Friday, February 05, 2016


Mr AS Ramanathan has boosted the sagging morale of the old pensioners by his reassurance that there is nothing ominous in the remark of the Bench that the issue is one to determine whether the power to approve the Board Recommendations is that of the Government or whether LIC can go ahead with implementation of its own Board decision without approval of the Government.

Let us for a moment imagine two scenarios,viz one where Sec 48 is upheld by the Supreme Court and the one where Sec 48 is struck down by the SC.

Scenario 1: Sec 48 is upheld by SC

This means that Government approval is required for implementation of the Board Resolution. But the question arises, whether this will lead ipso facto to allowing the Civil Appeals of LIC thereby setting aside the judgment dt 12/1/2010 of the Single Judge Bench at Jaipur. My answer is ‘No’.

Scenario 2 : Sec 48 is struck down

This means that Government approval is not required for implementation of the Board Resolution. But the question is still open whether the Civil Appeals will be dismissed without any directions to LIC or with some directions clarifying apparently grey areas in the judgment or Board Resolution lending themselves to varying interpretations.

Here we have to go into the cause of legal action that arose leading to the Jaipur Bench judgment and subsequent legal proceedings leading to CAs filed by LIC in the Supreme Court.

The first writ petition 6676/1978 was filed because the DR formula for pre-August 1997 retirees was anomalous whereby the DR was reduced to 50% of that for in-service employees while 100% DR neutralization was adopted for in-service employees as well as those who retired after 1/8/1997.

The second writ petition No 654/2007 was filed because of discrimination between pensioners who had retired on different dates whereby a retiree after a subsequent wage revision period was getting more pension than a pre-wage revision retiree, sometimes even belonging to a higher cadre. This anomaly could be removed only by upgradation of pension of earlier pensioners in tandem with wage revisions effected for in-service employees.

The Single Judge Bench Judge in Jaipur allowed both these petitions by its judgment dt 12/1/2010 which is still sta-refused although LIC’s Civil Appeals re pending in Supreme Court. The effect of this judgment is as follows:

1. The DR formula as per Annexure IV of  LIC Pension Rules is to be modified on par with that applied for in-service employees as is done after 1/8/1997 wage revision.This should take effect from the date of retirement or 1/11/1993 whichever is later.

2. The pension should be upgraded on 1/8/1997 as decided in the LIC Board Resolution dt 24/11/2001 by providing weightage of 11.25% after merger of DR (without anomaly) with Basic Pension as is done for in-service employees. (It must be noted that 11.25% should be taken only as an average as the actual weightage may range from 8% to 13% depending on the cadre).

Two points to be noted in this context is that (i) the Board Resolution was passed to benefit the pre-August 1997 retirees who were victims of the DR anomaly which came in sharp relief after the wage revision w.e.f 1/8/1997 was notified in the year 2000; and (ii) subsequent wage revisions were yet to be notified. It should also be noted that the Board did not specify that this suggested upgradation is an one-time benefit given to pre-August 1997 retirees.

The operative part of the judgment states,” In light of the discussion made above, both the writ petitions are allowed. The respondent Corporation is directed to take a decision for implementation of the resolution dated 24.11.2001 passed by the Board. The respondent Corporation cannot provide different criteria for grant of dearness allowance to the existing pensioners based on cut off date i.e. 31.7.1997. The benefit arising out of the directions above would, however, be considered by the respondent Corporation so that every retired employee may get the same”.

The directions on implementation of the Board decision is only one part of the judgment. That the Corporation cannot provide different criteria for grant of dearness allowance to the existing pensioners based on cut –off date i.e. 31.7.1997 only means that LIC should modify Annexure IV of the LIC Pension Rules on par with the DR formula for in-service employees from 1/8/1992 to 31/7/1997..The last sentence stating “the benefit arising out of the directions above would, however, be considered by the respondent Corporation so that every retired employee may get the same benefit.” Has to be construed as a direction for upgradation of pension with every wage revision as prayed for in the WP No 654/2007 allowed by the Bench.

Thus the Jaipur Single Judge Bench order dt 12/1/2010 has to be viewed from an integrated perspective providing for DR anomaly removal and equitable DR neutralization for pre-August 1997 retirees and upgradation of pension for all pensioners with every wage revision, whereas the tendency of LIC has been to equate the judgment wholly to implementation of the Board Decision dt 24/11/2001 only that too according to its own convenient interpretation .This has resulted in its playing havoc with the interpretation of the LIC Board Resolution and making payment of an inadequate amount of arrears due to the petitioners while depositing in Jaipur & Chandigarh HC Registries and also while paying interim relief to the 1200 pre-August 1997 retiree-Class I Officers recently.

So my view is that in the Scenario 1, even if the powers of the Government under Sec 48 are upheld, it need not necessarily ipso facto lead to allowing of the CAs by the Supreme Court. The Apex Court will still have to consider the aspects of anomalies in DR and lack of pension parity on the touchstone of Article 14 of the Constitution. So along with upholding the powers of the Government under Sec 48, the Apex Court may like to give suitable directions to the Government and LIC to remove the anomalies and disparities that violate Article 14 of the Constitution .This would mean directions for amendment of pension rules to the benefit of LIC Pensioners.

If Scenario 2 happens, and the SC finds it proper to dismiss the CAs, it may not stop with a simple order of dismissal, but may give suitable directions to LIC giving clarifications on grey areas in the Jaipur judgment and the Board Resolution which LIC has been exploiting to the detriment of pensioners.

Either way, I feel that there is no need for pensioners to be worried about- whether LIC has the powers or the Government has the powers. In my view, Supreme Court will focus primarily on justice to be done to those for whom it is denied. But there is a caveat; the case managers and the counsel have a crucial role to play to make that happen.

C H Mahadevan