22. RETIREMENT BENEFITS

22.1 The benefits available to Civilian employees are pension, gratuity, leave encashment, commutation of pension and family pension.

22.2 At the outset, we may point out that the pension is not a gratis or bounty payable on the sweet will and pleasure of the employer. It is the right of the employee to get pension and it is a valuable right vesting in the employee.

22.3 In DEOKINANDAN PRASAD v. STATE OF BIHAR1, the Supreme Court observed:

" The grant of pension does not depend upon an order being passed by the authorities to that effect. It may be that for the purposes of quantifying the amount having regard to the period of service and other allied matters, it may be necessary for the authorities to pass an order to that effect, but the right to receive pension flows to the officer employee not because of the said order but by virtue of the Rules."

It was further held:

" Pension is not a bounty payable on the sweet will and pleasure of the Government and that on the other hand, the right to pension is a valuable right vesting in a Government Servant."

22.4 Pension is thus a valuable right of an employee.

22.5 The Central Government employees are given such benefits in the following terms:

 

 


1. AIR 1971 SC 1409.

 

i) Pension :

The amount of pension is related to the length of qualifying service rendered by the employee and average emoluments drawn by him during 10 months immediately preceding the date of retirement. Full pension is admissible to an employee who retires after completing the qualifying years of service of not less than 33 years and the amount of pension is determined at 50% of the average emoluments subject to a maximum of 50% of the highest pay in the Central Government i.e. Rs.30,000/-.

22.6 Proportionate pension is admissible where an employee retires before completing 33 years of qualifying service but after completing 10 years of service. The amount of pension will be proportionate to the amount of pension admissible for qualifying service of 33 years and is subject to a minimum of Rs.1275/- per month.

ii) Death-cum-Retirement Gratuity (DCRG) :

DCRG is admissible to permanent Government servant on his retirement or payable to his family in the event of his death while in service which have been dissected by the V Central Pay Commission as:

a) Retirement Gratuity; and

b) Death Gratuity

a) Retirement Gratuity :

It is admissible to permanent employees who retire after completion of 5 years' of qualifying service at the rate of 'one-fourth' of emoluments for each completed six-monthly period of qualifying service subject to a maximum of 16 times 'the emoluments' or Rs.3.5 lakhs (w.e.f. 1.1.1996), whichever is less.

 

b) Death Gratuity :

In the event of death in harness (while in service), the Death Gratuity shall be payable to his family or nominee(s) at the following rates:

 

Length of Qualifying Service

Rate of Gratuity

i)

Less than 1 year

2 times of emoluments

ii)

One year or more but less than

5 years

6 times of emoluments

iii)

5 years or more but less than 5 years

12 times of emoluments

iv)

20 years or more

Half month's emolument for every six-monthly period of qualifying service subject to a maximum of 33 times of emoluments limited to Rs.3.5 lakhs.

 

 

The Death Gratuity in the above scale is admissible irrespective of whether the deceased Government servant was permanent, temporary or quasi-permanent.

iii) Leave Encashment :

Leave Salary for the amount of Earned Leave at credit subject to a maximum of 300 days plus Dearness Allowance appropriate to such leave salary is admissible, but will not include House Rent Allowance, City Compensatory Allowance and Interim Relief allowed at the time of retirement or death in service.

iv) Commutation of Pension :

The popular conception of commutation is the sale of pension for a lump sum amount. The Central Government employee upon retirement is allowed to give up the right of a portion of pension, not exceeding 40% of the basic pension and to get a lump sum amount in lieu thereof.

The commuted value of pension is calculated with reference to a commutation table which, inter alia, takes into account the longevity of pensioners and the interest rate. The table indicates the commuted value of pension expressed as number of years' purchase with reference to the age of pensioner on his next birth day. The Commutation value of pension goes on decreasing as the age of pensioner increases. Normally the commuted portion of pension will be restored after 15 years from the date of retirement in case of simultaneous commutation, otherwise after 15 years from the date of commutation.

v) Family Pension :

Family Pension is admissible to the family of the deceased Government Servant when he dies:

a) after completion of not less than one year of continuous service;

b) after retirement from service and was in receipt of pension on the date of death.

At present, Family Pension is available for families of Civilian employees, who die while in service or after retirement. Family Pension is payable to the widow or widower for life or till remarriage and to children upto the age of 25 years.

Normal Rates of Family Pension :

22.6 Family Pension is calculated on the basis of basic pay last drawn on the date of retirement / death and is admissible at uniform rate of 30% of pay last drawn in all cases (effective from 1-1-1996) subject to a minimum of Rs.1275/- and a maximum of Rs.9000/- per month.

 

22.7 Enhanced Family Pension in case of dying in harness :

(i) When a Government Servant after rendering not less than 7 years of continuous service dies in harness, his family becomes entitled to Family Pension at enhanced rate of double the ordinary pension or 50% of the last pay drawn, whichever is less.

(ii) The rate of enhanced Family Pension shall be 50% of pay last drawn or double the ordinary family pension or the pension authorised on retirement, whichever is the least.

22.8 The enhanced Family Pension in both the cases shall be payable for a period of 7 years or upto the date on which the Government Servant would have attained the age of 65 years had he survived, whichever is less, and the higher rate is not admissible if a pensioner dies after attaining 65 years of age.

22.9 Most of the State Governments are following the Central Government pattern to their employees regarding the aforesaid matters. Some States, however, have prescribed the maximum and minimum pension. This maximum and minimum pension varies from State to State, since the pay scales are pegged at varying index levels and also the minimum and maximum of the same pay scales are allowed to the employees.

22.10 In order to ascertain the correct picture on these aspects, the Commission circulated the following questions:

Q.No.48.2. What is the maximum pension allowed to Judicial Officers in your State and what is the qualifying service required for it? Have you got any alternate proposal which is consistent with the general policy of the State?

Q.No.48.3. How much pension is allowed to be commuted? At present, commuted pension gets restored after completion of 15 years which period is said to have been fixed on scientific basis. How do you then justify the reduction of that period?

Q.No.48.4. What are the rules relating to payment of terminal gratuity? What is the maximum gratuity payable? Please furnish the relevant rules.

Q.No.48.5. What are the rules in your State governing encashment of leave upon retirement? How much leave is permitted to be encashed? Please furnish the relevant rules.

Q.No.48.6. What is the rule relating to Family Pension? What is the maximum Family Pension allowed?

(Please furnish the relevant rules.)

Do you propose uniformity in the aforesaid matters in all States / UTs?

22.11 The responses received from the respondents indicate that most of the State Governments have generally adopted Central Government pattern for grant of pensionary benefits to their employees and the same has been extended to Judicial Officers. The only difference between the pension structure of the State Governments and that of the Central Government is in the quantum of minimum pension, gratuity and terms of encashment of leave.

22.12 As against the full pension allowed for Central Government employees on completion of qualifying service of 33 years, the State Governments like Tamil Nadu and Kerala allow full pension to their employees on completion of qualifying service of 30 years.

22.13 In most of the States, pension is calculated with reference to the average emoluments drawn during the 10 months preceding superannuation. But in States like Karnataka, Orissa, Tamil Nadu and West Bengal, last pay drawn by the retiring officer forms the basis for determination of the pension.

22.14 We have received suggestions to reduce the qualifying years of service for full pension and also for dispensing the present ceiling of minimum 10 years of qualifying service for minimum pension.

22.15 For full pension, the request of the Associations is 18 ' 30 years of qualifying service. Likewise, it was suggested that the quantum of pension from the existing 50% of the basic pay be raised to 60% , 75%. Some Associations have demanded even 100% of the last pay drawn.

Commutation of Pension :

22.16 As seen earlier, the Central Government allowed their employees to commute a maximum of 2rd of the pension till recently. However, the Government after accepting the recommendations of the V CPC has raised the level to 40% of the pension with effect from 1.1.1996. This has been followed by the State of Sikkim and in no other States. In all other States, 2rd of the pension is allowed to be commuted.

22.17 We have, however, received suggestions from the Respondents to raise the existing ceiling on commutation from 2rd to 50% of the pension.

22.18 So far as the restoration of commuted pension is concerned, the Central Government allows such restoration on expiry of 15 years period from the date of commutation. Here again, almost all the States have followed this pattern, save the States of Kerala, Madhya Pradesh and Orissa. These three States allow the restoration of commuted pension after expiry of 12 years period. In Punjab, the restoration of commuted pension is allowed on expiry of 12 years only to those cases where pension is commuted before attaining the age of 59 years.

 

 

Gratuity :

22.19 The present position with regard to gratuity is that it is paid at 3th of emoluments for each completed six-monthly period of qualifying years of service subject to a maximum of 16 times of emoluments. Most of the States are also following the Central pattern of payment of gratuity. However, the ceiling on maximum gratuity varies from State to State. It ranges between Rs.1 lakh to Rs.3.5 lakhs. While the ceiling on gratuity / death gratuity has been enhanced to Rs.3.5 lakhs by Government of India with effect from 1.1.1996 in pursuance of the recommendations of V CPC, most of the State Governments have, however, limited the gratuity-cash-ceiling at Rs.2.5 lakhs.

22.20 We have received the following suggestions / requests from the High Courts and the Service Associations with regard to payment of gratuity:

i) That it should be calculated at the rate of half of emoluments for each completed six-monthly period of service instead of 3th at present;

ii) That cash ceiling should be removed;

iii) That D.A. should be taken into account for computing gratuity; and

iv) That the maximum gratuity should be raised appropriately from the present 16.5 times of emoluments.

Encashment of Leave :

22.21 As seen earlier, the limit of accumulation of Earned Leave is 300 days for Central Government employees, plus D.A. appropriate to such leave salary. But it will not include House Rent Allowance, City Compensatory Allowance and Interim Relief allowed at the time of retirement or death in service.

22.22 This limit of 300 days has not been followed by the State Governments. They have prescribed the maximum of 240 days Earned Leave for encashment.

 

22.23 We understand that in the Central Government service, Officers are not entitled to encash their Earned Leave when they are in service, whereas in most of the States, encashment of Earned Leave while in service is allowed. Indeed, we have also recommended this procedure for Judicial Officers.

22.24 High Courts and the Service Associations have suggested that encashment of Earned Leave at the time of retirement may be enhanced to 300 days.

Family Pension :

22.25 We have earlier set out the Rules relating to Family Pension for Central Government employees. It is, therefore, not necessary to restate here. But the payment of Family Pension in State Governments is not uniform. It varies from 30%, 20% and 15% depending upon the pay ranges of the deceased. Therefore, the High Courts have suggested that it is desirable to have uniformity in the matter of Family Pension for the Judicial Officers throughout the country.

22.26 The Service Associations have represented to the Commission that the existing rates of Family Pension are grossly inadequate and it should be revised upwards between the range of 50% to 75% of the last pay drawn.

OUR RECOMMENDATION :

22.27 We have considered all the suggestions of the Respondents.

Minimum Qualifying Service :

22.28 We do not consider that it is proper to dispense the present ceiling of minimum 10 years of qualifying service for entitlement to pension. Pension confers a long term benefit on a pensioner covering the entire remaining period of his life and should, therefore, be admissible only if he has served a minimum period of 10 years. We are, therefore, not inclined to dispense the existing requirements of 10 years to be eligible for minimum pension.

Eligibility to Full Pension :

22.29 As to the plea to reduce the qualifying service of 33 years for earning full pension, it may be stated that the Judicial Officers would now retire at the age of 60 years and they will have thus the benefit of two more years of service than the State Government employees who retire at 58 years. In fact, in Kerala, the age of superannuation of the State Government employees is still at 55.

22.30 Almost all the States have followed the Central Government pattern in prescribing 33 years of service for earning full pension. The States of Kerala and Tamil Nadu, however, have reduced it to 30 years. The Table below gives the picture of such requirements in all the States / UTs.

 

 

T A B L E

DETAILS OF (A) MAXIMUM PENSION, (B) QUALIFYING YEARS OF SERVICE AND (C) PORTION OF COMMUTATION

Sl.No.

State / UT

Maximum Pension (%)

Qualifying years of Service

Portion of Commutation

1

Andhra Pradesh

50

33

1/3

2

Assam

50

33

1/3

3

Bihar

33

1/3

4

Gujarat

50

33

1/3

5

Haryana

50

33

1/3

6

Himachal Pradesh

50

33

1/3

7

Jammu & Kashmir

50

33

1/3

8

Karnataka

50

33

1/3

9

Kerala

50

33

1/3

10

Madhya Pradesh

50

33

1/3

11

Maharashtra

50

33

1/3

12

Orissa

50

33

1/3

13

Punjab

50

33

1/3

14

Rajasthan

50

33

1/3

15

Sikkim

50

33

40%

16

Tamil Nadu

50

33

1/3

17

Tripura

50

33

1/3

18

Uttar Pradesh

50

33

1/3

19

West Bengal

50

33

1/3

20

Goa

50

33

1/3

21

Delhi

50

33

40%

22

Meghalaya

50

33

1/3

23

Manipur

24

Mizoram

As per Central Rules

25

Nagaland

26

Lakshadweep

27

Pondicherry

Not available

NOTE: Commutation of pension for Central Government Civilian Employees has been enhanced to 40% from 1/3rd w.e.f. 1-1-1996 on the recommendations of V CPC.

22.31 We do not know the circumstances, which compelled the State of Tamil Nadu to reduce the qualifying years of service from 33 to 30 years for earning full pension. In Kerala, we can understand that the age of retirement is 55 and there is, therefore, every justification for prescribing 30 years of qualifying service to get full pension.

22.32 So far as the Judicial Officers are concerned, there is no such inhibition. Their age of superannuation has been raised to 60 years. In view of this enhanced superannuation age, there is no reason at all to reduce the qualifying years of service for entitlement to full pension.

22.33 We accordingly recommend that the qualifying years of service should be 33 years for earning full pension except in the States of Tamil Nadu and Kerala.

Quantum of Pension :

22.34 There is a general demand from the Associations of Judicial Officers for increasing the quantum of pension from the existing 50% to 60%, 75% and even to 100%.

22.35 In our opinion, this demand is unreasonable and indeed uncalled for.

22.36 We have made significant upward revision in the pay scales of Judicial Officers at all levels and that would in turn confer on the retiring persons substantial benefit of enhanced pension even at the existing rate of 50%.

22.37 It may be noted that Judges of the High Courts and the Supreme Court are allowed pension only upto 50% of the pay.

22.38 There is therefore, no justification to recommend any increase of pension from the existing level of 50%. It may remain at 50% of the pay only.

 

 

Calculation of Pension :

22.39 We would, however, like to say a word more on the method of calculation of the pension.

22.40 At present, pension is calculated with reference to the average emoluments drawn during the 10 months preceding the superannuation for the Central Government employees and also in most of the States, except in the States of Karnataka, Orissa, Tamil Nadu and West Bengal. In these States, as stated earlier, the last pay drawn is the only basis for determining the pension.

22.41 The Central Government has not adopted the principle of last pay drawn in spite of the recommendation of the V CPC to that effect. Most of the State Governments have not accepted the principle 'last pay drawn' and even the Central Government has not accepted it.

22.42 We recommend that the State Rules for the time-being in force for calculation of pension may apply to Judicial Officers in the respective States / UTs.

22.43 We may, however, state that determination of the pension with reference to the last pay drawn is more practical, simple and indeed beneficial in view of the fact that some of the Officers would have drawn their annual increments just before retirement and there is no reason why full benefit of increment drawn should be denied to them for the purpose of calculating the pension.

22.44 We, therefore, recommend to all the State Governments to follow the principle of last pay drawn, which has been adopted by the States of Karnataka, Orissa, Tamil Nadu and West Bengal.

Commutation of Pension :

22.45 As seen from the Table earlier referred to, the Central Government has allowed commutation upto 40% of the Pension by accepting the recommendation of the V CPC.

22.46 But under the service conditions of Judges of the Supreme Court and High Courts, commutation of pension is allowed to the extent of 50% of the pension.

22.47 Since the Judicial officers after retirement are expected to maintain a degnified life, we consider that it is appropriate to allow them commutation upto a maximum of 50% of the Pension.

22.48 We, accordingly, recommend that the commutation of pension for Judicial Officers in every State / UT be allowed upto 50% of the pension determined.

Restoration of Commuted Pension:

22.49 Restoration of the commuted portion of the pension is generally after 15 years. Even the Judges of the Supreme Court and High Courts will get such restoration only after 15 years. That 15 years is reckoned from the actual date of commutation. This has been arrived at after a scientific calculation on the return to the Government on the consolidated sum paid as Commutation Pension.

22.50 Secondly, we are allowing commutation to the extent of 50% of the Pension. We cannot, therefore, reduce the period for restoration of pension.

22.51 We, accordingly, recommend that restoration of commuted pension may be allowed after 15 years.

GRATUITY :

22.52 As earlier stated, the gratuity payable varies from State to State. It ranges from Rs.1 lakh to Rs.3.5 lakhs. The Central Government, however, has raised the gratuity to Rs.3.5 lakhs with effect from 1.1.1996. But the States generally have not followed this principle.

22.53 The procedure for payment of gratuity to the High Court Judges under the Conditions of Service Act, 1954 and the Rules made thereunder is two-fold - one applicable to the Judges who are elevated to the High Court from the judicial service cadre and the other to Judges who are directly recruited from the Bar. To the first category, gratuity will be payable on the basis of the rules applicable to the Judge if he had not been appointed as a Judge and his service as a Judge being treated as service thereon for the purpose of calculating the gratuity. To the second category, the rules, notification and orders for the time-being in force with respect to the death-cum-retirement gratuity benefits which are applicable in relation to the Officer of a Central Civil Service Class I, would apply.

22.54 What it means to say is that for the second category, the maximum gratuity payable would be Rs.3.5 lakhs, whereas to the first category, it would be invariably less than Rs.3.5 lakhs depending upon the rules prevalent in each State. Of course, option is given to the first category to opt for the other, in the event of which, he may have certain advantage or disadvantage.

22.55 Taking all these factors into consideration, we recommend that the rules of each State applicable to Government Servants shall govern also the Judicial Officers in the matter of payment of gratuity.

ENCASHMENT OF LEAVE :

22.56 As elsewhere stated, the limit of accumulation of Earned Leave is 300 days for Central Government employees. But in most of the States, it is limited to 240 days.

22.57 The Judges of the High Courts and the Supreme Court are allowed to encash 300 days of Earned Leave. But the same principle need not be adopted for the Subordinate Judiciary since they have been given the privilege of encashing their Earned Leave to the extent of 30 days once in every block period of two years when they are in service.

22.58 In the premise, we recommend that the procedure prescribed from time to time by the respective State Governments for Government employees with regard to the limit of Earned Leave for encashment would continue to operate even for Judicial Officers.

FAMILY PENSION :

22.59 As of now, the rate of family pension admissible to the members of the Central Government employees is 30% of the pay last drawn, subject to a minimum of Rs.1275/- and maximum of Rs.9000/- per month. Be it noted that it is 30% of the last pay drawn.

22.60 But, the family members of the Judges of the High Courts and the Supreme Court get only 30% of the pension payable to them. In other words, the family pension admissible to the members of the Judges of the High Courts and Supreme Court is very much less than the family pension admissible to the members of the Central Government employees.

22.61 This glaring discrimination deserves to be removed and we trust and hope that Central Government would soon take the necessary steps in this regard.

22.62 The Judges of the Subordinate Courts are governed by the rules regulating the family pension framed by the respective State Governments. It varies from 30%, 20% and 15% depending upon the pay ranges of the deceased, subject to a minimum prescribed in each pay range.

22.63 If the Central Government provides payment of family pension at 30% of the last pay drawn to the family members of the Judges of the Supreme Court and High Courts, we recommend similar benefit be provided to the family members of the Judicial Officers in every State / UT. Till then, we suggest that the Rules of each State governing the payment of Family Pension to their Government Servants may continue to apply even to the Judicial Officers.

 

Domestic Help Allowance :

22.64 We have seen that Judicial Officers, after retirement, stand in long queue to pay electricity or water bills. It is indeed a pathetic scene, if not embarrassing for themselves. It is necessary that they be paid some amount to enable them, to employ a domestic assistant or a part-time servant. We have recommended Rs.2500/- per month for every serving Judicial Officer for engaging a Home Orderly of his choice. For the retired Judicial Officer, we recommend a cash payment of Rs.1250/- per month as 'Domestic Help Allowance', which will be paid to him upon furnishing a certificate every month that he has engaged a servant.

WHETHER COMMUTED PENSION RETAINS THE CHARACTER OF PENSION ?

22.65 That commuted pension is no pension at all. The commutation money stands entirely on a different footing from pension money.

22.66 For general information of our Judicial officers we may refer to two decisions of the Supreme Court.

(i) UNION OF INDIA AND ANOTHER v. WING COMMANDER, R.R. HINGORANI (RETD.)2

The facts of the case are that the Respondent was then Squadron Leader of Indian Air Force. He was allotted Official quarters in the Cantonment, Delhi. While he was in occupation of the said quarters, he was transferred from Delhi to Chandigarh and therefore the allotment of the quarters to him stood automatically cancelled after concessional period of two months from the date of his transfer. He, however, did not give any intimation of his transfer to the Directorate of Estates, but continued in the occupation of the said flat for a period of nearly

 


2. AIR 1987 Supreme Court 808.

5 years. The Estate Officer having come to know of the occupation asked him to vacate the flat and pay the damages for the unauthorised occupation. The Respondent refused to pay the damages on the ground that he was not in unauthorised occupation. The Estate Officer initiated proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 to recover Rs.38811.17p. as damages. The Respondent in the meanwhile made a representation to the Central Government for sympathetic consideration of his case. The Central Government reduced the amount to Rs.20482.78p. on compassionate ground but deducted the same from out of commuted pension payable to the Respondent, apparently under Section 11 of the Pension Act, 1871.

Section 11 of the Pension Act, inter-alia, protects from attachment, seizure or sequestration pension or money due or to become due on account of any such pension.

Validity of the recovery of Rs.20482.78 was questioned before the Delhi High Court but the Delhi High Court upheld the recovery. Upon the appeal, the Supreme Court reversed the judgment of the High Court.

The relevant portion of the judgment is set out below:

"Whether on commutation of pension the commuted pension becomes a capital sum or still retains the character of pension so long as it remains unpaid in the hands of the Government, is not a new one till it was settled by the judgment of this Court in Union of India v. Jyoti Chit Fund & Finance3. The Court touched upon the previous judgment in this regard including a decision in the English case, in Crowe v. Price4, it was held that -money paid to a retired


3. (1976) 3 SCR 763: (AIR 1976 SC 1163).

4. (1889) 58 LJ QB 215.

officer of His Majesty's force for the commutation of his pension does not retain its character as pension so as to prevent it from being taken in execution. On p. 217 of the Report, Coleridge, C.J. said:"

"It is clear to me that commutation money stands on an entirely different ground from pension money, and that if an officer commuted his pension for a capital sum paid down, the rules which apply to pension money and make any assignment of it void, do not apply to sum."

"Following the dictum of Coleridge, C.J., Besley, C.J. and King J. in Municipal Council, Salem v. B. Gururajah Rao5, held that when pension or portion thereof is commuted, it ceases to be pension and becomes a capital sum. The question in that case was whether the commuted portion of the pension of a retired Subordinate Judge was income for purposes of assessment of professional tax in a municipality. The question arose in a different form in C. Gopalachariar v. Deep Chand Sowcar,6 and it was, whether the commuted portion of the pension was not attachable in execution of a decree obtained by certain creditors in view of S. 11 of the Pensions Act. Pandurang Row, J. interpreting S. 11 of the Act was of the opinion that not only the pension but any portion of it which is commuted came within the provisions of the Section. He particularly referred to the words "money due or to become due on account of pension" appearing in S. 11 of the Act which, according to him, would necessarily include the commuted portion of the pension. He observed that the phrase "on account of" is a phrase


5. ILR 58 Mad 469: (AIR 1935 Mad 249).

6. AIR 1941 Mad 207

used in ordinary parlance and is certainly not a term of art, which has acquired a definite or precise meaning in law. According to its ordinary commutation the phrase "on account of" means "by reason of" and he therefore queried :"

"Now can it be said that the commuted portion of the pension is not money due on account of the pension? Though the pension has been commuted, still can it be said that money due by reason of such commutation or because of such commutation, is not money due on account of pension?"

He referred to S. 10 of the Act which provides for the mode of commutation and is part of Chapter III which is headed "Mode of Payment" and observed:

"In other words, the commutation of pension is regarded as a mode of payment of pension. If so, can it be reasonably urged that payment of the commutation amount is not payment on account of the pension, though not of the pension itself, because after commutation it ceases to be pension? I see no good reason why it be deemed to be otherwise. No doubt money is due immediately under the commutation order, but the commutation order itself is on account of a pension which was commuted. The intention behind the provisions of S. 11, Pensions Act, is applicable to the commuted portion as well as to the uncommuted portion of the pension and the language of S. 11 does not appear to exclude from its protection the money that is due under a commutation order commuting a part of the pension."

 

 

"10. In Hassomal Sangumal v. Diaromal Laloomal,7 C.J. speaking for a Division Bench referred to Gopalachariar's case and pointed out that it does not lay down that once a pension has been commuted and the money paid over to the pensioner, the exemption from attachment still continues. The learned Chief Justice went on to say that the words "money due or to become due" used in S. 11 must by necessary implication mean the money that has not yet been paid to the pensioner."

"11. In Jyoti Chit Fund's case8 the Court repelled the contention that since the civil servant had already retired, the provident fund amount. pension and other compulsory deposits which were in the hands of the Government and payable to him had ceased to retain their character as such provident fund or pension under Ss 3 and 4 of the Provident Funds Act, 1925, Krishna Iyer, J. speaking for himself and Chandrachud, J. observed:"

"on first principles and on precedent, we are clear in our minds that these sums, if they are of the character set up by the Union of India, are beyond the reach of the Court's power to attach. S.2(a) of the Provident Funds Act has also to be read in this connection to remove possible doubts because this definitional clause is of wide amplitude. Moreover, S. 60(1), provisos (g) and (k), leave no doubt on the point of non-attachability. The matter is so plain that discussion is uncalled for:

We may state without fear of contradiction that provident fund amounts, pensions and other compulsory deposits covered by


7. AIR 1942 Sind 19 Davis.

8. AIR 1976 SC 1183.

 

the provisions we have referred to, retain their character until they reach the hands of the employee. The reality of the protection is reduced to illusory formality if we accept the interpretation sought."

"12. xxx xxx xxx

It bears out the construction that the words " money due or to become due on account of pension " occurring in S. 11 of the Pensions Act, 1871 include the commuted portion of the pension payable to an employee after his retirement. It must accordingly be held that the Government had no authority or power to unilaterally deduct the amount of Rs.20482.78p. from the commuted pension payable to the respondent, contrary to S. 11 of the Pensions Act, 1871."

(ii) Des Raj Bhatnagar and another v. Union of India9

In this case, the Petitioner was an employee of the Central Government. After serving in the Central Government for over 29 years, he was permanently absorbed in Food Corporation of India and consequently retired from the Government service. On absorption in the Food Corporation of India he was required to exercise of the following two options :

(a) Receiving the pro rata monthly pension and death-cum-retirement gratuity as admissible under the rules; and

(b) Receiving the pro rata gratuity and a lump sum amount in lieu of pension worked out with reference to commutation table obtaining on the date from which the pension was to be admissible and under the option order.


9. (1991) 2 SCC 266.

Accordingly, the Petitioner was sanctioned the original pension in accordance with the Central Civil Services (Pension) Rules, 1972. Under the said Rules maximum of one-third of the amount admissible pension could be commuted. However, in the case of government officers including Industrial Management Pool Officers who were opting for permanent absorption in Public Sector Undertakings, an option was given to commute the full amount of their original pension, for a lump sum of Rs.35,568/-.

Thereupon, the Third Central Pay Commission made recommendations in the matter of providing relief to government pensioners. The said Commission recommended that irrespective of the amount of pension drawn by them, pensioners should be given relief at the rate of 5 per cent of their pension subject to a minimum of Rs.5 per mensem and a maximum of Rs.25 per mensem.

The case of the Petitioner was that according to the said recommendation he should also be given the relief similar to the other Government Pensioners. But the Central Government has arbitrarily denied that relief to him by passing an Office Memorandum to that effect.

The question arose whether the petitioner who has received the lump sum by way of commutation of the entire pension could be regarded as Central Government Pensioner.

The Supreme Court answered the question in the negative by observing thus:

"After getting a lump sum in lieu of entire pension, they do not fall in the class of Central Government pensioners who got their one-third pension commuted also fall in a different class in as much as they get two-third pension, and after 15 years of such commutation or having attained the age of 70 years whichever was later they became entitled to full pension. Petitioner on the other hand was not entitled to any pension after having received the lump sum amount in lieu of pension being commuted and having opted to receive such amount in lump sum at the time of entering the service in Public Sector Undertaking."

22.67 From the aforesaid decisions it becomes abundantly clear that the commuted pension cannot be regarded as pension.

 

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