Life Insurance Corporation of India v. Krishna Murari Lal Asthana & Ors.

(iii) Rs.3,851 to

0.35 per cent of Rs.2,400/plus 0.29 per cent of the difference between Rs.3,850 and Rs.2,400/- plus 0.17 per Page 8 8 cent of basic Rs.3,850/-

(iv) above Rs.4,100/- 0.35 per cent of Rs.2,400/plus 0.29 per cent of the difference between Rs.3,850 and Rs.2,400/- plus 0.17 per cent of the difference between Rs.4,100/- and Rs.3,850/- plus 0.09 per cent of basic pension in excess of Rs.4,100/- (3) Notwithstanding anything contained in Para (1) and Para (2), in respect of employees belonging to Class- III and Class-IV, who have retired on or after the 1st day of August, 1992 and in respect of Officers belonging to Class-I and Class-II, retired on or after 1st day of April, 1993, dearness relief shall be payable or be recoverable as may be determined from time to time. 3(A) In case of employees who have retired or died on or after the 1st day of August 1997, the dearness relief shall be payable for every rise or to be recoverable for every fall, as the case may be, of every 4 points over 1740 points in the quarterly Average Consumer Price Index for Industrial Workers in the series of 1960 = 100 Such increase or decrease in dearness relief for every said 4 points shall be at the rate of 0.23 per cent of the Basic Pension; 3(B) In case of any wage revision in future the rate of dearness relief payable to an employee shall be determined by the Corporation corresponding to the index to which the case is linked. (The Corporation has determined that in case of employees who have retired or died on or after the 1st day of August 2002, the dearness relief shall be payable for every rise or to be recoverable for every fall, as the case may be, of every 4 points over 2328 points in the quarterly Average Consumer Price Index for Industrial Workers in the series of 1960 = 100 Such increase or decrease in dearness relief for every said 4 points shall be at the rate of 0.18 per cent of the Basic Pension). (4) Dearness relief shall be payable for the half year commencing from the 1st day of February and ending with 31st day of July on the quarterly average of the index figures published for the months of October, November and December of the previous year and for the half year commencing from the 1st day of August and ending with the 31st day of January on the quarterly average of the index figures published for the months of April, May and June of the same year. (5) In the case of family pension, invalid pension and compassionate allowance, dearness relief shall be payable in accordance with the rates mentioned above. (6) Dearness relief will be allowed on full basic pension even after commutation. (7) Dearness relief is not payable on additional pension.”

5. Appendix IV relating to Dearness Relief divides the retired employees into three different categories. Clause 1 of appendix IV relates to employees, who had retired on or after 1st January, 1986, but before 1st November, 1993. For these retirees Dearness Relief is payable/recoverable on the basis of increase/decrease 4 points over/under 600 points in the quarterly average of the All India Average Consumer Price Index series 1960, which is taken as the base year equal to hundred. The graded table given in paragraph 1 is used for computing the Dearness Relief.

6. Paragraph 2 of Appendix IV deals with employees who had retired on or after the first day of November, 1993 and the said retired employees are entitled to benefit Dearness Relief for every 4 points over 1148 points in the quarterly average of All India Average Consumer Price Index Series 1960. The increase is to be computed as per the scale / table mentioned therein.

7. Paragraph 3A, which is the clause of relevance pertaining to the present controversy, relates to employees who had retired on or after 1st August, 1997. These employees are to be paid Dearness Relief for every rise of 4 points over 1740 points in the quarterly Average Consumer Price Index for Industrial Workers 1960 series = 100. Increase or reduction of Dearness Relief for every 4 points is calculated at the rate of 0.23% of the basic pension. Clause 3A does not, unlike clauses 1 or 2, refer to a table or chart setting a scaled formula for payment of Dearness Relief.

8. The current controversy and dispute arose after the Board of Directors of the Corporation had passed the resolution dated 24th November, 2001 for up-gradation of basic pension to All India Consumer Price Index of 1740 points, and simultaneously grant 100% Dearness Allowance neutralization, for the retirees prior to 1st August, 1997. The said resolution was forwarded to the Joint Secretary (Insurance and Banking) of the Government of India, seeking amendment to the 1995 Rules. However, nothing happened thereafter and the amendment was not made.

9. Aggrieved by the non-action, Writ Petition Nos.6676/1998 and 654/2007 were filed before the Rajasthan High Court. On the basis of concessions made, directions were issued for implementation of the Board resolution dated 24th November,

2001. It was observed that the Corporation cannot provide different criteria for grant of Dearness Allowance based upon the cut off date i.e. 31st July, 1997. Two intra court appeals bearing Civil Special Appeal (W) Nos.493 and 494/2010 were filed and were disposed of by the order dated 21st January, 2011, which was made the subject matter of challenge before the Supreme Court in Civil Appeal Nos.6995/2013 and 9223/2013. The Supreme Court after referring to the Life Insurance Corporation Act, 1956, held that benefit could not have been granted on the basis of a mere resolution by the Board, for an amendment to the rule was mandated and as per Section 48 of the Act the amended Rule had to be tabled before Parliament. Having held so, the Supreme Court noticed the second facet of the controversy relating to the challenge to the legality of paragraph 3A of the Appendix restrictively applicable to some employees who had retired on or after 1st day of August, 1997 and not to employees who had retired earlier in point of time. The Supreme Court referred to the contention of the parties and noticed that the High Court of Delhi had disposed of the Writ petition No.184/2007, which was challenged before the Supreme Court in Civil Appeal No.9223/2013 on the basis of the judgment of the Rajasthan High Court, without adverting to the challenge to the constitutional validity of paragraph 3A of the Appendix IV. Orders had also been passed by the Punjab and Haryana High Court. As challenge to the constitutional validity of paragraph 3A of the Appendix IV had not been examined and addressed, the Supreme Court has directed as under:

10. Earlier on 7th May, 2015, the Supreme Court while hearing the aforesaid appeals had passed the following interim order: “As an ad-interim measure, it is directed that the petitioner-Corporation shall release 20% of the amount as per the impugned judgments pertaining to the High Court, in favour of the respondent-employees within six weeks hence, subject to final result in the appeals. If any amount, that has been deposited before the High Court pursuant to the order passed by this Court, 20% of the same shall be released in favour of the Life Insurance Corporation of India, so that it can pay to the concerned employees. In case, where the amount has not been deposited, needless to emphasize, the Corporation shall pay and question of any kind of withdrawal from court does not arise. Needless to say, the payment in continuum shall be considered when the appeals are taken up for hearing.” The controversy had arisen before the Supreme Court whether the respondent Corporation had paid 20% of the amount as directed. This facet of the controversy was noticed in paragraph 25 and following observations and directions were made in paragraph 25 to 27:

11. Paragraph 27 of the said order directs that the Corporation shall pay 40% to each employee within six weeks and an affidavit to the said effect would be filed before the Delhi High Court. The Supreme Court in view of the conflicting stand on the question, whether there was compliance of the order dated 7th May, 2015 which had directed 20% payment in terms thereof, thought it appropriate to direct the Corporation to pay 40% of the amount due as per paragraph 3A of Appendix IV of the 1995 Rules. This was an interim mandate and direction. Noticeably paragraph 25 of the same order records the stand of the Additional Solicitor General on behalf of the Corporation that they had already deposited 20% as per paragraph 3A of the Appendix. In other words, we are of the opinion that the Supreme Court had directed doubling of the said amount i.e. instead of 20%, the interim payment would be at the enhanced amount, being 40% of the amount payable as per paragraph 3A of the Appendix.

12. We have already reproduced the paragraph 3A of the Appendix IV and interpreted the same. The said paragraph states that for every 4 points over 1740 points in the Quarterly Average Consumer Price Index, Dearness Allowance will be increased @ 0.23% of the basic pension. This clause is applicable to employees, who have retired or died on or after 1st August,

1997. The Index of 1740 mentioned in paragraph 3A is the Quarterly Average Consumer Price Index, 1960 as on 31st July,

1997.

13. The respondent Corporation in their compliance affidavit has stated as under:

In other words, the respondent Corporation to compute the basic pension as on 31st July, 1997 has taken the figure of the basic pension payable plus the Dearness Relief accrued thereon up to 31st July, 1997 under Clauses 1 and 2. After 1st August, 1997 Dearness Relief has been computed @ 0.23% for every 4 point raise as per paragraph 3A. This is, according to us, the correct manner to compute and implement the interim order and directions of the Supreme Court. Another way to implement the order of the Supreme Court was to follow the scale of 0.23% for every 4 point increase in the Price Index from the date of retirement of the employee, i.e. to change the computation table mentioned in paragraphs 1 and 2 from the date of retirement so as to compute the Dearness Relief under paragraph 3A. This computation it is pointed out and accepted would be detrimental to the retired employees for they would have received in actual terms, a lower amount than the amount paid in the method applied and followed by the Corporation.

14. Out of 17963 employees who had retired prior to 1st August, 1998, relief in the form of enhanced pension has been paid to 15922 retired employees. However, 2441 retired employees have not got any relief. The total amount disbursed to the retired employees is Rs.29.35 crores.

15. Counsel for the retired employees and association have pleaded that basic pension itself should have been re-worked and increased by 40% and this was the purport of the direction of the Supreme Court. The said contention is not correct and this is not the direction given. During the course of hearing, counsel for the retired employees‟ associations accepted and admitted that they had not worked out the total quantum of increase in pension, payable on increase in Dearness Relief only, without any increase in the basic pension. This is probably the reason why the petitioners are now contending that the quantum of relief granted in monetary terms is merely Rs.46,000/- (approximately) per retired employee.

16. Paragraph 3A of the Appendix IV deals only with Dearness Relief and not the basic pension. We do not find any direction of the Supreme Court that the basic pension should be enhanced and increased by 40%. This being the position the contention of the retired employees and the associations has to be rejected.

17. In view of the aforesaid discussion, we hold that the respondent Corporation has complied with the interim order passed by the Supreme Court. -sd- SANJIV KHANNA (JUDGE) -sd- SUNITA GUPTA (JUDGE) NOVEMBER 11, 2016 ssn