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What is pension and why to give pension

Supreme Court  D.S.Nakara v. Union of India, (1983) 2 SCR 165 observed as follows :

What is pension, and what are the goals of pension, and what public interest or purpose if any, it seeks to serve; the highest Court proceeded to answer the same inter alia that pension is not only a compensation for service rendered in the past but it has broader significance in that it is a measure of socio-economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to aging process and therefore, one is required to fall back on savings. Article 41 obligates the State within the limits of its economic capacity and development to make effective provisions amongst others for assistance in case of old age, sickness and disablement. Pension provisions are to some extent the legislative response to the Constitutional expectation.

“Pension to civil employees of the Government and the defence personnel as. administered in India appears to be a compensation for service rendered in the past………..

Summing-up it can be said with confidence that pension is not only compensation for loyal service rendered in the past, but pension also has a broader significance, in that it is a measure of socio-economic justice which inheres economic security in the fall of life when physical and mental prowess is ebbing corresponding to aging process and, therefore, one is required to fall back on savings. One such saving in kind is when you gave your best in the hey-day of life to your employer, in days of invalidity, economic security by way of periodical payment is assured. The term has been judicially defined as a stated allowance or stipend made in consideration of past service or a surrender of rights or emoluments to one retired from service. Thus the pension payable to a Government employee is earned by rendering long and efficient service and therefore can be said to be a deferred portion of the compensation or for service rendered. In one sentence one can say that the most practical raison d’etre for pension is the inability to provide for oneself due to old age. One may live and avoid unemployment but not senility and penury if there is nothing to fall back upon.

The discernible purpose thus underlying pension scheme or a statute introducing the pension scheme must inform interpretative process and accordingly it should receive a liberal construction and the courts may not so interpret such statute as to render them inane (see American Jurisprudence 2nd 881).”

What is pension

Is it a right to property or a bounty? The question came up for consideration before th P&H High Court in Bhagwant Singh Vs. Union of India, . It was held that such a right constitutes ‘property’ and any interference will be a breach of Article 31(1) of the Constitution. The decision given by the learned single Judge was approved by the Letters Patent Bench in Union of India v. Bhagwant Singh reported as ILR (1965) P&H 1. The Letters Patent Bench held that the pension granted to a public servant on his retirement is ‘property’ within the meaning of Article 31(1) of Constitution and he could not be deprived of the same,save by authority of law.

This matter again came up for hearing before a Full Bench of this Court in K.R. Erry v. State of Punjab reported as ILR (1967) P&H 278. The majority quoted with approval the principle laid down in the earlier two decisions of the Court referred to above and held that the pension is not to be treated as a bounty payable on the sweet-will and pleasure of the Government and that the right of superannuation pension, including its amount, is a valuable right vesting in a Government servant. The Full Bench decision was approved by their Lordships of the Supreme Court in Deokinandan Prasad Vs. The State of Bihar and Others, , with the following observations:

We are of the opinion that the right of the Petitioner to receive pension is property under Article 31(1) and by a mere executive order the State had no power to withhold the same. Similarly, the said claim is also property under Article 19(1)(f) and it is not saved by Sub-article (5) of Article 19. Therefore, it follows that the order dated June 12, 1968, denying the Petitioner right to receive pension affects the fundamental right of the Petitioner under Article 19(1)(f) and 31(1) of the Constitution, and as such the writ petition under Article 32 is maintainable.

This view was re-affirmed in State of Punjab and Another Vs. Iqbal Singh, where their Lordships of the Supreme Court were pleased to observe as under:

It has been urged by the Appellant that the Full Bench decision of the High Court of Punjab and Haryana in K.R. Erry and Another Vs. State of Punjab, is not in accordance with law as superannuation pension is a bounty and is given as an act of grace. That ground is no longer available to the Appellants in view of the decision of this Court in Deokinandan Prasad Vs. The State of Bihar and Others, where it was held that pension is not a bounty payable on the sweetwill and pleasure of the Government and the right of a Government servant to receive it is property under Article 31(1) of the Constitution and the State cannot withhold the same by a mere executive order. It was further held in that case that the claim to pension was also property under Article 19(1) of the Constitution and was not saved by Clause (v) thereof.

In view of this, the pension is a right to property and a Government servant cannot be deprived of this right, save by legislation which, too, has to satisfy the test of Article 14 of the Constitution.

19. …

…Equal protection of laws must mean the protection of equal laws for all persons similarly situated. Article 14 strikes at arbitrariness because a provision which is arbitrary involves the negation of equality. Even the temporary or officiating service under the State Government has to be reckoned for determining the qualifying service. It looks to be illogical that the period that the period of service spent by an employee in a work-charged establishment before his regularisation has not been taken into consideration for determining his qualifying service. The classification which is sought to be made among Government servants who are eligible for pension and those who started as work-charged employees and their services regularised subsequently, and the others is not based on any intelligible criteria and, therefore, is not sustainable at law. After the services of a work-charged employee have been regularised, he is a public servant like any other servant. To deprive him of the pension is not only unjust and inequitable but is hit by the vice of arbitrariness, and for these reasons the provisions of Sub-rule (ii) of Rule 3.17 of the Rules have to be struck down being violative of Article 14 of the Constitution.

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