# VIDESH SANCHAR NIGAM LTD. & ANR v. AJIT

- **Citation:** [2008] 5 S.C.R. 871
- **Court:** Supreme Court of India
- **Decided:** 2008-04-01
- **Case number:** Civil Appeal No. 2338 of 2008
- **Bench:** P.P. Naolekar, Lokeshwar Singh Panta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/videsh-sanchar-nigam-ltd-anr-v-ajit-24502
- **Pages:** 34

## Headnote

Service Law:
Memorandum No. 4(8)185-P & PW dated January 13,
1986; amended O.M. No. 4118187 - P & PW (0) dated July 5, c
1989, O.M. No. 4118187 - P & PW (0) dated February 7, 1990
clarifying about emoluments and payment of pension issued
by Government of India/Central Civil Services (Pension)
Rules, 1972; rr. 0, 3(c), 3 (1) and (e), 33, 49 and 55A/
Fundamental Rules; rr. 9(21) and 44:
D
~ ,...
Pension -
Employees transferring from Overseas
Communication Service, an office of Government of India, and
absorbed in Videsh Sanchar Nigam Limited, a Public Sector
Undertaking -
Settlement of Pension -
Pension on
E
emoluments drawn by them in PSU on Industrial Dearness
Allowance pay scale - VSNL making payment of pension to
the employees of OCS absorbed in it on emoluments arrived
at as per /DA pay scales and Dearness Relief accrued thereto
wrongly calculated as per Central Dearness Allowance scales
for certain period in contradiction to Government of India
F
~
Circular dated December 25, 1992 on the subject - Issuance
of clarific.atory Circular by VSNL - Challenge to - Allowed by
Single Judge of the High Court - Affirmed by Division Bench
of the High Court - Correctness of- Held: Incorrect- Retiree~·
in question have no vested right to receive Dearness Relief at G
CDA scales on pension calculated as per /DA pay scales -
Mis.fake committed by VSNL by making payments in
..
..(
contravention of the Government of India Circular could' never
be considered as supporting the existing fallacies - By issuing
871
H
872
SUPREME COURT REPORTS
[2008] 5 S.C.R.
"'
¥
A clarificatory order neither Government of India nor VSNL had
snatched away the right of pension of the respondent-retirees
- They are not entitled to get DA twice, on CDA scale and a/so
on /DA scale - Moreover, in terms of r(O) of Pension Rules,
pension does; not include DR and amount of pension has to
B be calculated in terms of r. 49 of the Pension Rules- Impugned
order of the High Court would result in granting benefits to the
~
retirees in question in excess of 100% neutralization of increase
in cost of living, which is not permissible - Hence, set aside -
However, the pensionary benefits given to them by mistake/in
c terms of order of the High Court, shall not be recovered - Grant
of Dearness Relief - Purpose of.
Words and Phrases:
'Deemed relief' and 'Emoluments' - Meaning of in the
D context of s.3 of the Civil Services (Pension) Rules, 1972.
'Pay' -
Meaning of in the context of r.9(21) of the
'
~ ·,
Fundamental Rules.
Respondent Nos.1 to 8, retired employees of Videsh
E Sanchar Niagam Limited, a Public Sector Undertaking,
filed a writ petition before the High Court of Calcutta
seeking directions to appellant and Union of India to
rescind/revoke the impugned decisions and orders
contained in the Office Orders/Memoranda dated October
F
18., 1995; December 19, 1995; November 22, 1996; May 5,
1998; May 28, 1998 and November 12, 1998 issued by the
Government of India to pay to the petitioners their
~ ,.
pensionary benefits in terms of the Memoranda/Office
Orders dated January 13, 1986, March 19, 1986, October
30, 1986, July 5, 1989, December 11, 1989, February 07,
G 1990, February 21, 1990, February 21, 1990 and September
3, 1993 for making payments of arrears of pensionary
benefits after calculating average emoluments on the last
pay drawn in the revised pay scale of 1992 and
)o.
'
subsequent revised pay scales with. the dearness relief
H calculated at the rate/rates prescribed by Central
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
873
KUMAR KAR & ORS.
'f
Government; and to make payments of the withheld A
amount of gratuity and commuted value of pension; and
also to make all such payments with compound interest
at the minimum rate of 18% per annum from the date/dates
such amounts became due till the date the same are
actually paid. The Single Judge of the High Court allowed
B
the Writ Petition and granted the reliefs. The appeal
preferred thereagainst by the appellants was dismissed

## Text

_Characters 0–39,913 of 69,817. This is a partial read: ask again with offset=39913 for what follows._

[2008] 5 S.C.R. 871
'
'f
VIDESH SANCHAR NIGAM LTD. & ANR.
A
II.
AJIT KUMAR KAR & ORS.
(Civil Appeal No. 2338 of 2008)
APRIL 1, 2008
B
~
(P.P. NAOLEKAR & LOKESHWAR SINGH PANTA, JJ.)
Service Law:
Memorandum No. 4(8)185-P & PW dated January 13,
1986; amended O.M. No. 4118187 - P & PW (0) dated July 5, c
1989, O.M. No. 4118187 - P & PW (0) dated February 7, 1990
clarifying about emoluments and payment of pension issued
by Government of India/Central Civil Services (Pension)
Rules, 1972; rr. 0, 3(c), 3 (1) and (e), 33, 49 and 55A/
Fundamental Rules; rr. 9(21) and 44:
D
~ ,...
Pension -
Employees transferring from Overseas
Communication Service, an office of Government of India, and
absorbed in Videsh Sanchar Nigam Limited, a Public Sector
Undertaking -
Settlement of Pension -
Pension on
E
emoluments drawn by them in PSU on Industrial Dearness
Allowance pay scale - VSNL making payment of pension to
the employees of OCS absorbed in it on emoluments arrived
at as per /DA pay scales and Dearness Relief accrued thereto
wrongly calculated as per Central Dearness Allowance scales
for certain period in contradiction to Government of India
F
~
Circular dated December 25, 1992 on the subject - Issuance
of clarific.atory Circular by VSNL - Challenge to - Allowed by
Single Judge of the High Court - Affirmed by Division Bench
of the High Court - Correctness of- Held: Incorrect- Retiree~·
in question have no vested right to receive Dearness Relief at G
CDA scales on pension calculated as per /DA pay scales -
Mis.fake committed by VSNL by making payments in
..
..(
contravention of the Government of India Circular could' never
be considered as supporting the existing fallacies - By issuing
871
H
872
SUPREME COURT REPORTS
[2008] 5 S.C.R.
"'
¥
A clarificatory order neither Government of India nor VSNL had
snatched away the right of pension of the respondent-retirees
- They are not entitled to get DA twice, on CDA scale and a/so
on /DA scale - Moreover, in terms of r(O) of Pension Rules,
pension does; not include DR and amount of pension has to
B be calculated in terms of r. 49 of the Pension Rules- Impugned
order of the High Court would result in granting benefits to the
~
retirees in question in excess of 100% neutralization of increase
in cost of living, which is not permissible - Hence, set aside -
However, the pensionary benefits given to them by mistake/in
c terms of order of the High Court, shall not be recovered - Grant
of Dearness Relief - Purpose of.
Words and Phrases:
'Deemed relief' and 'Emoluments' - Meaning of in the
D context of s.3 of the Civil Services (Pension) Rules, 1972.
'Pay' -
Meaning of in the context of r.9(21) of the
'
~ ·,
Fundamental Rules.
Respondent Nos.1 to 8, retired employees of Videsh
E Sanchar Niagam Limited, a Public Sector Undertaking,
filed a writ petition before the High Court of Calcutta
seeking directions to appellant and Union of India to
rescind/revoke the impugned decisions and orders
contained in the Office Orders/Memoranda dated October
F
18., 1995; December 19, 1995; November 22, 1996; May 5,
1998; May 28, 1998 and November 12, 1998 issued by the
Government of India to pay to the petitioners their
~ ,.
pensionary benefits in terms of the Memoranda/Office
Orders dated January 13, 1986, March 19, 1986, October
30, 1986, July 5, 1989, December 11, 1989, February 07,
G 1990, February 21, 1990, February 21, 1990 and September
3, 1993 for making payments of arrears of pensionary
benefits after calculating average emoluments on the last
pay drawn in the revised pay scale of 1992 and
)o.
'
subsequent revised pay scales with. the dearness relief
H calculated at the rate/rates prescribed by Central
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
873
KUMAR KAR & ORS.
'f
Government; and to make payments of the withheld A
amount of gratuity and commuted value of pension; and
also to make all such payments with compound interest
at the minimum rate of 18% per annum from the date/dates
such amounts became due till the date the same are
actually paid. The Single Judge of the High Court allowed
B
the Writ Petition and granted the reliefs. The appeal
preferred thereagainst by the appellants was dismissed
by the Division Bench of the High Court. Hence the
present appeal.
Respondents-retired employees submitted that the C
reasons given by the Single Judge as well as Division
Bench of the High Court for granting relief to the
respondents -
retirees are based upon proper
appreciation of the various Office Memoranda issued by
VSNL and the Union of India from time to time relating to · D
the subject-matter in issue; and that pension being a right
/
,.._
and not a bounty available to retired employees and
Dearness Relief being a part of pension, right to receive
the same could not have been denied merely because the
incumbent opted for IDA pay scale; that in the facts and E
circumstances of the case, this Court shall not be obliged
to interfere in the well-merited judgment of .the High Court
which does not suffer from any infirmity/perversity.
Allowing the appeal, the Court
HELD: 1.1 This Court cannot subscribe to the view
expressed by the High Court while construing the
expression of Dearness Relief as of right accrued to the
respondents-retirees. (Para - 20) [893-C]
F
1.2 The respondents- retirees along with other G
employees of Overceas Communication Service (OCS) of
the Department of Telecommunications of the
Government of India were transferred to the service of
Videsh Sanchar Nigam Limited (VSNL) on its formation
with effect from 151 April, 1986. By an Office Memorandum H
874
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A No. 4(8)/85-P & PW dated 13th January, 1986, Government
.,.
of India, Ministry of Personnel, Public Grievances and
Pension (Department of Pension & Pensioner's Welfare),
settled the pensionary benefits of the Government
employees who were transferred to Autonomous
B Organizations/PSUs consequent on the conversion of
Government Department/Office into an Autonomous Body
or PSUs. The terms of the said Circular clearly stated that
>-
the permanent government servants shall have an option
to retain the pensionary benefits available to them under
c the Government Rules or be governed by the Rules of
the PSUs/Autonomous Body and the Government
servants who opted to be governed by the Rules of the .
Autonomous Body or PSUs shall become entitled to the
pensionary benefits in accordance with the Rules of the
0 Autonomous Body or PSUs from the day of their transfer
from the service of the Government. Based on this Circular,
a memorandum was issued by the Government of India,
Ministry of Communications, reiterating that the
pensionary and other retiral benefits to the employees on
their absorption in the Corporation i.e. VSNL will be
E determined in accordance with the said Circular. (Para -
20) [893-C, D, E, F, G; 894-A]
1.3 Government of India modified its earlier Circular
vide its O.M. No. 4/18/87-P&PW(D) dated 5th July, 1989
F laying down certain terms and conditions which will be
applicable to the employees transferring en masse to
Central Public Sector Undertaking. The material and
relevant terms are that the permanent government
servants shall have an option to retain the pensionary
G benefits available to them under the Government Rules
or be governed by the Rules of the PSUs/Autonomous
Body. The Government servants, who opted to be
governed by the pensionary benefits available under the
Government, shall at the time of their retirement be entitled
to pension etc. in accordance with the Central
H
• •
'·
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
KUMAR KAR & ORS.
875
Government Rules in force at that time. (Para - 20) [894A
B, C, D, E]
1.4 The Government of India vide Office
Memorandum dated 7.2.1990 in reply to the Department
of Telecommunications O.M. dated 22nd January, 1990
issued a clarification relating to the settlement of 8
pensionary terms, etc. in respect of erstwhile OCS
employees who were absorbed in VSNL. It was clarified
very specifically that where the employees had opted to
retain the pensionary benefits under the Central
Government Rules, the emoluments drawn under the C
PSUs shall be treated as emoluments for the purpose of
Rule 33 of the Central Civil Services (Pension) Rules, and,
accordingly, any emolument drawn by the transferred
employee will be taken into account for the purposes of
calculation of average emoluments as per the clarification D
given in Note 10 below Rule 33 of the CCS (Pension) Rules
and it was stated that such employees who had
specifically opted for Central Government Pensionary
benefits will be entitled to the benefit of payment of
pension based on the emoluments drawn at the time of E
retirement from the PSUs. (Para - 20) [894-G, 895-A, B, C, D]
1.5 A Staff Notice dated 21.2.1990 came to be issued
by VSNL to all the permanent employees in Government
Service whose services had been transferred to VSNL
from the OCS and who had opted for absorption in VSNL
F
calling upon them to exercise their option in terms of sub•
para (a) of O.M. No. 4/18/87 -P & PW dated 05.07.1989 along
with a clarificatory information which inter alia provided
that the option to retain pensionary benefits under the
Central Government Rules will mean that the employees G
will receive pensionary benefits (pension and gratuity) on
the basis of emoluments/average emoluments drawn by
the employees at the time of retirement from VSNL and in
accordance with the Rules of the Central Government. It
was clarified that when the employee of VSNL will retire, H
876
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A he shall retire with pensionary benefits as if he had retired
'f
,-
from Central Government service. (Para - 22) [896-E, F, G,
H; 897-A]
2. VSNL issued another office order dated 03.09.1993
B
seeking clarification as to whether pay drawn under IDA
pattern could be treated as emoluments for the purpose
of calculation of pension and other terminal benefits on
or after 2.1.1990 in respect of employees who opted to
retain pensionary benefits available to them in terms of
Government of India Rules and also for change over to
c the IDA pattern of pay scale. The Department of Pension
and Pensioners' Welfare, vide its O.M. dated 5.7.1939,
clarified that in respect of those employees who had
changed over to IDA pattern of pay scale with effect from
2.1.1990 emoluments for purposes of calculation of
D pension and other terminal benefits shall be the
emoluments drawn by them in the IDA scales at the time
of their retirement/resignation/death, etc. from VSNL. The
""'
~
said order also prescribed that the pension and other
terminal benefits shall be calculated in accordance with
the Rules of Central Government in that behalf. It further
E stated that "Admissible Dearness Relief" (ADR) shall also
be allowed thereupon so arrived at as per the existing
Central Government Rules. (Para - 22) [897-G; 898-A, B,
C, D]
F
3.1 It appears that due to uncertainty on the part of
VSNL for some period pension was paid on emoluments
arrived at as per the IDA pay scales and DR accrued on
-+
IDA pay scale was wrongly given as per the CDA scales.
This method and calculation was totally contrary to and
inconsistent with the Government Circular dated
G 24.12.1992 which was referred to and relied upon by the
respondents-retirees themselves in the writ petition and,
therefore, the payment of pension made under bonafide
mistake would, under no circumstances, be viewed and
treated as vested right of VSNL employees who were
...
H drawing pay in IDA scales. (Para - 22) [898-G, H; 899-A, B]
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
877
KUMAR KAR & ORS.
T
3.2 The Department of Pension and Pensioners' A
Welfare vide O.M. No. 4/16/90-P&PW dated 22.11.1996
clearly clarified that the Central Government employees
who opted for retention of Central Government pensionary
benefits of absorption in PSUs/Autonomous Body as a
result of efforts of Government departments as such, were B
entitled to the payment of pension based on the
emoluments drawn by them. As per this Office
Memorandum, earlier clarification has been repeated and
re-asserted that in the case of transferred employees of
VSNL who were drawing IDA pay scales prior to their c
retirement, the emoluments for the purpo~e of pension
shall be calculated on the basis of emoluments drawn in
the IDA pay scales. It was also categorically stated that
such employees shall not be entitled to the payment of
DR on pension at Central Government rates. The D
Department of Public Enterprises has prescribed a
..
~
separate DR table in respect of such transferred
employees and therefore, DR on pension in respect of
VSNL retirees shall be regulated by the orders issued by
the Department of Public Enterprises from time to time. In.
E
these circumstances, it cannot be countenanced that the
respondents - retirees have any vested right to receive
DR at CDA scales on the pension which was calculated
as per the IDA pay scales. The payment was made for
sometime under a mistake and in contravention of the
Government letter dated 24.12.1992 by VSNL vide its F
order dated 3.9.1993 could never be considered as
supporting the existing facilities or accrued right of the
OCS employees absorbed in VSNL regarding the mode
of computation of their pensionary benefits as held by
the High court. The said clarificatory order nowhere has G
suggested that the DR of CDA scales would be given on
pension which was based on emoluments in the IDA pay
r
-4
scales. Thus, the respondents-retirees would get
pensionary benefits on the basis of the Government
Circular dated 24.12.1992 and not on the basis of office H
878
SUPREME COURT REPORTS
(2008) 5 S.C.R.
A order of VSNL. (Para - 23) [899-C, D,. E, F, G, H; 900 A, B, C]
4.1 In the facts and circumstances of the case, the
clarification given by the Government of India in its O.M.
dated 22.11.1996 in clear and unambiguous terms stated
B
that the employees of VSNL who were drawing the IDA
pay scales with the ADR under the IDA pay scales were
entitled to pensionary benefits only on the basis of IDA
pay scales as IDA pay scales with IDA pattern of DR was
already taken into account for pension and other benefits
at the time of retirement of such employees of VSNL. It
c appears from the various communications exchanged
between the Government of India and VSNL referred to
earlier that due to some error or bona fide mistake, VSNL
made wrong payments of DA to the respondents-retirees
calculated on the IDA pay scales and such employees
D were getting double benefits of DR. Employees who were
getting IDA pay scales with IDA pattern of DR could not
draw pension calculated on IDA emoluments with CDA
pattern of DR. (Para - 24) [900-G, H; 901-A, B]
E
4.2 It is well-settled that a pona fide mistake does not
confer any right to any party and it can be corrected. VSNL
vide subsequent Office Order dated 18.10.1995 had
rectified its mistake appearing in earlier order dated
3.9.1993 and the said office order was again modified by
F
another Office Order dated 19.12.1995 by which para 2(A)
of the Office Order dated 18.10.1995 was modified. The
modified order was one-time exercise for choosing the
alternatives of settlement of pension and the pensioners
were required to submit their consent to the Regional
Heads in a prescribed format. (Para - 24) [901-C; D, E]
G
4.3 The benefit of DR of CDA scales, which has been
given to the respondents-retirees by mistake at the time
of their retirement, is not to be given again as clarified by
. the Government of India from time to time in their various
H Office Memoranda and the respondents -retirees are
,.
:..
~
+
•
.
' ..
-
....
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
879
KUMAR KAR & ORS.
entitled to pension to be calculated on emoluments in the A
IDA pay scales. (Para - 25) [901-G, H; 902-A]
4.4 On the basis of the various Office Memoranda
relating to the subject matter of pension, the Government
of India or VSNL have not infringed or snatched away the
right of pension of the respondent -retirees which had
B
accrued to them on the basis of IDA pay scale with IDA
pattern of DR either retrospectively or prospectively. The
respondents-retirees, therefore, cannot be held entitled
to get DA twice, i.e. first on CDA pay scale and then on
IDA pay scale. In terms of Rule (o) of CCS (Pension) Rules, C
'Pension' does not include DR and amount of pension
has to be calculated as prescribed under Rule 49 thereof.
It is well known that DR is always related to
industrialization of the increase in cost of living and it
cannot exceed to 100% neutralisation. Therefore, the 0
impugned order of the High Court would result in granting
to the respondents-retirees benefits in excess of 100%
neutralisation of the increase in cost of living. (Para - 26)
[903-C, D, E, F]
Chairman, Railway Board and Others v. C.R.
E
Rangadhamaiah and Others (1997) 6 SCC 623 -
distinguished .
. 4.5 Respondents Nos. 1, 4, and 8 and other
employees who retired after May 1993 and December 1993
respectively when the change over to the IDA scale was
F
implemented for Non-Executive Employees and Executive
.,.
Employees retrospectively, had in fact started drawing pay
in the IDA scales and DA in accordance with the orders of
the Government of India issued from time to time to all
PSUs/Autonomous Bodies. Therefore, no question arose G
for the respondents-retirees claiming a vested right to
draw DR as per existing pay scales which was much
higher in view of the fact that IDA pay scales were arrived
·at by merger of CDA pay scales and DR. It is well-settled
that DR is a matter of grace to the Government Servants H
880
SUPREME COURT REPORTS
[2008) 5 S.C.R.
A and not a vested right and hence a claim against the
"'
~
Government for the grant of such allowance at particular
rate is not justiciable. The grant of DR at such rates and
subject to such conditions is the prerogative of the Central
Government in terms of Rule 55-A of the CCA (Pension)
B Rules, 1972. Rule 44 of FR to the grant of DA imposed no
duty on the State to grant it and it merely confers a power
on the State to grant compassionate allowance at its own
,,.
discretion and no mandamus or any other writ or
direction, therefore, should be issued to compel the
c exercise of such a power as there is no right in the
employee which is capable of being protected or
enforced. (Para - 27) [903-F, G, 904-A-D]
State of M.P vs. G.C. Mandawar AIR (1954) SC 493 -
relied on.
D
5. It is clarified that if any pensionary benefits have
been given to respondents-retirees or to any similarly
situated persons of VSNL at the time of mistaken
~ -
calculation of the pensionary benefits or in compliance
I:
E to the order of the High Court, such benefits shall not be
recovered from them. (Para - 28) [904-F, G)
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2338 of 2008
F
From the final Judgment and Order dated 25.11.2004 of
the High Court of at Calcutta in M.A.T. No. 171 of 2002.
K.J. Presswala, Asha Gopalan Nair and Khooshnum R.
~
Daviervala for the Appellants.
K.V. Vishwanathan, Hiren Dasan, Anandajyoti Dasgupta,
"'
G Dhirendra Kumar Mishra and Sarla Chandra for the
Respondents.
The Judgment of the Court was delivered by
LOKESHWAR SINGH PANTA, J. 1. Leave granted.
H
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
881
KUMAR KAR & ORS. [LOKESHWAR SINGH PANTA, J.]
~
2. This appeal by special leave is directed against the
A
judgment and order dated 25th November, 2004 passed by the
High Court of Calcutta in MAT No. 171 of 2002 whereby and
whereunder the order of the learned Single Judge of the High
Court dated 15th October, 2001 recorded on Writ Petition No.
6935(W) of 1999 was affirmed and the appellants herein were
B
-"'
directed to give retrial benefits to all the writ petitioners/
respondents 1 to 8-retirees in accordance with the Central
Government Pension Scheme as opted by them in the year 1989
within a period of four weeks from the date of communication of
the order.
c
3. Briefly stated, the facts of the case are as follows:-
The respondents 1 to 8-retirees herein were employees
of the Overseas Communication Service (OCS), the
Department of Telecommunications of the Government of India.
D
The OCS was converted into a Government Company, namely,
-~
.
-r
'Videsh Sanchar Nigam Limited' (VSNL) on 151 April, 1986.
4. By an Office Memorandum No. 4(8)/85-P & PW dated
13th January, 1986, the Government of India settled the
pensionary terms of Government employees who were E
transferred to an Autonomous Body/Public Sector Undertaking
(PSU) on conversion of a Central Governmr~"t OepartmenU
Office into an Autonomous Body or PSU. The relevant terms of
the said Circular reads as under:-
(a)
The permanent Government Servants shall have an
F
""'f
option to retain pensionary benefits available to them
under Government Rules or be governed by the Rules
of the Public Sector Undertaking/Autonomous Body.
(b)
The Government Servants who opt to be governed
G
by the pensionary benefits available under the
Government shall at the time of their retirement, be
entitled to pension etc. in accordance with the Central
Government Rules in force at that time.
5. The Government of India, Ministry of Communication,
H
882
SUPREME COURT REPORTS
[2008] 5 S.C.R.
~
,
A
Sanchar Bhawan, vide another O.M. bearing No. G 25015/ 1/
86-00 dated 19.3.1986 decided to set up a wholly Government
owned Public Sector Corporation known as VSNL which was
made operational from 1st April, 1986. This Circular reiterated
that the pension and other benefits to the employees on their
B absorption in the Corporation will be determined in accordance
with the Department of Pension & Pension Welfare, O.M. No.
4(8)-85, P & PW dated 13.1.1986 and as amended from time
to time. Later on, O.M. dated 13.1.1986 was amended by O.M.
No. 4/18/87-P & PW (D), dated 5.7.1989, which provided inter
c a!ia that the employees will have an option to retain Government
pay scale till their promotion or retirement (whichever is earlier)
or to come over to the service conditions of PSUs. A Circular
No. HQ/01-01/89-PEM/dated 11.12.1989 was issued by VSNL
with a proposal to absorb individual employees in regular service
D with effect from 1.1.1990 and the employee concerned had to
exercise his/her option of getting himself/herself absorbed in
regular service of VSNL and if the concerned employee did not
~ ~
opt for absorption, his or her name will be transferred to the
Surplus Staff Cell for deployment against possible vacancies in
other Government offices. The terms and conditions of
E permanent absorption of the OCS staff contained in separate
formats were supplied to the employees for their information
and necessary action.
6. The Government of India, Ministry of Personnel, Public
F Grievances and Pension (Department of Pension and Pension
Welfare) later on vide O.M. bearing No. 4/18/87-P & PW (D)
dated 7.2.1990 issued clarification in the following terms:-
(i)
that where the employees had opted to retain
pensionary benefits under the Cent~al Government
G
Rules, the emoluments drawn under the PSU shall
be treated as emoluments for the purpose of Rule
33 of the Central Civil Services (Pension) Rules,
1972 and accordingly any, emoluments drawn by the
~
transferred employee will be taken into account for
H
the purpose of calculation of average emoluments
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
883
KUMAR KAR & ORS. [LOKESHWAR SINGH PANTA, J.]
'"
as per clarification given in Note 10 below Rule 33 A
of the Central Civil Services (Pension) Rules, 1972.
(ii)
That such employees, who have specifically opted
for Central Government Pensionary benefits, will be
entitled to the benefit of payment of pension on the
B
emoluments drawn at the time of retirement from the
..,
PSU. It is not obligatory on the part of the transferred
employees who opted for pensionary benefits as
admissible under Central Government Rules to retain
Government pay scales, since both issues are not
related.
c
7. A fresh Staff Notice, bearing Ref. No. HQ-A/01-01/90
PE1 dated 21.2.1990, was issued by VSNL by which the
employees were called upon to exercise their option as to
whether they wanted to retain the pensionary benefits available
D
to them under the Government Rules or be governed by the
+
Rules of the PSU/Autonomous Body. The clarificatory
information was annexed to the said Notice which inter alia
provided that the option .to retain pensionary benefits under the
Central Government Rules will mean that the employees will
receiye pensionary benefits (Pension & Gratuity) on the basis
E
of emoluments/average emoluments drawn by the employee at
the time of retirement from VSNL and in accordance with the
Rules of the Central Government.
8. The Government of India vide Office Memorandum
dated 24.12.1992 conveyed to the VSNL the revision of the pay
F
structure of Executives (below Board level) and Non-Executives/
employees of VSNL recruited on or after 1989 to the Industrial
Dearness Pattern (IDP). This O.M. also provided that D.A.
admissible to Executives and Non-Executives would be at the
rates specified in the DPEs O.M. dated 22.1.1991 as amended G
from time to time. The letter in the 'Fitment Method' would show
that the basic pay plus Central D.A. was merged in the Basic
,...
Pay to be fixed in the appropriate stage of the IDA pattern scale
of pay and it was also clarified that the total emoluments would
be drawn by VSNL employees in the Government scale of pay
H
884
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A and D.A. pattern as on 2.1.1990 and, accordingly, the pay scales
of Non-Executive employees of VSNL were changed over to
IDA pay scale in May, 1993 with retrospective effect from
2.1.1990. The VSNL vide Office Order No. HQ-A/01-04/91-PE1
dated 3.9.1993 in reply to the clarifications sought for by its
B Centres/Units as to whether the pay drawn on JOA scales could
be treated as emoluments for the purpose of calculation of
pension in respect of employees who opted to retain pensionary
benefits available to them in terms of Government of India Rules
but have changed over to the JOA pattern of pay scales. It was
c clarified in a letter dated 3.9.1993 with reference to O.M. dated
5.7.1989 that in respect of those employees who have changed
over to IDA pattern of pay scales with effect from 2.1.1990,
emoluments for the purpose of calculation of pension and other
terminal benefits shall be the treated emoluments drawn by them
0 in JOA Scale at the time of retirement/resignation/death from
the Company. This Order stated that pension and other terminal
benefits in the above case shall be calculated in accordance
with the Rules of the CentraJ·Government in that behalf. The order
further clarified: "Admissible Dearness Relief shall also be
allowed on the pension so arrived at as per the existing Central
E Government Rules."
9. On 18.10.1995 VSNL vide its Reference No. HQ-A/0104/91-PE1, issued Office Order in terms of O.M. No. 4/18/87-P
& PW(D) dated 07.02.1990 of the Ministry of Personnel, Public
F Grievances and Pension (DP & PW) notifying mode of
settlement of pensioners' benefits in case of the employees who
opted for the Government pension on superannuation at the time
of absorption in the Company and thereafter VSNL by Office
Order dated 19th December, 1995 carried out modifications in
G Para 2(A) of the earlier office order dated 1 sth October, 1995.
The modified para reads as under:-
H
"A. Employees who retired prior to 1.1.1992 shall have
the following alternative for regulation of their pension;
(i)
To draw pension on eligible CDA pay with admissible
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
885
KUMAR KAR & ORS. [LOKESHWAR SINGH PANTA, J.]
,,.
Dearness Relief as per the existing Central A
Government rules.
(ii)
To draw pension last IDA pay (emoluments for
purposes of calculation of pension shall comprise of
Basic Pay, Personal Pay, if any) with admissible DA
notified by the Government for employees of Public
B
,.-:
Sector Undertakings."
10. The modification so recorded was a one-time exercise
for choosing the alternatives for settlement of pension and the
pensioners shall be required to submit their consent to the C
Regional Heads by 15.1.1996 on a prescribed format giving
choice of either of the alternatives. The Assistant General
Manager (P) sent a letter dated 19.12.1995 to Shri Nikhileshwar
Das, Secretary, VSNL Retired Employees Association, in regard
to the alternatives being provided to employees who retired prior D
to 1.1.1992 so as to bring to their notice to choose either CDA
pay with Central Dearness Relief or IDA pay with admissible
DA notified by the Government of India for the employees of
PSUs. The Ministry of Personnel, Public Grievances and
Pension (Department of Pension and Pensioners' Welfare) vide
its Office Memorandum No. 4/16/90-P & PW (D), clearly stated
E
that all those transferred employees on the establishment of
VSNL who received IDA pay scales prior to their retirement,
their emoluments for the purpose of pension shall be calculated
based on the emoluments drawn in the IDA pay scales, but,
they will not be entitled to the payment of DR on pension at
F
Central Government rates as the Department of Public
Enterprises have prescribed a separate DR table in respect of
such transferred employees and, therefore, DR on pension in
respect of VSNL retirees shall be regulated as per the orders
issued by the Department of Public Enterprises from time to
G
time.
11. It appears that the Director, Ministry of Personnel, Public
Grievances and Pension (Department of Pension and
Pensioners' Welfare) vide its O.M. No. 4/3/07-P & PW (D)
requested the Department of Communications to examine the
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886
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A grievances of the absorbees, in accordance with the Rules and
Instructions so that the absorbees who had opted for retention
of Central Govern.ment pensionary benefits on their absorption
on the establishment of VSNL could get their retrial benefits,
gratuity and commutation of pension and secondly to examine
B the anomalies highlighted by the Association of Retired
Employees of VSNL in consultation with the Department of
Public Enterprises.
12. The Department of Telecommunications in reply to the
representation dated 23.08.1998 of the Secretary of VSNL's
C Retired Employees Association, in their notification states:-
(i)
Pension in IDA pay scale with IDA relief:
Having changed over to IDA pattern of pay scales as
per the Government instructions, it is obvious that
D
employees who opted for the Government pension
should be paid in the applicable IDA pattern of pay
scales with IDA relief.
(ii)
Revision of Pension - Rule 70
E
It is clarified that it is not a revision of pension but
change of pension from CDA to IDA pattern 0f pay
scales as per the government decision. The revision
in IDA pattern of pay scales is due from 1.1.1997
and pension shall also be revised.
F
13. The respondents 1 to 8, who are the retired VSNL
G
H
employees, filed W.P. No. 6935 (W) of 1999 before the High
Court of Calcutta on 19th April, 1999 seeking inter alia the
following reliefs:
(a)
a writ in the nature of mandamus directing the VSNL
and Union of India to rescind or revoke the impugned
decisions and orders contained in the Office Orders/
Memoranda dated October 18., 1995 (Annexure P11 ); December 19, 1995 (Annexure P-12);
November 22, 1996 (Annexure P-14); May 5, 1998
(Annexure P-16); May 28, 1998 and November 12,
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
887
KUMAR KAR & ORS. [LOKESHWAR SINGH PANTA, J.]
1998 (Annexure P-17);
A
(b)
to pay to the petitioners their pensionary benefits on
the basis of the appellants decisions contained in
Memoranda and/or Office Orders dated January 13,
1986 (Annexure P-1 ); March 19, 1986 (Annexure'P2); October 30, 1986; July 5, 1989 (Annexure P-4);
B
December 11, 1989 (Annexure P - 6); February 07,
1990 (Annexure- PB); February 21, 1990 (Annexure
P-8); February 21, 1990 (Annexure P-9) and
September 3, 1993 (Annexure P-10).
(c)
to make payments of arrears of pensionary benefits c
after calculating average emoluments on the last pay
drawn in the revised pay scale of 1992 and other
subsequent revised pay scales with the dearness
relief calculated at the rate or rates prescribed by
Central Government for the Central Government D
emoluments
(d)
to make payments of the withheld amount of gratuity
and commuted value of pension; and to make all
such payments with compound interest at the E
minimum rate of 18% per annum from the date or
dates such amounts because due and payable till
(which should be forth with) the date or dates such
emoluments became due and payable till the date of
the same are actually paid.
F
14. In the writ petition, VSNL and the Union of India were
made parties-respondents. Affidavit in-opposition to the writ
petition has been filed by a senior officer of VSNL. The
respondents 1 to 8-retirees filed rejoinder and VSNL filed
supplementary affidavit-in-opposition to the rejoinder of the G
respondents 1 to 8-retirees. The learned Single Judge of the
High Court allowed the Writ Petition and granted the above said
reliefs.
15. The appellants then preferred an appeal before the
Division Bench of the High Court which dismissed the same by
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888
SUPREME COURT REPORTS
[2008] 5 S.C.R.
A judgment and order dated 24.11.2004 impugned by the
appellants in this appeal by way of special leave before us.
16. We have heard learned counsel for the parties and
perused the material on record. The appellants have challenged
B
the correctness and validity of the impugned judgment and order
of the High Court inter alia on the following grounds:-
(i)
The Hon'ble High Court failed to appreciate that in
service jurisprudence, Dearness Relief (DR) in a
particular pay scale complements the basic pay of
c
the pay scale and is designed to compensate the
cost of living while the basic pay/pension remains
steady so that an employee/retired employee is
protected against fluctuation in the cost of Living
Index;
D
(ii)
The Hon'ble High Court failed to appreciate that the
basic purpose of the DR is neutralization of the
increase in cost of living and it cannot exceed 100%
""'
neutralization. The impugned order would result in a
wrongful gain to the respondents 1 to 8- retirees far
E
in excess of 100% neutralization;
(iii) The Hon'ble Court failed to appreciate that the
original petitioners viz. respondent nos. 2, 3, 5, 6
and 7 herein were retired on CDA emoluments and
they were drawing pension on CDA pay scale with
F
DR as applicable to CDA pay scale and therefore,
they have no vested right to receive pension as per
IDA pay scale which would be much higher;
(iv)
The Hon'ble Court failed to appreciate that IDA pay
G
scales were introduced by VSNL pursuant to the
Government letter No. G-12013/1/91-0C dated 24th
December, 1992 with retrospective effect in respect
of employees who were on the role of company as
on 2nd January, 1990 and the same was implemented
for Non-Executive Employees in May, 1993 with
H
retrospective effect from 2nd January, 1990 and for
t
VIDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
889
KUMAR KAR & ORS. [LOKESHWAR SINGH PANTA, J.]
Executive Employees in December, 1993 with
A
retrospective effect from 2nd January, 1990.
Respondent Nos. 1, 4, 8 and other employees who
retired after May, 1993 and December, 1993 (when
the change over to the IDA scale was implemented
for Non-Executive Employees and Executive
B
Employees respectively) had in fact started drawing
pay on the IDA scales of pay and Dearness Allowance
(DA) as notified by the Government for employees
of Public Sector Undertakings. Therefore, there was
no question to respondents Nos. 1 to 8- retirees C
having claimed vested right to draw DR as per
existing Central Government Rules when they
accepted their pension not as per Central
Government Rules and CDA pay scales, but as per
IDA pay scales which were much higher in view of
the fact that IDA pay scales were arrived at by merger D
of CDA pay scales and DR;
(v)
The Hon'ble Court failed to appreciate that if it could
be stated that the respondent Nos. 1 to 8-retirees
have vested right to receive DR as per Central
E
Government Rules, then they did not have any vested
right to receive pension as per IDA pay scale;
(vi)
The Hon'ble Court failed to appreciate that the
respondents No. 1 to 8 - retirees were approbating
and reprobating at the same time in as much as
F
when it came to the payment of pension as per IDA
pay scale, although the same was introduced
retrospectively much after their retirement, the same
was acceptable to them whereas DR as notified by
the Government for employees of PSUs was not G
acceptable to them on the ground that it was taking
away their vested right to receive DA/DR;
(vii) The Hon'ble Court failed to appreciate that the
impugned order would result in adverse
discrimination to other employees of VSNL who
H
890
A
B
SUPREME COURT REPORTS
[2008] 5 S.C.R.
retired subsequently inasmuch as the subsequent
retirees would get pension at the IDA pay scale and
DR as notified by the Government for PSU
employees whereas the respondents Nos. 1 to 8 -
retirees would get that pension as per CDA scale
and at the same time they would get DR as per Central
Government Rules, which was also much larger then
the DR as notified by the Government for employees
of PSUs on IDA scale.
17. We may note at this stage that the respondents-retirees
C despite service of notice have chosen not to file any counter to
the special leave petition or the appeal before this Court. Having
heard Mr. K.J. Presswala learned counsel for the appellants and
Mr. K.V. Vishwanathan learned counsel for the respondentsretirees this Court on 17.01.2008 recorded the following order:-
D
E
"The Parties are permitted to file affidavit explaining
Clause 3 of the Circular dated 24.12.1992 of the
Government of India, Department of Telecommunications,
Sanchar Bhavan, 20 Ashok Road, New Delhi within the
period of one week and the counter affidavit a week
thereafter."
Mr. Vivek D. Dhule, Senior Manager (HR) of appellantVSNL, pursuant to the above said order filed an affidavit inter
alia states as under:-
F
''1. That in order to ascertain the meaning of Clause 3 of
the Circular dated 24th December, 1992 I saw my own
fixation of pay in the IDA Scale as on 2nd January, 1990.
2. In fixation of the said pay, my Basic Pay (CDA) on 2nd
January, 1990 of Rs.1260/- was taken and clubbed with
G
my CDA Dearness Allowance Relief of Rs.479/- making
the total existing CDA emoluments of Rs.1739/- (Rupees
one thousand seven hundred thirty nine only). From this
amount, an amount of Industrial Dearness Allowance and
fixed Dearness Allowance (FDA) of Rs.325.75 (Rupees
H
· three hundred twenty five and paise seventy five only) and
VJDESH SANCHAR NIGAM LTD. & ANR. v. AJIT
891
KUMAR KAR & ORS. [LOKESHWAR .SINGH PANTA, J.]
,.
Rs.101.60 (Rupees one hundred one and paise sixty only) A
'
respectively (i.e. Rs.427.35 (Rupees four hundred twenty
seven and paise thirty five only) was deducted and the
amount for fixation was arrived at Rs.1,311.65 (Rupees
one thousand three hundred eleven and paise sixty five
only) and I was fitted in the pay scale at Rs.1,321/- (Rupees
B
one thousand three hundred twenty one only) (Basic pay).
~
On this salary Industrial Dearness Allowance of Rs.325. 75
(Rupees three hundred twenty five and paise seventy five
only) plus Fixed Dearness Allowance of Rs.101.60
(Rupees one hundred one and paise sixty only) was added c
and my total pay became Rs.1,748.35 (Rupees one
thousand seven hundred forty eight and paise thirty five
only)
3. This shows how the said circular was implemented.
4. In the subsequent revision, i.e. in 1992 the basic pay D
and dearness allowance was merged, resulting in larger
basic pay and lower IDA Dearness Allowance while the
CDA Dearness Allowance remained much larger as the
CDA basic pay was much smaller."
E
18. Mr.