# KRISHENA KUMAR AND ANR. ETC. ETC v. UNION OF INDIA AND ORS

- **Citation:** [1990] 3 S.C.R. 352
- **Court:** Supreme Court of India
- **Decided:** 1987-05-08
- **Bench:** Sabyasachi Mukharji, B.C. Ray, M.H. Kania, c K.N. SAIKIA, S.C. Agrawal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/krishena-kumar-and-anr-etc-etc-v-union-of-india-and-ors-10867
- **Pages:** 38

## Headnote

Constitution of India, 1950: Article 141-Policy of courts is to
stand by precedent and not disturb settled point.
Civil Services: Railway Board Circular dated May 8, 1987Change over of railway employees from SRPF (Contributory Scheme)
to Pension Scheme-Uth option-Exercise of-Para 3.1-Whether
constitutionally valid.
The petitioners are retired railway employees who were covered
D
by the Railway Contributory Provident Fund Scheme. The Provident
Fund Scheme was replaced in the year 1957 by the Pension Scheme. The
employees who entered Railway service on or after 1.4.1957 were automatically covered by the Pension Scheme instead of the Provident Fund
Scheme. The employees who were already in service on 1.4.1957 were
given an option either to retain the Provident Fund benefits or to switch
E
over to the pensiooary benefits. The petitioners had opted for Contributory Provident Fund Scheme.
The petitioners' case is that till 1.4.1957 or even sometime thereafter, the pensionary benefits and the alternative Contributory Provident Fund benefits were considered to be more or less equally beoefiF
cial; at the time when the option was given to choose between pension
and Provident Fund, the employees had no idea that in future improvements would be made to either of them; and that as a result of the
decision of the Railways to implement the judgment of this Court in
D.S. Nakara v. Union of India, [1983] 2 SCR 165, and to extend the
liberalised pension benefits even to those railway employees who had
G
retired long before the liberalisations of pension were introduced, the
pension retirees derived manifOld benefits while P.F. retirees' benefits
remained stagnant.
The main legal contention of the petitioners is that the Railways
bad issued twelve notifications giving option to certain Provident Fund
H
retirees after the respective cut-off dates, to opt for the Pension Scheme
352
•'"'\
-
-·~
KRISHENA KUMAR v. U.0.I.
353
even after their retirement, but the same options were not given to other
similarly situated Provident Fund retirees beyond the respective cut-off
dates, which was discriminatory and hence violative of Art. 14 of the
Constitution. It is further contended that the notifications specifying
cut-off dates were arbitrary and on-related to the objects sought to be
achieved by giving of the option, and therefore violative of Article 14
and also of the principle laid down in Nakara's case. According to
counsel, the principle is that pension retirees could not be divided by
such arbitrary cut-off dates for the purpose of giving benefits to some
and not to other similarly situated employees. It is submitted that by
analogy the principle is equally applicable to the Provident Fund
retirees as a class.
On these grounds, it is prayed that applying the law laid down in
Nakara's case this Court should simply strike down or read down
paragraph 3.1 of the 12th option dated 8.5.1987. That paragraph said
that all Contributory Provident Fund beneficiaries who were in service
on 1.1.86 and who were still in service on the date of the order would be
deemed to have come over to the pension scheme. It is ~ubmitted that
once this limiting requirement is removed all the Contributory Provident Fund beneficiaries shall be eligible and will be deemed to have
come over to the pension scheme. As the basis for striking or reading
down paragraph 3.1 on Nakara's ratio, it is urged that all the Railway
employees both in service and pensioners constitute one family and
must be treated as one class, and Government's obligation to look after
the retired Railway employees both under the pension scheme and the
provident fund scheme being the same, they could not be treated differently, and any differential treatment will be discriminatory and violative of Article 14 of the Constitution oflndia. In Nakara's case the date
arbitrarily chosen was struck down and, as a result, the revised formula
A
B
c
D
E
for computing pension was made applicable to all the retired pensi

## Text

_Characters 0–39,848 of 82,941. This is a partial read: ask again with offset=39848 for what follows._

A
KRISHENA KUMAR AND ANR. ETC. ETC.
v.
UNION OF INDIA AND ORS.
ruLY 13, 1990
B
[SABYASACHI MUKHARJI, CJ., B.C. RAY, M.H. KANIA,
c
K.N. SAIKIA AND S.C. AGRAWAL, JJ.]
Constitution of India, 1950: Article 141-Policy of courts is to
stand by precedent and not disturb settled point.
Civil Services: Railway Board Circular dated May 8, 1987Change over of railway employees from SRPF (Contributory Scheme)
to Pension Scheme-Uth option-Exercise of-Para 3.1-Whether
constitutionally valid.
The petitioners are retired railway employees who were covered
D
by the Railway Contributory Provident Fund Scheme. The Provident
Fund Scheme was replaced in the year 1957 by the Pension Scheme. The
employees who entered Railway service on or after 1.4.1957 were automatically covered by the Pension Scheme instead of the Provident Fund
Scheme. The employees who were already in service on 1.4.1957 were
given an option either to retain the Provident Fund benefits or to switch
E
over to the pensiooary benefits. The petitioners had opted for Contributory Provident Fund Scheme.
The petitioners' case is that till 1.4.1957 or even sometime thereafter, the pensionary benefits and the alternative Contributory Provident Fund benefits were considered to be more or less equally beoefiF
cial; at the time when the option was given to choose between pension
and Provident Fund, the employees had no idea that in future improvements would be made to either of them; and that as a result of the
decision of the Railways to implement the judgment of this Court in
D.S. Nakara v. Union of India, [1983] 2 SCR 165, and to extend the
liberalised pension benefits even to those railway employees who had
G
retired long before the liberalisations of pension were introduced, the
pension retirees derived manifOld benefits while P.F. retirees' benefits
remained stagnant.
The main legal contention of the petitioners is that the Railways
bad issued twelve notifications giving option to certain Provident Fund
H
retirees after the respective cut-off dates, to opt for the Pension Scheme
352
•'"'\
-
-·~
KRISHENA KUMAR v. U.0.I.
353
even after their retirement, but the same options were not given to other
similarly situated Provident Fund retirees beyond the respective cut-off
dates, which was discriminatory and hence violative of Art. 14 of the
Constitution. It is further contended that the notifications specifying
cut-off dates were arbitrary and on-related to the objects sought to be
achieved by giving of the option, and therefore violative of Article 14
and also of the principle laid down in Nakara's case. According to
counsel, the principle is that pension retirees could not be divided by
such arbitrary cut-off dates for the purpose of giving benefits to some
and not to other similarly situated employees. It is submitted that by
analogy the principle is equally applicable to the Provident Fund
retirees as a class.
On these grounds, it is prayed that applying the law laid down in
Nakara's case this Court should simply strike down or read down
paragraph 3.1 of the 12th option dated 8.5.1987. That paragraph said
that all Contributory Provident Fund beneficiaries who were in service
on 1.1.86 and who were still in service on the date of the order would be
deemed to have come over to the pension scheme. It is ~ubmitted that
once this limiting requirement is removed all the Contributory Provident Fund beneficiaries shall be eligible and will be deemed to have
come over to the pension scheme. As the basis for striking or reading
down paragraph 3.1 on Nakara's ratio, it is urged that all the Railway
employees both in service and pensioners constitute one family and
must be treated as one class, and Government's obligation to look after
the retired Railway employees both under the pension scheme and the
provident fund scheme being the same, they could not be treated differently, and any differential treatment will be discriminatory and violative of Article 14 of the Constitution oflndia. In Nakara's case the date
arbitrarily chosen was struck down and, as a result, the revised formula
A
B
c
D
E
for computing pension was made applicable to all the retired pensioners.
F ,
On behalf of the respondents it was contended that the options
were meant to give the Provident Fund retirees after the specified dates
option to switch over to Pension Scheme and that each specified date
had nexus with the reason for granting the particular option. It is
further submitted that the petitioners' basic assumption is erroneous
G
inasmuch as Nakara's case did not hold that whenever there was a
liberalisation of pension, all other pension retirees and Provident Fund
- ·-""""
retirees must be given the option, and that the older system of pension
or Provident Fund was always Insufficient.
Dismissing the writ petitions and the Special Leave Petition, this
H
Cllurt,
A
354
SUPREME COURT REPORTS
[1990] 3 S.C.R.
HELD: (1) The doctrine of precedent, that is, being bound by a
previous decision, is limited to the deciskln itself and as to what is
necessarily involved in it. It does not mean that this Court is bound by
the various reasons given in support or it, especially when they contain
"propositions wider than the case itself required." [374A-B]
B
(2) The enunciation of the reason or principle upon which a quesc
tion before a court bas been decided is alone binding as a precedent.
The ratio decidendi is the underlying principle, namely, the general
reasons or the general grounds upon which the decision is based on the
test or abstract from the specific peculiarities of the particular case
which gives rise to the decision. [382A; 3740]
Caledonian Railway Co. v. Walker's Trustees, and Quinn v.
Leathern, [1901] A.C. 495 (502), referred to.
(3) Apart from Article 141 oftbe Constitution the policy or courts
is to stand by precedent and not to disturb settled point. When court
D
bas once laid down a principle of law as applicable to certain state of
facts, it will adhere to that principle, and apply it to all future cases
wbtre facts are substantially the same. [381F-G]
(4) In Nakara's case it was never required to be decided that all
the retirees formed a class and no further classification was permissible.
E
At the same time it was never held in that case that both the pension
retirees .and tb.e Provident Fund retirees formed a homogeneous class
and that any further classification among them could be violative of
Article 14. On the other band, the Court bad clearly observed that it
was not dealing with the problem of a ''fund''. [380H]
F
(5) The Railway Contributory Provident Fund is by definition a
fund. Besides, the Government's obligation towards an employee under
Contributory Provident Fund Scheme to give the matching contribution
begins as soon as bis account is opened and ends with bis retirement
when bis rights qua the Government in respect of the Provident Fund is
finally crystalized, and thereafter no statutory obligation continues.
G
Whether there still remained a moral obligation is a different matter.
On the other band, under the Pension Scheme the Government's obligation does not begin until the employee retires when only it begins and it
continues till the death of the employee. Thus, on the retirement of an
employee Government's legal obligation under the Provident Fund
account ends while under the Pension Scheme it begins. Therefore, the
H
provident fund retirees could not be treated at par_ with the living
•
KRISHENA KUMAR v. U.0.1.
355
,.
pensioners. There was, therefore, no discrimination, and the question
A
..
~ of striking down or reading down clause 3.1 of the 12th option does not
arise. l380H; 381A-B; 382F]
Union of India v. Ghansham Das &.Ors., S.L.P. No. 5973of1988
•
and Union of India v. Bidhubhushan Malik, !1984] 3 sec 95,
distinguished.
B
-----{
-
'""'(
~
\ - ..__
(6) The rules governing the Provident Fund and its contribution
are entirely different from the rules governing pension. R would not,
therefore, be reasonable to argue that what is applicable to the pension
retirees must also equally be applicable to Provident Fund retirees. [381C]
(7) An imaginary definition of obligation to include all the c
Government retirees in a class was not decided and could not form the
basis for any classification for the purpose of this case. Nakara cannot,
therefore, be an authority for this case. f381E]
D.S. Nakara v. Union of India, [1983] 2 SCC 165, explained.
D
(8) The argument Is that the State's obligation towards pension
retirees is the same as that towards Provident Fund retirees. That may·
be morally so. But that was not the ratio decidendi of Nakara. Legislation bas not said so. To say so legally would amount to legislation by
enlarging the circumference of the obligation and converting a moral
obligation into a legal obligation. l380C-D]
(9) The statements made on behalf of the respondents to the effect
that cot-off dates had nexus with the reason for granting the particular
option, has been substantiated by facts. The cut-off dates were not
arbitrarily chosen but. had nexus with the purpose for which the option
was given. [382B-D]
(10) That the Pension Scheme and the Provident Fund Scheme
are structurally different Is also the view of the Central Pay Commissions, and hence ex-gratia benefits have been recommended, which may
E
F
be suitably increased. [383E]
G
CIVIL APPELLAIB JURISDICTION: Special Leave Petition
--"°\ (Civil) No. 8461of1986.
From the Judgment and Order dated 31.3.1986 of the Central
Administrative Tribunal, New Delhi, in Original Appln. No. 40 of
H
1986.
356
SUPREME COURT REPORTS
[1990] 3 S.C.R.
A
AND
Writ Petition Nos. 1285, 1575/86, 352, 361 & 1165 of1989.
(Under Article 32 of the Constitution of India).
...
B.
Petitioners in Person in SLP 8461of1986 and W.P. No. 1285 of
1986.
)- -
Shanti Bhushan, Mrs. Swaran Mahajan, Ms. Anuradha MahaY-
jan, Mrs. Rekha Pandey, Jayant Bhushan, Badri Das Sharma, C.V.
Francis, Ramesh Babu, Ms. Santosh Paul and G. Prakash, for the
C Petitioners in W.P. No. 1575 of 1986, 352, 361and1165of1989.
Kapil Sibal, Additional Solicitor General, R.B. Datar, Mukul
Mudgal, C.V. Subba Rao, B.D. Sharma, R.B. Mishra, B.K. Prasad -e;
-..
and A.M. Khanwilkar for the Respondents.
D
N .P. Saxena for the Intervener.
The Judgment of the Court was delivered by
K.N. SAIKIA, J. This analogous cluster of five writ petitions
and one special leave petition involves a common question of law. The
E petitioner in Writ Petition No. 352 of 1989 is the President of the All
India Retired Railwaymen (P.F. Terms) Association and the petition
has been filed in a representative capacity on behalf of all the members
of the Association who retired with Provident Fund benefits. Writ
Petition No. 361 of 1989 has been filed by three individual retired
Railway employees who also retired with Provident Fund benefits.
F
The petitioner in Writ Petition No. 1285 of 1986 retired as Block
Inspector of Northern Railway on 7 .1.1968, a non-pensionable post.
All the petitioners except petitioner No. 5 in W.P. No. 1575 of 1986
retired from Railway service high posts. Petitioner No. 1 retired as
Additional Member, Railway Board on 5 .11.1960 with Provident Fund
benefits. Petitioner No. 2 was Member, Railway Board and similarly
G
retired on 1.3.1968 opting for Provident Fund Scheme as at that time
the maximum monthly pension was Rs.675 only. Petitioner No. 3 similarly retired as General Manager on 5.12.1960. Petitioner No. 4 retired
as Member (Staff) Railway Board and Ex-officio Secretary to the Government of India on 30.6.1977 opting for the Provident Fund Scheme.
Petitioner No. 5 also retired on 19.6.1972 opting for the Provident
H Fund Scheme. Petitioner No. 6 retired on 28.8.1962 as Director
•
-
--
-\.
KRISHENA KUMAR v. U.0.I. (SAIKIA, J.]
357
~ Health, Railway Board opting for Provident Fund Scheme. Petitioner
No. 7 similarly retired on 17.2.1968 as Director, R3iiway Board.
Petitioner No. 8 retired as General Manager, Indian Railways on
15.10.1966 with the Contributory Provident Fund Scheme. The
petitioners in Writ Petition No. 1165 of 1989 are also similarly retired
persons. The petitioner in Special Leave Petition (Civil) No. 8461 of
1986 retired as Assistant Auditor, with Provident Fund benefits. ~is
claim to switch over to pension after retirement was rejected. The
petitioners are thus retired railway employees who were covered by or
had opted for the Railway Contributory Provident Fund Scheme. It is
the petitioners' case that before 1957 the only scheme for retirement
benefits in the Railways was the Provident Fund Scheme wherein each
employee had to contribute till retirement a portion of his ·annual
income towards the Provident Fund and the Railways as the employer
would make a matching contribution thereto. This provident Fund
Scheme was replaced in the year 1957 by the Pension Scheme whereunder the Railways would give posterior to his retirement certain
monthly pension to each retired employee instead .of making prior
.contribution to his Provident Fund. It is stated that the employees who
entered Railway service on or after 1.4.1957 were automatically
covered by the Pension Scheme instead of the Provident Fund
Scheme. In so far as the employees who were already in service on
1.4.1957, they were given an option either to retain the Provident
Fund benefits or to switch over to the pensionary benefits on condition
that the matching Railway contribution already made to their Provident Fund accounts would revert to the Railway on exercise of the
option.
It is the petitioners' case that till 1.4.1957 or even sometime
thereafter, the pensionary benefits and the alternative Contributory
A
B
c
D
E
Provident Fund benefits were considered to be more or less equally
F
beneficial, wherefore, employees opted for either of them. That the
benefits of the two were evenly balanced was evidenced by the Railway Board circular dated 17.9.1960 which gave an option to the
employees covered by the Provident Fund Scheme to switch over to
pension scheme and vice versa.
Mr. Shanti Bhushan, the learned counsel for the petitioners in
Writ Petition Nos. 352 and 361of1989, submits that between 1957 and
1987 the pensionary benefits of Railway employees were enhanced on
several occasions by different ways such as altering the formula for
computing the pension, by including dearness allowance in the pay for
G
computing pension, by removal of the ceiling on pension, and by introH
358
SUPREME COURT REPORTS
[1990) 3 S.C.R.
A ducing or liberalising the Family Pension Scheme etc. The Railway, it
is urged, had expressed no intention of extending the benefits of this'
liberalised pension to those employees who had already retired. At the
time when the option was given to choose between pension and Provident Fund, the employees had no idea that in future improvements
B
c
would be made to either of them. However, it is stated, this Court in
D.S. Nakara and Ors. v. Union of India, [1983) 2 SCR 165 held that
the benefit of any liberalisation in computation of pension would also
have to be extended to those employees who had already retired as
they were similarly situated with those who were yet to retire. It is
submitted, that even though Nakara's case related to Central Government employees, the Railways also implemented the Judgment and
extended the liberalised pension benefits even to those employees who
had retired long before the liberalisations concerned were introduced.
The decision to implement Nakara's Judgment to Railway employees
is admittedly contained in G.O. No. Fl (3)-EV/83 dated 22.10.1983.
This has, according to the learned counsel, given rise to the "strange
situation" namely, that while two alternative benefits of provident
D fund and pension were more or less equal at the time when the
petitioners were to make their choice, the pensions have thereafter
been liberalised manifold to the benefit of the pension retirees,
whereas no similar benefits have been extended to those who retired
opting for Provident Fund, hereinafter called 'the P .F. retirees'. It is
asserted that due to successive liberalisations of pensions, the pension
E retirees derived manifold benefits while the P.F. retirees' benefits remained stagnant. It is submitted that had the petitioners, all of whom
are P.F. retirees, known that pensionary benefits might subsequently
be so increased, they would no doubt have opted for pension instead of
Provident Fund. The following twelve notifications given such options
are referred to:
F
Date of Notification
Cut-off date chosen
1.
17.09.60
01.07.59
G 2.
26.10.62
01.09.62
3.
03.03.66
31.12.65
4.
13.09.68
01.05.68
H 5.
23.07.74
01.01.73
...
-
'
KRISHENA KUMAR v. U.0.1. [SAi.KIA, J.]
359
·~ 6.
23.08.79
31.03.79
7
Ol.09.80
23.02.80
8.
04.10.82
31.08.82
-"'(
9.
09.11.82
31.01.82
~ "( 10.
13.05.83
31.01.82
n
rn.o6.s5
31.03.85
12.
08.05.87
01.01.86
It may be 11oted that in case of each option the cut-off date was
anterior to the respective dates of.announcement, and as a result,
employees who retir.ed after the cut-off date (specified date) and
before the notification date were also m.ade eligible for exercising the
option despite the fact that they already retired in the meantime. From
.the above, the 'main legal point' that arises, submits Mr. Shanti
Bhushan, is that the Railways issued the above notification giving
option to certain P.F. retirees after the respective cut-off dates to opt
for the Pension Scheme even after their retirement, but the same
options were not given to other similarly situated P.F. retirees beyond
the respective cut-off dates. This, it is submitted, is clearly discriminatory and violative of Art. 14 of the Constitution and deserves to be
struck down.
It is·contended by the petitioners that each of the above notifications including the last one, dated 8.5.1987 had given a fresh option to
some of the P.F. retirees while denying that option to other P.F.
retirees who were identically placed but were separated from the rest
by the arbitrary cut-off date. Each of the notifications specified a date
and provided that the P .F. retirees who retired on or after that date
would have fresh option of switching over to the pensionary benefits
even though they had already retired, and also had already drawn the
entire Provident Fund benefits due to thein. It is also contended that
the specified dates in these notifications having formed the basis of the
discrimination between similarly placed P.F. retirees those were
arbitrary and un-related to the objects sought to be achieved by giving
of the option and were clearly violative of Art. 14 and also of the
principle laid down in Nakara's case, which according to counsel, is
that pension retirees could not be .divided by s.uch arbitrary cut-off
A
B
c
D
E
.G
H
360
SUPREME COURT REPORTS
[1990] 3 S.C.R.
A
dates for the purpose of giving benefits .. to some and not to other
~·
similarly situated employees; and that by analogy the rule is equally
applicable to the Provident Fund retirees as a class.
B
c
Mr. Kapil Sibal, the learned Additional Solicitor General refuting the argument submits that each of the options was meant to give
the P.F. retirees after the speCified dates option to switch over to
Pension Scheme and that each specified date had nexus with the
reason for granting the particular option. He relies on the following
statements to substantiate his submssion.
STATEMENT SHOWING PENSION OPTIONS
GIVEN TO RAILWAY EMPLOYEES
-
SI. No. Option
Granted
Option
Reasons for
<'
Rly. Board's
validity
granting
D
letter No.
period
option
date
1
2
3
4
5
1.
I Option
F(E) 50/RTI/6 1.4.57 to 3 l.3.58Introduction
dated. 16 .11.57 (For those in
of Pension
.,,.__
E
service on
system on
1.4.1957
Railways
Extensions
F(P) 58. PN-1/6 Extended upto
}--
dated 7.3.58
30.6.56
F
F(P) 58. PN-1/6 Extended upto
_j
dated 19.6.58
31.12.58
F(P) 58. PN-1/6 Extended upto
dated 24.12.58 313.59
F(P) 58. PN-1/6 Extended upto
dated 28.3.59
30.9.59
G
2.
II Option
PC-60/RB/2/2
1.7.59 to 15.12.60Revision of
dated 17.9.60
(For those in
Pay Structure
service on
(2nd Pay
).-'-
1.7.59
Commission
recommendH
ation)
KRISHENA KUMAR v. U.0.1. [SAIKIA, J.]
361
Extensions
PC-60/RB-2/2
Extended upto
A
dated 7.4.61
30.6.61
~
PC/60/RB-2/2
Extended upto
dated 2.11.61
31.12.61
3.
Ill Option
F(P) 62. PN-1/2 1.9.62 to 31.3.63 Consequent
B
dated 26.10.62 (For those in
upon decision
--{
service on
to count
1.9.1962)
officiatiug
"(
pay for
pensionary
benefits.
c
4.
IV Option
F(P) 63. PN/l/ l.1.64to 16.7.66Introduction
40 dated 17.1.64
of family
pension
>
scheme.
Extension
F(P) 63. PN-1/ Extended upto
D
47 dated 4.7.64 30.9.64 ..
5.
VOption
F(P)65. PN1/4131.12.65to
In pursuance
dated 3.3.66
30.6.66
of deci-
(For those in
sion to
E
--·
service on
literalise
31.12.65
the Family
Pension
-_.t
Scheme by
extending it
to employees
F
. who die while
\
in service.
- )._
6.
VI Option
F(E) III. 68. PN-1.5.68 to 31.12.68In pursuance
l/2dated 13.9.88(Forthosein
of decision
service on
to change the
G
1.5.68
definition of
HPay" w.e.f.
1.5.68 for
·---..._,
the purpose
of pensionary
benefits.
H
362
SUPREME COURT REPORTS
l1990j 3 S.C.R.
A
Extensions
F(E) III. 68 PN- Extended upto
l/2dated31.1.69 31.3.69
--{'
7.
VII Option
F(E) III. 71. PN- 15.7.72 to
As a result
1/3 dated 15.7.72 21.10.72
of demands
(For those ir
from organiB
service on
sedlabour.
15.7.72
'r
8.
VIII Option PC-III. 73. PN/3 l.1.73to22.1.75Consequent
dated23.7.74
(For those in
to acceptance )r
service on
III Pay
1.1.73)
Commissions'
c
Recommendations.
Extensions
PC-III. 73. PN /3 Extended up to Extended
dated 18.1. 75 & 30.6.76&
because by
-<
25.6.75
31.12.75
schedule for
D
PC-III, 73 PN/3 Extended upto various
•
Pt!
30.6.76
categories
dated 16.12.75
were being
PC-III. 73 PN /3 Extended upto finalised.
Pt. I
31.12.76
dated 30.6,76
E
PC-III. 73 PN/3 Extended upto
·---
Pt. I
30.6.77
dated 3.1.77
PC-III. 73 PN/3 Extended upto
1---
Pt. I
31.12.77
dated 12.7.77
F
PC-III, 73 PN/3 Extended upto
Pt. I
30.6.78
jdated 17.4.78
PC-III. 73 PN/3 Options exercised
Pt. I
upto 31.12.78 be
dated 20.5.78
considered as
G
PC-III. 78 PN/3 valid (Staff who
Pt. I
were in service
dated 27.12.78
as on 1.1.73 &
retired/died/quitr-
ted service during the period
H
from 1. 1. 73 to 31. 12. 78)
KRISHENA KUMAR v. U.0.1. (SAIKIA, J.]
363
'
9.
IX Option
F(E) III. 79. PN 31.3. 79 to
On account
~
'"
-1/4
22.2.80
of liberalisaA
dated23.8.79
(For those in
tion of pen-·
service on
sion fonnula
1.4.79)
atid introductionof slao
'
system.
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Extensions
F(E) III. 79. PN Extended upto
'-1
-1/4 dated 1. 9. 80 22. 2. 81
10.
XOption
F(E) III 82.
31.8.82 to 28.2.830n acco,unt
...
PNl/7
(For those in
of part of DA t
dated 4.10.82
service on
treated as
31.8.82)
pay.
Extension
F(E) III 82. PN Extended upto
1/7 dated 13.5.83 31.8.83
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% made dpplicable from
31.1.82 under
letter No. F(E)
III82PN1/7
\ -____.-~
dated 9.11.82
11.
XI Option
F(E) III 85.
31.3.85 to
Consequent
_,
PN 1/5
17.12.85
upon DA/
....,,.,..
dated 18.6.85
(For those in
ADAupto
service on
average price
31.3.85)
index at point
F
-\..
568 treated as
pay for retirement benefits.
12.
XII Option
PC-IV/87/13/
1.1.86 to 30.9.87 AllCPFbene881
ficiaries who
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dated 8.5.87
(For those in
were in serservice on
vice on 1.1.86
---.....:
1.1.86)
and who are
still in service
will be
deemed to
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SUPREME COURT REPORTS
[1990] 3 S.C.R.
have come
over to Pension Scheme
unless they
specifically
opt out of
·Pension
Scheme and
desire to
retain the
CPFscheme.
INTRODUCTION OF PENSION SCHEME OF RAILWAYS AND
SUBSEQUENT PENSION OPTION
(i) Introduction of Pension Scheme
Pension Scheme was introduced on the Railways on 16. 11.57 and
D was applicable to the following:
(a) To all Railway servants who enter service on and after
16.11.57 and
(b) To all non-pensionable Railway servants who were in service
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on 1.4.57 or join Railway Service between 1.4.57 and 16.11.57
and opt for the Pension Scheme.
The scheme was made applicable from 1.4.57 because the financial year commences from April each year. This option was extended 4
times from time to time and was valid upt~ 28.3.59. The extensions
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were given because there were representations for its extension so that
the staff could get time to weigh the merits of the Schemes before they
take decision.
(ii) Pension option dated Ji. 9. 1960
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Orders were issued on 2.8.1960 notifying Railway Services
(Authorised Pay) Rules, 1960. Under this notification new pay scales
were introduced for Railway Servants. These new pay scales were
effective from ~st July, 1959.
Fresh option was granted on 17.9.60 to Railway employees who
H were in service on 1.7.59 to come over to the pension scheme. The last
,
KRISHENA KlJMAR-v_ U.0.L [SA!KIA, .l.]
365
date for exercising the option was 15.12.60. This was extended upto
~ 31.12.60 to enable the concerned employees to come to a considered
decision whether to retain the P .F. or opt for the pension scheme.
(iii) Pension Option dated26.10.62
1\ decision was taken on 26.10.62 to count the officiating pay for
the purpose of retirement benefits in case of those who were in service
on 1.9.62. Accordingly, a fresh option was given to staff to come over
to pension scheme on 26.10.62. This option remained open till 31.3.63.
(iv) Pension Option dated 17.1.1964
As a result of introduction of Family Pension Scheme 1964,
which came into force on 1.1.1964 orders were issued on 17.1.64 to the
>--
effect that all Railway employees who were in service could opt for
pension scheme within a period of 6 months. This option was extended
upto 16.9.64:
(v) Pension Option dated3.3.66
Family Pension Scheme was further liberalised for employees
who die while in service. In view of this improvement in Pension
Scheme, pension option under Railway Board's orders dated 3.3.66
was given to employees who were in service on 31.12.65. Since the
liberalisation in Family Pension Scheme came· into effect from 1st
January, 1966, the option was open for employees who were in service
on 31.12.65 and was open upto 30.6.1966.
(vi) Pension Option dated 13.9.68
~ \_
The definition of 'Pay' for pensionary benefits was changed from
1.5.68, through Board's orders dated 13.9.68. In vie.w_ofthis, a further
option was given on 13.9.68 to Railway employees who were in service
on and after 1.5.68 to opt for the Pension Scheme. This option was
open upto 31.12.68. This was further extended upto 31.3.69.
(vii) Pension Option dt. 15. 7. 72
On representation from the recognised labour federations that
many employees had not clearly understood the liberalisation introduced in the pension scheme, a fresh option was allowed on 15.7.72 to
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all serving employees. This was open till 21.10.72.
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SUPREME COURT REPORTS
[1990] 3 S.C.R.
(viii) Pension Option dated 23.7. 74
This option was based on similar orders issued by Ministry of
Finance. The rationale behind this option was that the recommenda·
tions of the 3rd Pay Commission became effective from 1.1. 73 but pay
structure of all employees who were in service on 1.1. 73 got altered
thwugh orders issued piecemeal from time to time. There were
liberalisations in the pension scheme also in the form of increase in the
amount of gratuity as also introduction of the concept of Dearness
Relief made available to the pensioners. This option was made avail·
able to all employees who were in service on 1.1.73. Employees who
had retired earlier did not get affected in any way by the recommenda·
tions of the 3rd Pay Commission and were accordingly not given this
option to come over to Pension Scheme. This option was available
upto 22.1. 75, a period of 6 months.
The option given vide letter of 23.7.74 was extended from time
to time till 31.12.78. The reason why this extension had to be allowed
D was that the revised pay scales recommended by the Pay Commission
for many of the categories could not be finalised and notified. Till such
time, the revised pay scale admissible to each category was made
known, it was impossible for the concerned staff to assess the benefit
admissible for opting for the revised scale as also for the pension
option. The pension option had therefore to be extended from time to
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time in this manner.
The letters authorising extension of the date of option were not
very clearly worded with the result that the pension option during the
periods of extension was granted even to those who had retired before
such extension became admissibie but who were in service on 1.1.73.
F
The clarification was accordingly issued to all the Railways stating that
the subsequent orders extending the date of option were applicable to
serving employees only, but the cases already decided otherwise may
be treated as closed and need not be opened again.
It was subsequently represented by the organised labour that the
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options actually exercised upto 31.12. 78 should be treated valid even
though such cases may not have been decided by that date. This was
agreed to and orders issued accordingly.
(ix) Pension Option dated 23.8. 79
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A liberalised formula and slab-system for calculation of pension
.,
KRISHENA KUMAR 14 li.0.1. [SAJKIA, J.]
361
effective from 31.3.79 was notified by Riilway Board on 1.6.79.
~ Accordingly, orders were issued on 23.8.798nowingpensio11 option to
those Railway employees who were in service on 31.3.79. This option
was initially open till 22.2.80 but was extended subsequently to enable
wider participation upto 22.2.1981.
(x) Pension Option dated 4.10.82
Orders were issued by Board on 30.4.82 ordering that a portion
~ of Dearness Allowance will be treated as pay for retirement benefits
w.e.f. 31.1.82. Accordingly a fresh option was allowed on 4.10.82
which could be exercised by Railway employees who were ill service
on 31.1.82. This option was available upto 31.8.83.
(xi) Pension Option dated 18.6.85
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Orders were issued by Railway Board on 17.5.85 merging Dearness Allowance to the price. index upto 568 with pay for the purpose of
retirement benefits and raising the ceiling of DCRG from 36,000 to
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50,000 w.e.f. 31.3.85: Accordingly, another option was granted to the
Railway employees who were in service on 31.3.85. This option was
available for a period of 6 months i.e. upto 17.12.1985.
--~:»/ (xii) Pension Option dated 8.5.87 ,
,
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Consequent upon acceptance of the recommendatiOns of the 4th
Pay Commission the revised pr.y ·scales were notified on 19.9.86 'and
14.3.87, effective from 1.1.1986. Accordingly another pension option
was given to the Railway employees who were in service on 1.1.86 vide
orders of 8.5.87. Under these orders those who did not specifically opt
out of pension scheme by 17 .12.87,.;..ould he automatically deemed tci
have opted for the pension scheme.
We may now examine these options. The Railway Board's letter
No. F(E) 50-RTl/6 dated November 16, 1967 introduced the_pension
scheme for railway servants. It said that . the President had been
pleased to decide that the pension rules, as liberalised vide Railway
Board's Memo No. E-48 OPC-208 dated 8.7.1950 as amended or
clarified from time to time should apply "(a) to all railway servants
who entered service on or after issue of that letter and (b) to all
non-pensionable railway servants who were in service on 1.4.57 or
have joined railway service between that date and the date of issue of
the order." The Railway servants referred to in para (b) were required
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368
SUPREME COURT REPORTS
l1990] 3 S.C.R.
to exercise an unconditional and unambiguous option on the prescribed form on or before 31.3.1958 electing for the pensionary benefits
or retaining their existing retirement benefits under the State Railway
Provident Fund Rules. It further said that any such employee from
whom an option form prescribed for the employee's option was not
received within the above time limit or whose option was incomplete
or conditional or ambiguous shall be deemed to have opted for the
pensionary benefits and if any such employee had died by that date or
on or after 1.4.57 without exercising option for the pensionary scheme,
his dues would be paid on the provident fund system. The period of
validity of this option was first extended upto 30.6.58, 31.12.58,
31.3.59 and lastly upto 30.9.59. There could, therefore, be no doubt
that those who did not opt for ·the pension scheme had ample
opportunity to choose between the two.
The second option was given by the Board's letter No. PC-60/
RB/2/2 dated 17.9.60 to elect the retirement benefits under the Provident Fund Rules or the Pension Rules. All Railway servants who were
in non-pensionable service on 15 .11.57 prior to the introduction of the
pension scheme on the Railways and who were still in service including
(IPR) on 1. 7 .59 were granted this option to have their retirement
benefits regulated by the State Railway Provident Fund Rules or the
Railway Pension Rules. Every eligible railway servant was given the
option to change over from P.F. benefits to pensionary benefits or vice
versa. It clearly said that Railway servants who did not exercise the
option would continue to be eligible for the P .F. benefits or pensionary benefits as the case might be for which he was already eligible.
The option was subject to the special conditions stated therein.
Where the Railway servants opted for pensionary benefits, the part of
the Government contribution together with interest thereon and/or
special contribution to the Railway servants' P.F. account had already
been paid, the excess of the amount over the gratuity due under the
Pension Rules should be refunded to the Government. It clearly said
that: "the option once exercised shall, however, be final and inrevocable irrespective of the decision taken on that issue." If a Railway
servant opted for P .F. benefits and if the payment of pensionary
benefits had already commenced, further payment would be stopped
and his P .F. account would be reconstructed as if he had never opted
for pensionary benefits. The period of validity of option was extended
upto 30.6.61, and then upto 31.12.61. This letter clearly indicated the
reason for giving this option as "under the revised pay structure introduced from 1.7.59, the bulk or whole of the D.A. previously payable
)
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KRISHENA KUMAR v. U.0.1. [SAIKIA. J.)
369
have been absorbed into pay and a number of changes are also being
A
made in the rules regarding retirement benefits."
In pursuance of the 3rd Pay Commission Report, Government
decided to give opportunity to opt for liberalised Railway Pension
Rules including benefits of Family Pension Scheme, 1964, to Railway
employees, who had retained the contributory P.F. Rules and who
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were in service on 31.3.1979 and retired on or after that date provided
they gave in writing their option within six months. Employees who
had retired under the said State Railway P.F. (Contributory) Rules,
their option would be valid if they refunded the entire Government
contribution and the excess, if any, of special contribution to P.F.
received by them over D.C.R.G. due to them under Pension Rules. In c
case of deceased employees request could be made for option by valid
n;,minee and in the absence. qf him by legal guardian. Thereafter a
number of representations were made and the Government extended
the time for giving Option for adopting Pension Scheme in place of
contributory P.F. Scheme.
D
As a result of treatment of a portion of ADA as pay for purpose
of retirement bene_fits and consequently enhan~ment in pensionary
benefits, the date for giving option was further extended by 28.2.1983
only for these employees who were in service on 31.8.1982 and who
quitted/retired on or after that date. The date of option was further
extended from time to time.
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Keeping in .. view the treatment of entire DA upto the price index
line of 568 as pay for retirement benefit with effect from 31.3.85,
removal of ceiling limit of Rs.1500 on pension and raising of ceiling of
DCRG from Rs.36,000 to Rs.50,000 the date of option for employees
who were in service on 31.3.85 and onwards and still governed by
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S.R.P.F. (Contributory) Rules, was further extended upto 17.12.1985
provided the amount of death-cum-retirement gratuity and the excess,
if any, of special contribution over the D .C.R.G., was refunded.
The 12th option was as under.
"Government of India/Bharat Sarkar Ministry of Railways/Rail Mantralaya (Railway Board)
Machine No. PC-IV/87/13/881
No. PC-IV/87/Imp. PW 1
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370
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SUPREME COURT REPORTS
l1990J 3 S.C.R.
•
The General Managers,
All Indian Railways,
Production Units etc.
as per mailing list.
RBB/S. No. 116/87
New Delhi, dated 8th May, 1987 ~
Subject:- Change over of Railway employees from the
SRPF (Contributory Scheme) to Pension Scheme-Implementation of the recommendation of the IV Central Pay
Commission-regarding.
The Railway employees who are covered by the
SRPF (Contributory Scheme) CPF Scheme have been
given repeated options in the past to come over the Pension
Scheme. However, some Railway employees still continue
under the CPF Scheme. The Fourth Central Pay Commission has now recommended that all CPF beneficiaries in
service on January 1, 1986, should be deemed to have come
over to the Pension Scheme on that date, unless they specifically opt out to continue under the GPF Scheme.
2. After careful consideration the President is pleased to
decide that the said recommendation shall be accepted and
implemented in the manner hereinafter indicated.
3. 1. All CPF beneficiaries, who were in service on 1.1.86
and who are still in service on the date of issue of these
orders, will be deemed to have come over to the Pension
Scheme.
I
3.2. The employees of the category mentioned above will,
however, have an option to continue under the CPF
Scheme, if they so desire. The option will have to be exercised and conveyed to the concerned Head of Office by
30.9.87, in the form enclosed, if the employees wish to
continue under the GPF Scheme. If no option is received
by the Head of Office by the above date the employees will
be deemed to have come over to the Pension Scheme.
3.3. The CPF beneficiaries, ·who were in service on
1.1.1986, but have since retired and in whose cases retirement benefits have also been paid under the CPF Scheme,
will have an option to have their retirement benefits
calculated under the Pension Scheme provided they refund
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KRISHENA KUMAR '· U.0.1. lSAIKIA, J.]
371
to the Government the Government contribution to the
Contributory Provident Fund and the· interest thereon,
drawn by them at the time of settlement of the CPF
Account. Such option shall be exercised latest by
30.9. 1987.
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3.4. CPF beneficiaries, who were in service on 1.1.1986
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but were since retired, and in whose cases the CPF Account
has not already been paid, will be allowed retirement
benefits as if they were borne on pensionable establishments, unless they specifically opt. by 30.9.87, to have their
retirement benefits settled under the CPF Scheme.
3.5. Cases of CPF beneficiaries, who were in service on
1. 1. 86, but have since died, either before retirement or
after retirement, will be settled in accordance with para
3.3. or 3.4 above, as the case may be. Options in such cases
will be exercised, latest by 30.9.87, by the widow/widower
and, in•the absence of widow/widower, by the eldest surviving member of the family, who would have otherwise
been eligible to family pension under the Family Pension
Scheme, if such Scheme were applicable.
3.6. The option, once exercised, shall be final.
3.7.
4.1.
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4.2 In the case of employees referred to above, who ccime
over or are deemed to have come over to the Pension
Scheme, the Government's contribution to the CPF
together with the interest thereon, credited to the CPF F
Account of the employee, will be resumed by the Government.