COVER LETTER

TITLE-CRITICAL

ANALYSIS

OF

THE

SUPREME

COURTS STANCE ON ONE RANK, ONE PENSION:

FROM D. S.NAKARA CASE TO NOW
ABSTRACT-CONTROVERSY
PENSION

IS

HOT

JUDICIARY.THIS

OVER

IN

ONE

BOTH

ARTICLE

RANK

ONE

POLITICS

AND

FORTH

THE

PUTS

ANALYTICAL DISCOURSE UPON THE ISSUE OF OROP

AND ITS DEVELOPMENT THROUGH THE ANALYSIS OF
JUDGMENTS PRONOUNCED BY THE COURTS OF LAW
DATING PAST TO PRESENT. THE SUPREME COURT HAS
IN ONE ITS JUDGMENT VIZ. D.S. NAKARA V. UNION OF
INDIA

HAS

INTRODUCED

THE

PRINCIPLE

FOR

APPLICATION OF PENSION SCHEME FOR CALCULATING

PENSION OF THE PEOPLE WHO RETIRED PRIOR AND
AFTER A SPECIFIC DATE. IT DEVELOPED INTO OROP IN
A COURSE OF TIME AND THE SUPREME COURT
PROVIDED OROP FOR THE FIRST TIME IN SPS VAINS.
THE ARTICLES ALSO PRESENTS WITH THE CURRENT
STANCE

OF

GOVERNMENT

IN

FULFILLING

PRINCIPLE OF OROP AND CHALLENGES.

KEY WORDS ONE RANK ONE PENSION D.S. NAKARA
Page 1 of 12

THE

NAME- DUSHYANT THAKUR

DESIGNATION- STUDENT, GUJARAT NATIONAL LAW UNIVERSITY
INSTITUTIONAL AFFILIATION-GUJARAT NATIONAL LAW UNIVERSITY
CORRESPONDENCE ADDRESS-GUJARAT NATIONAL LAW UNIVERSITY,
ATTALIKA AVENUE, KNOWLEDGE CORRIDOR, KOBA, GANDHINAGAR, GUJARAT382007
CONTACT NO.-08141207710
E-MAIL- dushyant.dt1@gmail.com

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CRITICAL ANALYSIS OF THE SUPREME COURTS STANCE ON

ONE RANK, ONE PENSION: FROM D. S. NAKARA CASE TO
NOW

DUSHYANT THAKUR

Page 3 of 12

I.

INTRODUCTION
A. Pension

Pension is defined in Oxford Advanced Learners Dictionary as an amount of money paid

regularly by a government or a company to somebody who is considered to be too old or too
ill/sick to work.1
The term has been judicially defined as a stated allowance or stipend made in consideration
of past service or a surrender of rights or emoluments to one retired from service. Thus the
pension payable to a Government employee is earned by rendering long and efficient service
and therefore can be said to be a deferred portion of the compensation or for service
rendered.2

B. Raison d'tre for Pension

Raison dtre i.e. reason for giving pension becomes important because if pension is just an
ex gratia payment to retirees, then pension payment will be completely on employers whims
and fancies. But if it is seen in a way that an employee earns it while he works for his
employer, then employer must pay pension to his employee and it will be an expense for
him.
Initially the Non-Contributory pension3 appears to have been introduced as a reward for loyal
service. Probably the alien rulers who recruited employees in lower echelons of service from
the colony and exported higher level employees from the seat of Empire, wanted to ensure in
the case of former continued loyalty till death to the alien rulers and in the case of latter, an
assured decent living standard in old age ensuring economic security at the cost of the
colony.4
In the course of transformation of society from feudal to welfare, and as socialistic thinking
acquired respectability, States obligation to provide security in old age was recognized and as
1

Pension, Oxford Advanced Learners Dictionary 1120 (7th edition 2005).

D.S. Nakara & Others v. Union Of India, 1983 AIR 138.

Fringe benefits to the employee wherein he is not required to contribute and all related retirement plan costs
are borne by the government and/or employer as per Available at http://thelawdictionary.org/non-contributorypension-plan/, last seen on 29/12/2015.
4
Supra 2, at 136.
3

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a first step pension was treated not only as a reward for past service but also as a way of
helping the employee avoid destitution in old age. The quid pro quo was that when the
employee was physically and mentally alert, he rendered unto the master the best, expecting
him to look after him in the fall of life. A retirement system therefore exists solely for the
purpose of providing benefits. In most of the plans of retirement benefits, everyone who
qualifies for normal retirement receives the same amount.5
Therefore, it can be said that pension is not only compensation for loyal service in the past or
an amount of money paid ex gratia for the past services, but, compensation earned by
rendering long and efficient service, and is thus an expense for the government.
In one sentence one can say that the most practical raison d'tre for pension is the inability to
provide for oneself due to old age.6
C. One Rank, One Pension
From the last few decades it is being contested that just providing pension to retirees is not
enough. It should be equal for all people of the same rank, who provided same length of
service, irrespective of their date of retirement. This is the idea behind One Rank, One
Pension.
OROP "implies that uniform pension be paid to the Armed Forces Personnel retiring in the
same rank with the same length of service irrespective of their date of retirement and any
future enhancement in the rates of pension to be automatically passed on to the past
pensioners. The concept includes bridging the gap between the rate of pension of the current
pensioners and the past pensioners, and also future enhancements in the rate of pension to be
automatically passed on to the past pensioners. This definition of OROP was given by the
Koshyari Committee7 in its report on Grant Of One Rank One Pension in 2011. It became the
most popular definition as it was accepted by the then UPA Government, endorsed by the
Parliament, and by ex-servicemen and ex-servicemen organizations but Defense.
Demand for the use of same formula for calculation of pension (and not the same amount of
pension) started from the landmark case of D. S. Nakara and oth. v. Union of India 8, which
subsequently formed the base of every such petition. But in Union of India And Anr v. S. P.
5
6

Ibid.
Supra 2, at 138.

The Parliamentary Committee on Petitions on Grant of OROP, named after its Chairman, Bhagat Singh
Koshyari.
8
Supra 2, at 130.

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S. Vains (Retd.) And Ors9, the Court went far from the ratio of Nakara case and provided for
One Rank, One Pension.

II.

D.S. NAKARA CASE

D. S. Nakara and oth. v. Union of India (Nakara Case) came up when formula for
calculating pension, in which pension was calculated by taking average of emoluments of last
36 months just preceding the service, was liberalized by a memorandum dated May 25, 1979
and average of 10 months preceding the date was taken for the calculation of pension.
Coupled with it, a slab system for computation was introduced and the ceiling was raised.
The liberalized pension formula, slab system and raised ceiling was applicable prospectively
to those who retired on or after March 31, 1979 in case of government servants covered by
1972 Rules and in respect of defense personnel, those who became/become non-effective on
or after April 1, 1979. This liberalized formula, slab system and raised ceiling was not made
applicable to those who retired prior to the above-mentioned dates. In this way, government
servants and defense personnel who retired prior to March 31, 1979 and April 1, 1979,
respectively, suffered from triple jeopardy, viz., lower average emoluments, absence of slab
system and lower ceiling.
The Honble Supreme Court held that the liberalized scheme will be made applicable even to
those government servants and defense personnel who retired prior to March 31, 1979 and
April 1, 1979 respectively. For arriving at this decision, the Court, among many points,
considered the following:
That the differentia between the class on the basis of date does not have rational nexus to

the object sought to be achieved by the memorandum in question and, thus, violate Art. 14
of the Constitution of India10.
The Court directed respondents to apply the new liberalized formula, which was an

upward revision of the existing benefit, for calculation of pension of the retirees who
retired prior to the specified date.

Union of India v. SPS Vains, (2008) 9 SCC 125.

10

Article 14 of the Constitution of India says that, The State shall not deny to any person equality before the
law or the equal protection of the laws within the territory of India.

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 That the liberalized scheme was not a new retiral benefit, but an upward revision of the

existing benefit and had it been a new retiral benefit, those who have already retired could
not expect it.
On observing the Judgment of the Honble Supreme Court, one will note that the Court never
gave for One Rank, One Pension. Although the Courts in some subsequent decisions did pay
careful heed to aforesaid points, but the attention of various High Courts and the Supreme
Court, in recent years, has shifted from these points to the concept of One Rank, One
Pension.

III.

CONFIRMATION OF RATIO FROM D.S. NAKARA CASE

In the case R. L. Marwaha v. Union of India11, the Supreme Court confirmed to the
observation in Nakara case that the insertion of date to provide benefit just to those who
retired after the said date and not to

those who retired prior to the date without any

reasonable nexus does violate Art.14 of the Constitution of India as it creates two classes of
pensioners which is not warranted under the Article The Court laid down thus:
it has to be held that the classification of the pensioners who were working in the
government/autonomous bodies into two classes merely on the basis of date of retirement as
unconstitutional as it bears no nexus to the object to be achieved by the order.12
The writ appeal was allowed in this case.
Violation of Art. 14 due to cut off date was again confirmed in M.C. Dhingra v. Union of
India and Others13, when the Supreme Court held that:
The cut off date is arbitrary violating Article 14 of the Constitution of India. Having grouped
all the similar circumstanced employees, fixing the cut off date and giving benefit to those
who retired thereafter is obviously arbitrary.14

In the case, Indian Ex-Service League and ors. v. Union of India and ors.15, the Supreme
Court dismissed the writ petition of the petitioners and held that:
11
12
13
14
15

R. L. Marwaha v. Union of India, (1987) 4 SCC 31.

Ibid, at 37.
M.C. Dhingra v. Union of India and Others, AIR 1996 SC 2963.
Ibid, at 2964.
Indian Ex-Service League and Ors. v. Union of India, AIR 1991 SC 1182.

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The petitioners' claim that all pre-1.4.1979 retirees of the Armed Forces are entitled to the
same amount of pensionas shown in appendices `A' `B' and `C' for each rank is clearly
untenable and does not flow from the Nakara decision.16
This was because the ratio that flows from the Nakara Case is that, if there is an upward
revision of an existing benefit, the same will be provided to old retirees. And the Court never
held in the Nakara case that the old retirees will be provided with the same amount of
pension which is being provided to new retirees, even of the same rank.
It can be seen that the Court keeping Nakara Decision in mind denied the petitioners
demand for the One Rank, One Pension
The Supreme Court came across a similar situation in the case of, State of Rajasthan and
anr. v. Prem Raj17 and took the same stance as in the case of Indian Ex-Service League and
ors. v. Union of India and ors., allowing the appeal and thus dismissing the Writ Petitions
filed by the respondents. Yet again, the Supreme Court rejected One Rank, One Pension
keeping Nakara Case and Indian Ex-Services League's case in mind.
In the case, State of Punjab v. Justice S.S. Dewan (Retired Chief Justice) and others 18, the
Supreme Court relied on the same reasoning as in the Nakara Case, that, benefit of upward
revision of an existing scheme should also be given to the people who retired before the cut
off date but not those benefits which arise of a new retiral benefit. The court also explained
what can be regarded as an upward revision of an existing scheme and what can be said to be
a new retiral benefit in the following terms:
On the basis of same reasoning it may be said that any modification with respect to the other
determinative factor, namely, qualifying service made with a view to make it more beneficial
in terms of quantum of pension can also be regarded as liberalization or upward revision of
the existing pension scheme. If, however, the change is not confined to the period of service
but extends or relates to a period anterior to the joining of service then it would assume a
different character. Then it is not liberalization of the existing scheme but introduction of a
new retiral benefit.19
16
17
18
19

Ibid, at 1190.
State of Rajasthan and anr. v. Prem Raj, AIR 1997 SC 1081.
State of Punjab v. Justice S.S. Dewan (Retired Chief Justice) and oths, AIR 1997 SC 2388.
Ibid, at 2390.

Page 8 of 12

The Court, considering the new amendment as a new retiral benefit, observed that:
What has been done by amending Rule 16 is to make the period of practice at the Bar, which
was otherwise irrelevant for determining the qualifying service, also relevant for that
purpose. It is a new concept and a new retiral benefit. The object of the amendment does not
appear to be to go for liberalization.20
The Court, in this case, allowed the appeal, setting aside the judgment and order passed by
the High Court and dismissed the writ petition filed by the respondents. This was again in
line with the reasoning used in the Nakara case.
Till this stage we have seen that Supreme Court never ruled for One Rank, One Pension but
just followed the ratio of the Nakara Case. The Supreme Court recognized One Rank, One
Pension for the first time in Union Of India And Anr v. S. P. S. Vains (Retd.) And Ors.

IV.

S.P.S. VAINS CASE

In Union Of India And Anr v. S.P. S. Vains (Retd.) And Ors21, the contention was that a
Brigadier was drawing more pension than that of a Major General as the rank of Brigadier is
a feeder post for the promotional rank of Major General. The Punjab and Haryana High Court
allowing the writ petition held that:
"For the foregoing reasons, the writ petition is allowed and the respondents are directed to
fix minimum pay scale of the Major General above that of the Brigadier and grant pay above
that of a Brigadier as has been done in the case of post 1.1.1996 retirees and consequently fix
the pension and family pension accordingly. There shall be no order as to costs.22
But when an appeal was filed by the Union of India through the Secretary, Ministry of
Defense and the Chief of Army Staff through the Adjutant General Army Headquarters, New
Delhi, against the judgment and order Adjutant General Army Headquarters, New Delhi,
against the judgment and order, the Supreme Court went ahead from the bone of contention
to the idea of One Rank, One Pension. The Court observed that:

20
21
22

Supra 18, at 2390.

Union of India v. SPS Vains, (2008) 9 SCC 125.
Ibid, at 127.

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If the government increases pay of Major Generals to a position which is more than that of
Brigadier, even than two Major Generals who retired prior and after to cut off date would get
two different amount to pensions.23
Thus, the Supreme Court dismissing the appeal directed that:
We, accordingly, dismiss the appeal and modify the order of the High Court by directing
that the pay of all pensioners in the rank of Major General and its equivalent rank in the
two other Wings of the Defense Services be notionally fixed at the rate given to similar
officers of the same rank after the revision of pay scales with effect from 1.1.1996.24
This is exactly what One Rank, One Pension means and this case was the point when the idea
of One Rank, One Pension cropped up in the Supreme Court.

V.

AFTER S.P.S. VAINS CASE

But after this decision, although the Court gave its observations on S.P.S. Vains case in its
latter judgments, but preferred to follow the ratio from the Nakara case.
In K.J.S. Buttar v. Union Of India And Anr25, the Supreme Court held that:
In our opinion, the restriction of the benefit to only officers who were invalided out of
service after 1.1.1996 is violative of Article 14 of the Constitution and is hence illegal.26
In A.N. Sachdeva (dead) by LRs. & Ors. v. Maharshi Dayanand University, Rohtak &
Anr.27, the Supreme Court made the same observation as in D.S. Nakara case that NonContributory pension in not an ex gratia payment, but payment for past services. The
Courts observation that the scheme was an upward revision of benefit and fixing a cut off
is not intelligible and is discriminatory is also based on the ratio of D.S. Nakara case.
In the above mentioned cases the Court allowed the appeals, setting aside impugned order
and judgment.
Although the Court, in both the cases gave serious consideration to S.P.S. Vains case but
preferred to follow the ratio of Nakara case.
23
24
25
26

Supra 21, at 131.

Supra 21, at133.
K.J.S. Buttar v. Union Of India And Anr, (2011) 11 SCC 429.
Ibid, at 432.

27

A.N. Sachdeva (dead) by LRs. & Ors. v. Maharshi Dayanand University, Rohtak & Anr., Civil Appeal
Nos.626-627 of 2008, Judgment dated August 10, 2015.

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On the other hand, Full Bench of Central Administrative Tribunal in All India S-30
Pensioners Association & Others v. Union of India & Others 28not only preferred to follow
the ratio laid down in SPS Vains case but also observed that SPS Vains judgment relies on
D.S. Nakara case which can be said to be an incorrect observation because D.S. Nakara case
laid down that there can be no disparity in application of pension scheme between the officers
who are of same rank and not that there can be no disparity in pension amount given to the
officers who are of same rank.
This was again confirmed in Shri R.C. Garg & Others v. Union Of India & Others 29 in
which the Full Bench of Central Administrative Tribunal did not prefer to interfere with the
decision of previous Tribunals of providing Pre 2006 retirees with the amount of pension
equal to that of Post 2006 retirees.

VI.

CONCLUSION AND OBSERVATIONS

Therefore, Although the Supreme Court in Judgments later to D. S. Nakara case denied One
Rank, One Pension on the basis of ratio given in D. S. Nakara case and even after S.P.S.
Vains case, D. S. Nakara case has been weighted more than the S.P.S. Vains case, but the
demand for One Rank, One Pension is on the rise (mainly from defense personnels) and very
soon Courts (Both High Courts and Supreme Court) will look forward to provide for One
Rank, One Pension, as seen in the above mentioned decisions of Full Bench of Central
Administrative Tribunal, which can be said as a start in the shift of stance of Courts towards
One Rank, One Pension.
This can also be confirmed by the recent direction by the Supreme Court to the Centre for
implement its six-year-old verdict given in the S.P.S. Vains case to follow the one rank, one
pension (OROP) principle for retired armed forces personnel. This direction came while
hearing a contempt petition filed by retired Major General SPS Vains after waiting for nearly
6 years.30

28

All India S-30 Pensioners Association & Others V. Union of India & Others, OA 937/2010 with OA
2101/2010 (Central Administrative Tribunal, 20/11/14).
29
Shri R.C. Garg & Others v. Union Of India & Others, RA No.186/2014 in OA No.2461/2012 (Central
Administrative Tribunal, 07/01/15).
30
Bhadra Sinha, SC asks Centre to fulfil one rank, one pension promise, Hindustan Times (Feb 19, 2015),
http://www.hindustantimes.com/india/sc-asks-centre-to-fulfil-one-rank-one-pension-promise/storyaC0SnqA433iK0o5YEsk5hM.html, last seen on 20/12/15.

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Even the Government, after many protests from Defense personnels, came up with a
memorandum dated November 7, 2015, implementing One Rank, One Pension for Defense
Forces Personnels with effect from July 1, 2014.31 It also said that pension will be re-fixed on
the basis of average of minimum and maximum pension for personnel retired in 2013 in the
same rank and with the same length of service and pension will be re-fixed, in future, in
every 5 years. The Defense personnel have protested re-fixing of pension every 5 years and
they are demanding that re-fixing should be done every 2 years.
The Court in Nakara Case observed that liberalization of pension of retiring Government
servants was decided by the Government in view of the persistent demand of the Central
Government employees because that the pre-liberalized pension scheme did not provide
adequate protection in old age and that a further liberalization was necessary as a measure of
economic security. The Government also took note of the fact that continuous upward
movement of the cost of living index as a sequel of inflationary inputs and diminishing
purchasing power of rupee necessitated upward revision of pension. If this be the underlying
intendment of liberalization of pension scheme, can any one be bold enough to assert that it
was good enough only for those who would retire subsequent to the specified date but those
who had already retired did not suffer the pangs of rising prices and falling purchasing power
of the rupee?32
Considering this observation, if the people who retired prior to a specific date are equally hit
by inflation as the people who retired after that specific date, then why just provide old
retirees with a new formula for calculating pension (as given in Nakara case) and why not
provide them with the same amount of pension as is being provided to the new retirees? This
question should be considered seriously by the courts because even if old retirees are
provided with a new formula for calculating pension, their pension will still be less than that
of the new retirees and therefore they will suffer the pangs of rising prices and falling
purchasing power of the rupee even more.

31

Department of Ex-Servicemen Welfare, Ministry of Defence, Government of India, One Rank One Pension
(OROP) to Defence Forces Personnel, OROP Letter No. 12(1)/2014/D(Pen/Pol)/Part-II dated November 7,
2015.
32
Supra 4, at 141.

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