-going inflation so as to ensure that inflation does not interfere with the enjoyment of life to which the employees and pensioners are accustomed to. The Court further observed that since the component of inflation similarly affects all employees and pensioners irrespective of the date of their entry or retirement, it is not per se possible to accept different levels of 'dearness pay' to remedy the malady of inflation. The Court also said that date of retirement for pensioners would be irrelevant to determine the dearness pay that is to be extended to retired employees as the same does not have any relevance to the objective sought to be achieved i.e. balance effects of inflation as inflation affects all pensioners alike.

The Apex Court also observed that focus point of adjudication must be the dearness pay rather than the eventual carry home pension and observed that object of the adding of dearness pay to the wage of the retiree was for determining pension payable to the retiree and was to remedy the adverse effects of inflation and therefore any classification without reference to the objective sought to be achieved would be arbitrary and violative of Articles 14 and 16 of Constitution of India.

The Court also observed that Inflation, in case of all such pensioners, whether retired prior to 1.6.1988 or thereafter, would have had the same effect on all of them. The purpose of adding the component of 'dearness pay' to wages for calculating pension is to offset the effect of inflation and, therefore, the instant classification made by the State Government in the impugned Government order dated 9.8.1989 placing employees who had retired after 1.6.1988 at a disadvantage, vis-à-vis the employees who retired prior thereto, by allowing them a lower component of 'dearness pay', is clearly arbitrary and discriminatory in nature, and is thus liable to be set aside on account of being violative of Articles 14 and 16 of the Constitution of India.

Thus, the Apex Court struck down a government order that distinguished same class of officers without disclosing any rational basis or reason for the said classification.