STATE OF ANDHRA PRADESH AND ANR. versus A.P. PENSIONERS ASSOCIATION AND ORS.

Citation: [2005] SUPP. 5 S.C.R. 223 · Decided: 11-11-2005 · Supreme Court of India · Bench: B.P. SINGH · Disposal: Appeal(s) allowed

Judgment (excerpt)

STA TE OF ANDHRA PRADESH AND ANR. 
A 
v. 
A.P. PENSIONERS ASSOCIATION AND ORS. 
NOVEMBER 11, 2005 
[B.P. SINGH AND S.B. SINHA, JJ.] 
B 
Constitution of India, 195~Article 309 provis~A.P. Revised Scales 
of Pay Rules, 1999-Rules 3, 4, 5 and 9-A.P. Civil Pension Commutation 
Rules, 1944-Rule 3(d) and (e)-Revision in pay scale-Notionally from 
1. 7.1998 with financial benefits from 1. 4.1999-Government Order for payment C 
of pension and terminal benefits-Employees retiring between 1.7.1998 to 
1.4.1999 claiming pensiona1y benefits including commutation of pension, 
gratuity and leave encashment-Held: Legal fiction is to be construed in 
such a manner so as to enable a person for whose benefit such legal fiction 
has been created, to obtain all consequences flowing therefrom-Employees D 
became entitled to enhanced pay from 1. 7.1998 but only notionally for the 
purpose of calculation of such recurring liability of the State which became 
payable with effect from 1.4.1999-State did not intend to grant any benefit 
towards gratuity in relation. to those employees who retired in between 
1.7.1998 and 31.3.1999-0rder of Tribuna/.holding employees eligible for E 
commutation of portion of revised pension upheld and that of High Court 
granting gratuity set aside. 
Appellant-State constituted a Pay Revision Committee (PRC) which 
recommended revised scale of pay notionally from 1. 7.1998 with financial 
benefits from 1.4.1999 for its employees:Thereafter State issued Government F 
order GO(P) No.114 which specified the procedure for implementing the 
recommendations of PRC on pension and other terminal benefits. The 
employees who retired between 1.7.1988 and 1.4.1999 filed application for 
payment of pensionary benefits including commutation of pension, gratuity 
and leave encashment in terms of the Government Order. Tribunal held that 
the employees were not entitled to gratuity and leave encashment based on G 
their notional pay fixed in revised scale of pay; and also enhanced gratuity 
and percentage of commuted pension but were only eligible for commutation 
of portion of revised pension in terms of Rule 3(d) and (e) of A.P. Civil Pension 
Commutation Rules, 1944. Both State and employees filed Writ Petition. High 
223 
H 
224 
SUPREME COURT REPORTS (2005J SUPP. 5 S.C.R. 
A Court dismissed the Writ Petition filed by the State but allowed the writ 
petition filed by the employees. Hence the present appeal. 
Appellant-State contended that paragraph 9 of GO No. 114 did not confer 
a legal right on the employees but merely provided background facts; that it 
was clear from Rule 4 of the GO that no monetary benefit prior to 1.4.1999 
B accrued or was to be paid; that the terminal benefits did not include gratuity; 
and that financial implication is the relevant criteria. 
Respondent - association of pensioners contended that the Rules read 
as a whole clearly point out that the same had come into force with effect 
from 1.7.1998 wherefor a legal fiction has been created and in that view, 
C although the monetary benefit was to be paid with effect from 1.4.1999, the 
entitlement to the scale of pay for all purposes including that of computation 
of the amount of gratuify as also commutation of pension, cannot be denied. 
D 
E 
Allowing the appeals, the Court 
HELD I.I. The provisions of the Notification are to be read as a whole. 
The intention of the State in issuing the Notification although may have to be 
gathered in the backdrop of the facts stated in the preamble portion thereof, 
indisputably the legal right of the respondent- employees, if any, must be 
found out from the Notification portion itself. (233-C) 
1.2. The first part of GO No. 114 which is in the nature of preamble or 
statement of background facts cannot be treated to be a part of the Rules 
framed and notified in terms of proviso to Article 309 of the Constitution. 
Paragraph 16 of GO, in no uncertain terms states that separate orders were 
being issued in regard to.recommendations of PRC on pension and other 
F terminal benefits. Only because clauses 9 and t6 of GO speak ofpensionary 
benefits and/ or other terminal benefits, the same, would not mean that they 
embraced within their fold all benefits which under different provisions of a 
statute or even different statutes could come within the preview thereof. The 
Notification read as a whole does not suggest that the State thereby intended 
G to pay before 1.4.1999 retirement gratuity reckoned on the

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