STATE OF PUNJAB AND ORS. versus AMAR NATH GOYAL AND ORS.

Citation: [2005] SUPP. 2 S.C.R. 549 · Decided: 11-08-2005 · Supreme Court of India · Bench: Y.K. SABHARWAL · Disposal: Dismissed

Judgment (excerpt)

ST A TE OF PUNJAB AND ORS. 
A 
V. 
AMAR NATH GOYAL AND ORS. 
AUGUST 11, 2005 
B 
[Y.K. SABHARWAL AND B.N. SRIKRISHNA, JJ.] 
Constitution of India, I 950-Article 14--Central Government, by Official 
Memoranda, directing that dearness allowance as linked to the average All 
India Consumer Index would be treated as dearness pay for reckoning 
emoluments for the purpose of death-cum-retirement gratuity for employees 
C 
who retired or died on or after I.4.I995-State Government extending the 
benefit for its employees and adopting the same cut-off date as fixed by the 
Central Government-Employees challenging the orders of the Governments 
on the ground that the cut-off date fixed is discriminatory and violative of 
Article I 4 of the Constitution of India-Correctness of-Held, the action of D 
the Governments fixing cut-off date for the benefit keeping in view financial 
and economic implications cannot be treated att discriminatory or irrational 
and violative of Article 14. 
On the recommendations of the Fifth Central Pay Commission in its 
Interim Report, the Central Government, by Official Memoranda dated 
E 
14.7.1995, directed that dearness allowance as linked to the average All 
India Consumer Index would be treated as dearness pay for reckoning 
emoluments for the purpose of death-cum-retirement gratuity under the 
Central Civil Services (Pension). Rules, 1972. The benefit was made 
available to the employees, who retired or died on or after 1.4.1995. It F 
was directed that the ceiling on gratuity would stand enhanced to Rs.2.50 
lacs. 
G 
Following the Official Memoranda dated 14.7.1995, the State 
Government issued orders dated 13.12.1996 notifying that dearness 
allowance as admissible to the employees as on 1.7.1993 (linked to All 
India Consumer Price level I201.66) would be treated as dearness pay for 
reckoning emoluments for the purpose of death-cum-retirement gratuity 
under the State Civil Services Rules and made available to the State 
Government employees who retired or died on or after 1.4.1995. The 
order also notified that the ceiling of maximum amount of death-cum-
H 
549 
A 
B 
c 
D 
550 
SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R. 
retirement gratuity was to be raised from Rs. 1 lac to Rs. 2.50 lacs with 
effect from 1.4.1995. 
A large number of Central Government and State Government 
employees, who had retired prior to 1.4.1995, applied for getting the 
additional benefits ofincreased quantum of death-cum-retirement gratuity 
up to the increased limit of Rs. 2.5 lacs. their claims were rejected in some 
cases and in other cases, the CAT and High Courts took the view that the 
employees who had retired before 31.3.1995 were also eligible for the 
benefits. Special Leave Petitions were filed by afft:cted employees, Central 
and State Governments before this Court. Certain cases, which were 
pending before the High Court, were transferred to this Court. 
The employees contended that the decision of the Central 
Government/State Governments to make available the increased quantum 
of gratuity (with revised ceiling) only to employees, who retired or died 
on of after 1.4.1995, is discriminatory and arbitrary and therefore violative 
of Article 14 of the Constitution of India; that all retirees/dead persons 
form a homogenous class and that discrimination or distinction between 
retirees/dead persons prior to 1.4.1995 and those who retired or died on 
or after 1.4.1995 had no rational basis; 
E 
The Central Government and State Governments contended that 
F 
due to consequential financial burden, payments were restricted to the 
employees who had died or retired on or after 1.4.1995. 
Disposing of the appeals and the transfer cases, the Court 
HELD : Financial and economic implications are very relevant and 
germane for any policy decision touching the administration of the 
Government, at the Centre or at State level.1.4.1995 was the date suggested 
by the Fifth Central Pay Commission in its Interim Report. The Central 
Government took a conscious stand that the consequential financial burden 
G 
would be unbearable. It, therefore, chose to taper down the financial 
burden by making the benefits available only from 1.4.1995. It is trite 
that, the final recommendations of the Pay Commission were not ipso 
facto binding on the Government, as the Government had to accept and 
implement the recommendations of the Pay Commission consistent with 
H 
its financial position. This is precisely what the G.o

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