Indian Ex Servicemen Movement & Ors. vs Union of India & Ors.

Constitutionality of – Writ petition challenging the manner in which the OROP policy for ex-servicemen of defence forces has been implemented by the Union of India through a letter dated 07.11.2015 issued to the Chiefs of three defence forces – Letter defining OROP as the payment of uniform pension to armed services personnel retiring in the same rank with the same length of service, irrespective of the date of retirement; that OROP aims to bridge the gap between the rate of pension of current and past pensioners at periodic intervals – Petitioners case that in the course of implementation, the principle of OROP has been replaced by ‘one rank multiple pensions’ for persons with the same length of service; that the initial definition of OROP was altered by the UOI and, instead of an automatic revision of the rates of pension, where any future enhancement to the rates of pension are automatically passed on to the past pensioners, the revision now would take place at periodic intervals, is arbitrary and unconstitutional – Held: There is no constitutional infirmity in the OROP principle as defined by the communication dated 07.11.2015 – Definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement – Cut-off date is used only for the purpose of determining the base salary for the calculation of pension – While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used – Since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage, the Union Government has taken a policy decision to enhance the base salary for the calculation of pension – Such a decision lies within the ambit of policy choices – There was no conscious policy decision on the part of the Union Government on the modalities for implementing OROP until the communication dated 07.11.2015 came into being, and thus, the communication of 07.11.2015 cannot be invalidated on the ground that it infringed the ‘original understanding’ of OROP – Expression ‘automatically passed on’ cannot be construed as a commitment with reference to any period of time for the computation of benefits – Decision of the Central Government to revise the pension every five years cannot be held to violate the precepts underlying Art. 14 – Policy decision – Constitution of India – Art. 14, 32 – Service law. Pension – One Rank One Pension-OROP – Legitimate Expectation – Invocation of – Held: Doctrine of legitimate expectations can be invoked if a representation made by a public body leads an individual to believe that they would be a recipient of a substantive benefit – Doctrine of legitimate expectations emerges as a facet of Art. 14 – However, in the present case, there was no concrete government policy in existence prior to 07.11.2015 – There existed only certain assurances – These assurances were also to the effect that OROP has been accepted in principle - Implementation was yet to be worked out.

Pension – One Rank One Pension – Concept and genesis of – Policy and Principles – Discussed.

Administrative Law: Policy Decisions – Scope of judicial review – Held: Adjudication cannot serve as a substitute for policy – Most questions of policy involve complex considerations of not only technical and economic factors but also require balancing competing interests for which democratic reconciliation rather than adjudication is the best remedy – An increased reliance on judges to solve matters of pure policy diminishes the role of other political organs in resolving contested issues of social and political policy, which require a democratic dialogue – It is not that this Court will shy away from setting aside policies that impinge on constitutional rights – Rather it is to provide a clear-eyed role of the function that a court serves in a democracy – One Rank One Pension-OROP is itself a matter of policy and it was open to the makers of the policy to determine the terms of implementation – Policy is of course subject to judicial review on constitutional parameters, which is a distinct issue.

Disposing of the writ petition, the Court

HELD: 1. There is no constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015. (i) The definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement. It is not the case of the petitioners that the pension is reviewed ‘automatically’ to a class of the pensioners and ‘periodically’ to another class of the pensioners; (ii) The cut-off date is used only for the purpose of determining the base salary for the calculation of pension. While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used. Since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage, the Union Government has taken a policy decision to enhance the base salary for the calculation of pension. Undoubtedly, the Union Government had a range of policy choices including taking the minimum, the maximum or the mean or average. The Union government decided to adopt the average. Persons below the average were brought up to the average mark while those drawing above the average were protected. Such a decision lies within the ambit of policy choices; (iii) While no legal or constitutional mandate of OROP can be read into the decisions in Nakara’s case and SPS Vains’s case, varying pension payable to officers of the same rank retiring before and after 1 July 2014 either due to MACP or the different base salary used for the calculation of pension cannot be held arbitrary; and (iv) Since the OROP definition is not arbitrary, it is not necessary to undertake the exercise of determining if the financial implications of the scheme is negligible or enormous. This Court accordingly orders and directs that in terms of the communication dated 7 November 2015, a re-fixation exercise shall be carried out from 1 July 2019, upon the expiry of five years. Arrears payable to all eligible pensioners of the armed forces shall be computed and paid over accordingly within a period of three months. [Paras 49 and 51][942-D-H; 943-A-C, E]

2.1 The features of the policy communication of 7 November 2015 need to be noticed. First, it contains the decision of the Indian government to implement OROP for ex-servicemen. Second, it specifies the date with effect from which the decision would be implemented, namely, 1 July 2014. Third, it embodies the understanding that OROP implies the payment of uniform pension to defence personnel retiring in the same rank with the same length of service regardless of the date of retirement. Fourth, it emphasises the need to bridge the gap between the rates of pension of current and past pensioners at “periodic intervals”. The analysis of the underlying document indicates that while a decision to implement OROP was taken in principle, the modalities for implementation were yet to be chalked out. There was no conscious policy decision on the part of the Union Government on the modalities for implementing OROP until the communication dated 7 November 2015 came into being. The communication of 7 November 2015 cannot be invalidated on the ground that it infringed the ‘original understanding’ of OROP. A hierarchy in law exists between statutes and rules-a statutory provision will have precedence over delegated legislation if the latter conflicts with the former. Similarly, executive instructions cannot override a statute or rules made in pursuance of a statute. But in the present case the entire canvas is governed by a policy. The terms for implementing the policy were specified on 7 November 2015. Hence, that element of the policy cannot be challenged on the notion that there is an inflexible notion of OROP couched in an original understanding. OROP is itself a matter of policy and it was open to the makers of the policy to determine the terms of implementation. The policy is of course subject to judicial review on constitutional parameters, which is a distinct issue. [Paras 23 and 25][917-E-F; 918-E-H; 919-A]

1.3. The central limb of the submission of the petitioners is that a revision of OROP should be automatic. The Union government has submitted that besides lacking any prior precedent, in terms of the practice governing pay scales, pensions and other financial emoluments of government servants, automatic revision would be impossible to implement. Quite apart from the above consideration, it is evident that the three documents which have been relied upon by the petitioners namely (i) the Koshyari Committee Report; (ii) the minutes of the meeting chaired by the Defence Minister on 26 February 2014; and (iii) the communication dated 26 February 2014 to CGDA underscore that “any future enhancement in the rates of pension to be automatically passed on to the past pensioners”. The expression “to be automatically passed on” immediately follows upon the words “any future enhancement in the rates of pension”. When read together contextually, it signifies that the rates of pension would be passed on to past pensioners without any administrative impediments. The expression ‘automatically passed on’ cannot be construed as a commitment with reference to any period of time for the computation of benefits. The manner in which and the period over which revisions should take place of pensions, salaries and other financial benefits is a pure question of policy. The decision of the Central Government to revise the pension every five years cannot be held to violate the precepts underlying Article 14. [Para 37][931-E-H; 932-A]

1.4. As opposed to the factual matrix in Nakara, where the liberalised pension scheme was not made applicable to employees who had retired prior to the cut-off date, in this case the OROP principle is applicable to all retired army personnel, irrespective of the date of retirement. The cut-off date is only prescribed for determining the base salary used for computing the pension. While for those who retired on or after 2014, the last drawn salary is used for computing the pension; for those who retired prior to 2014, the average of the salary drawn in 2013 is used. This policy only seeks to protect those who retired before 2014 since the last drawn salary of the prior retirees might be too low and incomparable to the pay of the 2014 retirees. Moreover, if the maximum salary drawn is to be used as the base value instead of taking the average salary, an additional outlay of Rs 1,45,339.34 crores would be incurred. The executive is therefore, well within its limits to prescribe a policy keeping in view the financial implications. [Para 40][934-D-G]

DS Nakara v. Union of India 1983 ( 2 ) SCR 165 : 1983 ( 1 ) SCC 305- distinguished.

1.5 The canvass which is sought to be traversed in these proceedings under Article 32 of the Constitution trenches upon a domain which is reserved for executive policy. Adjudication cannot serve as a substitute for policy. Most questions of policy involve complex considerations of not only technical and economic factors but also require balancing competing interests for which democratic reconciliation rather than adjudication is the best remedy. Further, an increased reliance on judges to solve matters of pure policy diminishes the role of other political organs in resolving contested issues of social and political policy, which require a democratic dialogue. This is not to say that this Court will shy away from setting aside policies that impinge on constitutional rights. Rather it is to provide a clear-eyed role of the function that a court serves in a democracy. The OROP policy may only be challenged on the ground that it is manifestly arbitrary or capricious. In this regard, the policy which has been adopted by the Union Government is evaluated. The policy of OROP adopted by the Union Government stipulates thus: (i) The benefits will be effective from 1 July 2014; (ii) Pensions of past pensioners would be refixed on the basis of the pension of retirees of calendar year 2013; (iii) Pension for all pensioners would be protected; and (iv) In future, the pension would be refixed after every five years. [Paras 46 and 47][940-H; 941-A, C-D]

1.6 The principles governing pensions and cut-off dates can be summarised as follows: (i) All pensioners who hold the same rank may not for all purposes form a homogenous class. For example, amongst Sepoys differences do exist in view of the MACP and ACP schemes. Certain Sepoys receive the pay of the higher ranked personnel; (ii) The benefit of a new element in a pensionary scheme can be prospectively applied. However, the scheme cannot bifurcate a homogenous group based on a cut-off date; (iii) The judgment of the Constitution Bench in Nakara (supra) cannot be interpreted to read the one rank one pension rule into it. It was only held that the same principle of computation of pensions must be applied uniformly to a homogenous class; and (iv) It is not a legal mandate that pensioners who held the same rank must be given the same amount of pension. The varying benefits that may be applicable to certain personnel which would also impact the pension payable need not be equalised with the rest of the personnel. [Para 48][941-G; 942-A-C] Kalpana Mehta v. Union of India (2018) 7 SCC 1 : [2018] 4 SCR 1- followed.

Union of India v. SPS Vains [2008] 13 SCR 257 : 2008

(9) SCC 125- distinguished.

State of Arunachal Pradesh v. Nezone Law House (2008)

5 SCC 609 : [2008] 5 SCR 948; Col. B.J Akkara (Retd.) v. Government of India (2006) 11 SCC 709 : [2006]

7 Suppl. SCR 58; Indian Ex-Services League v. Union of India AIR 1991 SC 1182 : [1991] 1 SCR 158; KL Rathee v. Union of India SLJ 1997 (30 207); Suchet Singh Yadav v. Union of India (2019) 11 SCC 520 : [2018] 2 SCR 752; State of Jharkhand v. Brahmputra Metallics Ltd., Ranchi 2020 SCC OnLine SC 968; Union of India v. Balbir Singh Turn (2018) 11 SCC 99 : [2017] 12 SCR 421- referred to.

Fuller, L. L., & Winston, K. I. (1978). The Forms and Limits of Adjudication. Harvard Law Review, 92(2), 353–

409 – referred to.