R N Shivaprakash vs Government Of Karnataka

Since common questions arise for consideration in these writ petitions, these matters are clubbed, heard together and disposed of this by common

order.

The petitioners are retired executives (Senior Officers) of the Karnataka Power Transmission Corporation Limited (hereinafter referred to as

‘KPTCL’ for short), which was earlier known as Karnataka Electricity Board (KEB). There is no dispute that consequent to the Karnataka

Electricity Reforms Act, 1999 (hereinafter referred to as ‘Reforms Act, 1999 for short), which came into effect from 21.08.1999, all employees of

the KEB became employees of KPTCL with continuity of service conditions, under Section 15 of the Reforms Act, 1999.

The grievances of the petitioners relate to the quantum of pension payable from the date of their retirement, and more specifically to those who

retired prior to 01.04.2012. It is the contention of the petitioners that the KPTCL has unilaterally fixed a cap on the maximum pension and family

pension, contrary to the provisions applicable to the petitioners who were the employees of KPTCL, by illegally applying a provision applicable to

pensioners of Government of Karnataka.

It is contended by the petitioners that KEB (later KPTCL) determined pay and pension of its employees through a separate pay-revision process.

Though the fundamental principles guiding determination of pay and pension of State Government employees and that of the KPTCL are similar,

however the KPTCL, has always included an additional component of pay in its pay structure to compensate the employees for certain risks,

complexity and other factors involved in their work. Therefore, the salary of the KPTCL employees have always been higher than that of the State

Government employees. It follows naturally, that the pension, which is based on the last drawn salary, has always been higher than that of the State

Government employees.

In this regard, it was pointed out that one of the pre-conditions and statutory obligation under Section 15 of the Reforms Act, 1999, is that the

transfer of personnel shall not be in any way less favourable to the existing terms of employment which were enjoyed under the erstwhile KEB.

Regulations 219 of Karnataka Electricity Board Employees’ Service Regulations (hereinafter referred to as ‘Regulations, 219’ for short)

provides that the amount of service gratuity/pension and death-cum-retirement gratuity that may be granted is determined by the length of the service

as set forth in Regulations 219. The State of Karnataka appoints a ‘Pay Commission’ to study the need of revision of salary and pension. The

Commission, after studying the inflation and such other changes in the society, would submit a recommendatory report. The State of Karnataka would

revise the pay and pension by amending the Karnataka Civil Services (Revised Pay) Rules, (hereinafter referred to as ‘KCS’ (RP) Rules). The

petitioners contend that prior to 1999, the State Government followed the principle of fixing the maximum pension payable to its retired employees at

the rate of “50% or above†of the last drawn emoluments of the retired employee. However, after revision of pay in the year 2006 and 2012, the

maximum ceiling on the pension was set at exactly 50% of the last drawn emoluments of the retired employee.

It is contended that the KPTCL, has blindly followed the State Government and proceeded to fix a cap of 50% of the last drawn emoluments of the

retired employees of KPTCL. The learned counsels appearing for the petitioners therefore contend in unison that the KPTCL, by adopting the

maximum ceiling limit as made applicable to State Government employees, has violated the provisions of law applicable to the petitioners who are

governed by the Reforms Act, 1999 and KEB Service Regulations. To drive home the injustice caused to the petitioners, the following facts are

submitted: that in the year 1999, if the last drawn emoluments of a State Government employee was Rs.18,720/-, the maximum pension payable was

Rs.11,610; in 2007, when the last drawn emoluments was Rs.39,900/-, the pension was fixed at Rs.19,950/-; in 2012, when the last drawn emoluments

was Rs.79,800/-, the pension was fixed at Rs.39,900/-. However, in the case of an employee of KPTCL, in 1999, when the last drawn emoluments

was Rs.23,150/-, the pension was fixed at Rs.11,610/-; in 2007, when the last drawn emoluments was Rs.44,691/-, the pension was fixed at

Rs.19,950/-; in 2012, when the last drawn emoluments was Rs.96,700/-, the pension was fixed at Rs.39,900/-. When compared to the last drawn

emoluments, a retired employee of the KPTCL, subsequent to 1999, was paid pension at less than 50%, contrary to the provisions of law.

In the light of the above, the petitioners pray that the Board orders dated 31.08.2007, 10.07.2012, 14.09.2016 and 09.03.2018, passed by the

respondent KPTCL, be and hereby quashed. It is also prayed that the respondent KPTCL be directed to fix the pension of the petitioners by removing

the ceiling on the pension and fix the pension at the rate of 50% at the last drawn emoluments, strictly in terms of Section 15(2) of the Reforms Act,

1999. The petitioners also seek arrears of pension being the difference of what was paid and what was required to be paid by calculating the pension

at 50% of the petitioner’s last drawn emoluments, along with interest at the rate of 12% per annum.

Sri. S. S. Naganand, learned Senior Counsel appearing for the respondent KPTCL, at the outset submits that the writ petitions are required to be

dismissed on the ground of delay and laches. It is submitted that most of the petitioners have retired after 1999 and before 2012. The petitioners,

especially petitioner No.2, Sri. C.Sreenivasan, was a financial advisor to KPTCL and BESCOM and was part of the decision making process when

the respondents adopted the policy of the State Government and fixed the cap on the pension, as provided by the State Government. It is pointed out

that for the first time, a legal notice was issued by the petitioners on 17.06.2017 claiming higher pension from the date of retirement on the ground that

the petitioners pension fixed as per Board order dated 10.07.2012, in a maximum of Rs.39,900/- is not applicable to the petitioners. The learned Senior

Counsel, by relying on certain decisions of the Apex Court, would submit that delay of 5 years in filing the writ petitions is fatal to their case and

therefore seeks dismissal of the writ petitions on that ground.

The learned Senior Counsel further submits that Regulation 219, framed by the Board of KPTCL determining the pensionary benefits of employees

was amended by Board order dated 10.07.2012. Similarly, vide a Board order dated 09.03.2018, Regulations 219 was again amended following the

Government Orders issued by the State Government. It is further submitted that the petitioners have not challenged the amendment to Regulations

The Regulations bind the petitioners and any relief sought in variance with the Regulations would amount to a Mandamus being issued contrary to

law. In this regard, the learned Senior Counsel places reliance on State of West Bengal Vs. Subhas Kumar Chatterjee and Others, reported in (2010)

11 SCC 694 and State of Punjab and Others Vs. Gurdev Singh and Others, reported in AIR 1992 SC 111.

The learned Senior Counsel further contends that the KPTCL followed the pay revision of the State Government. As and when the State

Government appointed pay commissions and on the basis of the report of the Commission, revised the pay and allowances of the State Government

employees, the Board of KPTCL would adopt the revision made by the State Government. It is therefore submitted that no fault could be found in the

action of KPTCL, since the revisions have been adopted on the basis of the recommendation of the pay revision commissions. It is reiterated that the

maximum pension stipulated by the Government has been strictly applied and implemented by KPTCL right from the time it was formed. It is further

stated that insofar as the ‘workmen’ of KPTCL are concerned, following the provisions of Section 12(3) of the Industrial Disputes Act, 1947,

(hereinafter referred to as the ‘I.D. Act’ for short) the KPTCL allowed collective bargaining employee benefits and the settlement arrived at

was notified and the same are binding settlements since they are arrived at in terms of the provisions of the I.D. Act. The learned Senior Counsel

hastens to add that the Officers/Executives also participated in the settlements and therefore the same was binding on the Officers too.

The learned Counsel further submits that as on date, the pension being received by some of the petitioners would exceed Rs.70,000/- p.m., which

is a very handsome and liberal pension for leading a comfortable retired life. It was impressed upon this Court that going by various obligations and

huge financial outlay in the power sector and the financial burden it places on the exchequer and the consumers of electricity, it is submitted that public

interest would outweigh private interest of the petitioners especially when the KPTCL has uniformly adopted the maximum pension determined by

Government from time to time.

Insofar as the discriminatory treatment alleged by the petitioners, inasmuch as fixing an artificial date to give certain benefits to serving employees

and employees who retired subsequent to certain dates specified in the Board orders, while denying the same to employees who retired prior to the

said dates, the learned Senior Counsel draws the attention of this Court to orders passed by a co-ordinate Division Bench in W.A.Nos.15351-

15352/2011 and connected matters which were disposed of on 08.11.2012.

Heard Smt.Shwetha Ravishankar, learned Counsel, Sri Mahesh R.Uppin, and Sri Mukkannappa, learned Counsels appearing for the petitioners, Sri

C.Sreenivasan, petitioner No.2 - party-in-person in W.P.Nos.51276-51278/2017, Sri S.S.Naganand, learned Senior Counsel for KPTCL and learned

AGA for State Government.

On the question of delay and laches, it is to be observed that here the cause of action is a continuous one. Therefore, at best, this Court may deny

payment of interest till the date of filing the writ petitions, if this Court were to allow the writ petitions.

Two relevant provisions which are necessary for deciding the lis brought before this Court are Section 15 of the Reforms Act, 1999 and

Regulations 219. Section 15 of the Reforms Act, 1999 reads as follows:

“15. Provisions relating to personnel.- (1) The State Government may provide in a transfer scheme framed under section 14 for the transfer of the

personnel from the Board to the KPTC or to the generating company or companies or from the KPTC to further transferee, as the case may be, on

the vesting of properties, rights and liabilities in the KPTC or further transferee as provided under Section 14 and such transfers shall be effective in

the same manner as in the case of transfers under section 14.

Explanation:- For the purposes of this section and section 16, the term “personnel†shall mean all persons who, on the effective date of the

transfer, are the employees of the Board or the KPTC, as the case may be.

(2) Upon such transfer scheme, the personnel shall hold office or service under the KPTC or generating company or companies or the transferee

company on terms and conditions that may be determined, in accordance with the transfer scheme:

Provided that such terms and conditions on the transfer shall not in any way be less favourable than those which would have been applicable to them

before the relevant transfer scheme and the continuity of service of the personnel shall be maintained:

(emphasis supplied)

Provided further that any such scheme under sub-sections (1) and (2) shall be consistent with the tripartite agreements entered into between the State

Government, Board or KPTC as the case may be and the employees.

(3) Notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law as is applicable and except for the provisions made in this

Act, the transfer of the employment of the personnel referred to in sub- section (1) shall not entitle such employees to any compensation or damages

under this Act, or any other Central or State law or under the general law, save as provided in the transfer scheme.â€​

Regulations 219 reads as follows:

The amount of Compensation / Invalid / Superannuation pension (including retiring pension) or Gratuity and death- cum-retirement gratuity

admissible will be as noted below:-

Amount of Pension

a) The maximum qualifying service of earning pension shall be 66 completed six monthly periods, viz.:-

(i) Compensation Pension

(ii) Invalid Pension

(iii) Superannuation Pension

(iv) Retiring Pension

(v) Compassionate Allowance

It shall be calculated at 50% of the emoluments drawn at the time of retirement/death subject to a minimum of Rs.390/- and maximum of Rs.3450/-

per month. The amount of pension so arrived at will be related to the maximum qualifying service of 66 completed six monthly periods. For an

employee who at the time of his retirement, renders a qualifying service of 20 completed six monthly periods or more but less than 66 completed six

monthly periods; the amount of pension shall be such proportion of the maximum admissible pension, as the qualifying service rendered bears to the

maximum qualifying service of 66 completed six monthly periods. In calculating the length of qualifying service for this purpose, a fraction of a year

equal to three months and above shall be treated as a completed six monthly period and reckoned as qualifying service. (Emphasis supplied)

On a plain reading of Regulations 219, it is evident that the amount of pension shall be calculated at 50% of the emoluments drawn at the time of

retirement/death subject to a minimum of Rs.390 and maximum of Rs.3,450 p.m. The proviso to Sub-section (2) of Section 15 of Reforms Act, 1999,

provides that such terms and conditions on the transfer shall not in any way be less favourable than those which would have been applicable to them

before the relevant transfer scheme and the continuity of service of the personnel shall be maintained. Admittedly, under the previous regime, all

retired employees of the erstwhile KEB were entitled for pension at the rate of ‘50% or above’ since the State Government followed the said

policy and the same was made applicable to employees of KEB. The said Regulation was amended by the Board orders dated 10.07.2012 and

09.03.2018. Similarly as and when the State Government revised the pay and allowances by issuing notifications, the Board of KPTCL has followed

suit by adopting the pay revision made by the State Government and amended Regulations 219, by issuing the Board orders.

The contention of the KPTCL is that it has adopted the pay revisions made by the State Government and therefore the action cannot be found

fault with. On the other hand, it is the contention of the petitioners that the last drawn emoluments of the KPTCL employees have always been higher

when compared to the last drawn emoluments of State Government employees. On going through the comparative statement provided by the

petitioners, it is evident that the State Government has always maintained a policy fixing 50% of the last drawn emoluments as pension payable to its

employees. When in the year 1999, if the last drawn emoluments of a State Government employee was Rs.18,720/-, the maximum pension payable

was Rs.11,610; in 2007, when the last drawn emoluments was Rs.39,900/-, the pension was fixed at Rs.19,950/-; in 2012, when the last drawn

emoluments was Rs.79,800/-, the pension was fixed at Rs.39,900/-. A closer look at the said figures would reveal that the State Government

maintained fixation of pension at the rate of 50% of the last drawn emoluments. However, in the case of an employee of KPTCL, in 1999, when the

last drawn emoluments was Rs.23,150/-, the pension was fixed at Rs.11,610/-; in 2007, when the last drawn emoluments was Rs.44,691/-, the pension

was fixed at Rs.19,950/-; in 2012, when the last drawn emoluments was Rs.96,700/-, the pension was fixed at Rs.39,900/-. When compared to the last

drawn emoluments, a retired employee of the KPTCL, subsequent to 1999, was paid pension at less than 50%. This is the main grievance of the

petitioners.

The contention of the petitioners therefore is that adopting the pay revision and fixing of cap on the maximum pension payable is illogical. Though

the State Government notifications provide for a maximum ceiling limit, it would still provide for 50% of the last drawn emoluments. The Board of

KPTCL, by adopting the policy of the State Government, seems to have reduced the pension payable to the retired KPTCL employees, to less than

50% of the last drawn emoluments.

The claim of the petitioners seems to be justified. What the petitioners are seeking is that even if KPTCL were to fix a maximum cap on the

pension payable, it shall be fixed at 50% of the last drawn emoluments of KPTCL employees. The KPTCL, while adopting the pay revisions, should

have done so mutatis mutandis, with necessary changes. The most important aspect noticeable in the policy of the State Government is retaining the

maximum cap at 50% of the pay and allowances. The KPTCL, while adopting the said policy was required to notice that the emoluments of its

employees were higher than that of the State Government employees. Therefore, the adoption should have been with modification along with relevant

changes, viz., retaining the maximum cap at 50% of the last drawn emoluments of its employees and not that of State Government employees. By

adopting the cap fixed by the State Government to its employees, the KPTCL has caused injustice to the petitioners inasmuch as reducing the pension

payable to the petitioners to less than 50% of the last drawn emoluments. Therefore, the impugned Board resolutions are ex-facie unsustainable.

The contention of the learned Senior Counsel appearing for KPTCL that the provisions of I.D. Act have been fulfilled in allowing collective

bargaining and on the settlements being arrived, the pay and allowances have been made applicable in terms of the settlements and the same are

applicable to the petitioners also, cannot be countenanced. The petitioners were, admittedly Senior Officers/Executives and they do not fall under the

definition ‘workmen’ as provided in the I.D. Act and therefore such settlements may not be binding on the petitioners. For the same reason, the

decision of the co-ordinate Division Bench in W.A.Nos.15351-15352/2011 may not be applicable to the facts of the present case. That was a case

where the settlement made by the employees Union was held to be binding on all employees of KPTCL upto the post of Assistant Engineers (non-

graduates and Senior Personal Assistants), with a rider that the inclusion of Assistant Engineers and Senior Personal Assistants shall not be construed

as falling within the definition of ‘workmen’ and the purpose of inclusion was only for granting benefits in terms of the settlement.

The next question that arises for consideration is the artificial cut-off dates provided by the Board in each of the impugned Board orders, making

the revised pension applicable only to those employees/Executives who have either retired or died after the cut-off date. For instance, in the 2007

Board order, the orders are made applicable to employees retired/retiring on or after 01.04.2003. The petitioners contend that such an action is

arbitrary, violative of Article 14 of the Constitution and therefore, the same needs to be struck down.

This Court had an occasion to deal with similar questions raised in the case of Dr.K.Gopala and Others Vs. State Of Karnataka and Others,

reported in 2019 (3) KLJ 783, wherein the decision of the State Government in making the pay revision/pension revision applicable to employees who

retired subsequent to 01.01.2006 was the issue raised. Having discussed various judgments of the Hon’ble Supreme Court, starting from

D.S.Nakara and Others Vs. Union of India, reported in AIR 1983 SC 13 0to State of Rajasthan and Others Vs. Mahendra Nath Sharma, reported in

2015 (6) SCJ 705 and in particular Krishena Kumar Vs. Union of India and Others, reported in AIR 1990 SC 178 2and V.Kasturi Vs. Managing

Director, State Bank of India, Bombay and Another, reported in AIR 1999 SC 81, this Court held that in all the decisions of the Hon’ble Apex

Court relied upon by the State, where it was held that State can fix a cut-off date, it was with a rider that the same could be done, if permitted under

law and if could be demonstrated to be reasonable and rational in the light of Article 14 of the Constitution. It was further held that the State is

required to demonstrate that the case of the petitioners falls under category-II as enunciated by Their Lordships in V.Kasturi Vs. Managing Director

(supra). The meaning of the words ‘permissible in law’ in this context means the inherently differentiable separate classification in law,

projected as category-II in V.Kasturi (supra).

Very recently, the Hon’ble Apex Court in the case of All Manipur Pensioners Association Vs. The State of Manipur and Others, in Civil

Appeal No.10857 of 2016, decided on 11.07.2019, has held that there is no valid justification to create two classes viz., one who retired pre-1996 and

another who retired post-1996, for the purpose of grant of revised pension. It was held that such a classification has no nexus if the object and purpose

of grant of benefit of revised pension. All the pensioners form one class who are entitled to pension as per the pension rules. Article 14 of the

Constitution of India ensures to all equality before law and equal protection of laws. A valid classification is truly a valid discrimination. It is true that

Article 16 of the Constitution permits a valid classification. However, classification must be based on a just objective. The result to be achieved by the

just objective presupposes the choice of some for differential consideration/treatment over others. A classification to be valid must necessarily satisfy

two tests. Firstly, the distinguishing rationale has to be based on a just objective and secondly, the choice of differentiating one set of persons from

another, must have a reasonable nexus to the objective sought to be achieved. The test for a valid classification may be summarised as a distinction

based on a classification founded on an intelligible differentia, which has a rational relationship with the object sought to be achieved. It was therefore

held that whenever a cut-off date is fixed to categorise one set of pensioners for favourable consideration over others, the twin test for valid

classification or valid discrimination thereof must necessarily be satisfied. Since persons who retired prior to 1996 were not given the benefit as was

given to persons who retired subsequent to 1996, the Apex Court held that the classification in question has no reasonable nexus to the objective

sought to be achieved while revising the pension. The decision in All Manipur Pensioners Association (supra) applies on all fours to the present case.

Therefore, there is no hesitation to hold that the artificial cut-off dates provided in the impugned Board orders do not stand the test of law.

Having arrived at a conclusion that the petitioners are entitled for the relief prayed for, the next question is regarding payment of interest. As

noticed in the beginning, since the petitioners have approached this Court in the year 2016-2017, this Court is of the considered opinion that the

KPTCL shall be liable to pay interest on arrears at the rate of 6% p.a. from 01.01.2017.

In the light of the above, this Court proceeds to pass the following:

ORDER

i) The writ petitions are allowed.

ii) The impugned Board orders dated 31.08.2007, 10.07.2012, 14.09.2016 and 09.03.2018, to the extent of fixing maximum cap on pension and family

pension payable at less than 50% of the last drawn emoluments of the employees of KPTCL, stand quashed and set aside.

iii) The respondent-KPTCL is directed to re-fix the pension and family pension payable to the retired employees of KPTCL at the rate of 50% of the

last drawn emoluments, including mergeable Dearness Allowance.

iv) The petitioners are entitled for payment of arrears on the difference of pension already paid and what was required to be paid at the rate of 50%

of the last drawn emoluments including mergeable Dearness Allowance, along with interest. However, the interest at the rate of 6% p.a. shall be

calculated from 01.01.2017 and paid within a period of six months from today, failing which, on expiry of six months, the same shall carry interest at

12% p.a.