UNION OF INDIA versus P.N. MENON AND ORS.

Citation: [1994] 3 S.C.R. 44 · Decided: 17-03-1994 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
UNION OF INDIA 
v. 
P.N. MENON AND ORS. 
MARCH 17, 1994 
B 
[AM. AHMADI AND N.P. SINGH, JJ.J 
Constitution of India 195(}-Article, 14-Central Civil Services (Pen-
sion) Rules, 1972, Rule 33 read with Officer Memorandum No. F-19(4)-
C E. V./79 dated May 25, 1979-Treating portion of deamess allowance as 
'deamess pay' for computation of pension and gratuity-Fixation of September 
30, 1977 as cut-off date-Held, not arbitmy. 
D 
E 
Article 226--New scheme reg. retiral benefits-Cut off date-llldicial 
Review-Scope of-Explained. 
Service Law-C.C.S. (Pension) Rules, 1972-Rule 33-Retiral 
benefits-Option given to employees retiring after September 30, 1977 but not 
later than April 30, 1979 to get pension and gratuity calculated by excluding 
dearness pay as indicated in 1nen1oranduni-He!d, option given was not an 
exercise to create a class within a class-Constitution of India, Article 14. 
Scheme forencashment of earned leave-Family pension scheme made 
non-contributory-Fixation of cut-off dates for eligibility-Held, not ar-
bitrary-Constitution of India, Article 14. 
F 
Vide an Ofiice Memorandnm issued by the Government of India on 
May 25, 1979, in respect of government servants who retired on or after 
September 30, 1977 the amount of dearness allowance as indicated in para 
2 of the said OM was to be treated as dearness pay for calculating pension 
and gratuity in terms of Rule 33 of the Central Civil Services (Pension) 
Rules, 1972. An option was given to those retiring on or after September 
G 30, 1977 but not later than April 30, 1979 of getting pension and gratuity 
calculated either by excluding the element of dearness pay or by including 
it. Likewise a cnt off date was fixed for the coming into force of the new 
scheme of encashment of a maximum of six months' earned leave. The 
Family Pension Scheme was made non-contributory with effect from Sep-
H !ember 22, 1977. 
44 
~-
U.0.1. 1·. P.N. MENON 
45 
Tite writ petition of the respondents \\'ho retired from sen'ice before 
A 
September 30, 1977 contending that the benefit of the OM should have 
been extended to all government servants irrespective of their date of 
superannuation was allowed by a single judge of the High Court on the 
basis of the judgment of the Supreme Court in D.S. Nakara and others v. 
Union of India, (1983) 2 SCR 165. A Division Bench dismissed the appeal B 
of the Union of India. 
In the appeal before this Court the Union of India contended that 
based on the recommendations of the Third Pay Commission, September 
30, 1977 was fixed as a cut off date with reference to the average cost of 
living index at 272 which fell on that date. As regards the leave encashment C 
scheme and the Family Pension Scheme being made non-contributory, it 
was pointed out that since the Respondents were not in service on the date 
these schemes became operational they were not eligible for the same. 
Allowing the appeal, this Court 
·HELD : 1.1. Fixing 30th September, 1977 as the cut-of date cannot 
be held to be arbitrary. The decision to merge a part of the dearness 
allowance with pay, when the price index level was at 272, appears to have 
been taken on the basis of the recommendation of the Third Pay Com-
mision. As such it cannot be held that the cut off date has been selected 
in an arbitrary manner. (52-F-G) 
D.S. Nakara and others v. Union of India, [1983) 2 SCR 165, distin-
guished. 
D 
E 
F 
Action Conunittee South Eastern Raillvay Pensioners v. Union of India, 
(1991) Supp. 2 SCC 544; KJishena Kumar v. Union of India, [1990) 4 SCC 
207; Indian Ex-Services League v. Union of India, (1991) 1 SCR 158; State 
Government Pensioners' Association v. State of Andhra Pradesh, (1986) 3 
SCR 383 and All India Reserve Bank Retired Officers Association v. Union 
of India, (1992) Supp. 1 SCC 664, referred to. 
G 
1.2. Any revised scheme in respect of post-retirement benefits, if 
implemented with a cut-off date, which can be helJ to be reasonable and 
rational in the light of Article 14 of the Constitution is valid. It shall not 
amount to 'picking out a date from the hat'. (50-E] 
H 
A 
B 
46 
SUPREME COURT REPORTS 
[1994] 3 S.C.R. 
D.R. Nim v. Union of India, AIR (1967) SC 1301, referred to. 
2. The option given to employees to get their pension and gratuity by 
excluding the element of dearness pay as indicated in the aforesaid Office 
Memorandum or to get it included is not an exercise to create a class 
within class. (55-F) 
3. Encashment of leave was a n
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