"No Legal Mandate That Same Rank Pensioners Must Be Given Same Pension": Supreme Court Upholds Centre's OROP Policy In Defence Forces [Updated With Judgment]

The Supreme Court on Wednesday upheld the manner in which the Central Government introduced the "One Rank One Pension"/ ("OROP") scheme in defence forces as per its notification dated November 7, 2015.The bench of Justices DY Chandrachud, Surya Kant and Vikram Nath refused to accept the challenge made by the association "Indian Ex-Service Movement" against the 2015 notification issued by the Centre."We find no constitutional infirmity in the OROP principle adopted", the bench said in the judgment pronounced today.The bench has however directed that the re-fixation exercise as per the policy should be carried out with effect from July 1, 2019 and the arrears should be paid to the pensioners within 3 months.No legal mandate that pensioners who hold same rank must be given same pensionWhile dictating the operative portion of the judgment, the bench said that there is no legal mandate that pensioners who hold the same rank must be given the same pension.All pensioners who hold the same rank many not form a homogeneous class. Also, a new pensionary benefit can be made applicable from a prospective date, with the only condition that it cannot split up a homogenous class. The bench held that the DS Nakara judgment cannot be read as having mandated OROP.The Court further held that the the OROP definition in the Centre's policy cannot be held to be arbitrary. The Court also cited the limited scope of judicial review over executive policy decisions.At the same time, the Court ordered the re-fixation with effect from July 2019."We accordingly direct that a refixation exercise must be conducted by the Govt. for a period of 5 years with regard to pension payable to Army Personnel as stated in the OROP policy in accordance with the November 7, 2015 notification. Refixation exercise to be carried out from July 1, 2019 and arrears to be paid to Army personnel within 3 months", the bench ordered while disposing of the petition.The Court passed this direction noting that in terms of the 2015 police OROP was to be effected from 1 July 2014. Para 3 (v) of the communication states that "in future, the pension would be re-fixed every five years". Such an exercise has remained to be carried out after the expiry of five years possibly because of the pendency of the present proceedings, the Court noted.Reasons cited by the Court :The Court observed as follows"We find no constitutional infirmity in the OROP principle as defined by the communication dated 7 November 2015 for the following reasons:(i) The definition of OROP is uniformly applicable to all the pensioners irrespective of the date of retirement. It is not the case of the petitioners that the pension is reviewed 'automatically' to a class of the pensioners and 'periodically' to another class of the pensioners;(ii) The cut-off date is used only for the purpose of determining the base salary for the calculation of pension. While for those who retired after 2014, the last drawn salary is used to calculate pension, for those who retired prior to 2013, the average salary drawn in 2013 is used. Since the uniform application of the last drawn salary for the purpose of calculating pension would put the prior retirees at a disadvantage, the Union Government has taken a policy decision to enhance the base salary for the calculation of pension. Undoubtedly, the Union Government had a range of policy choices including taking the minimum, the maximum or the mean or average. The Union government decided to adopt the average. Persons below the average were brought up to the average mark while those drawing above the average were protected. Such a decision lies within the ambit of policy choices;(iii)While no legal or constitutional mandate of OROP can be read into the decisions in Nakara (supra) and SPS Vains (supra), varying pension payable to officers of the same rank retiring before and after 1 July 2014 either due to MACP or the different base salary used for the calculation of pension cannot be held arbitrary; and(iv) Since the OROP definition is not arbitrary, it is not necessary for us to undertake the exercise of determining if the financial implications of the scheme is negligible or enormous".Principles governing pensions and cut-off dates summarisedThe principles governing pensions and cut-off dates were summarised by the Court as follows :(i) All pensioners who hold the same rank may not for all purposes form a homogenous class. For example, amongst Sepoys differences do exist in view of the MACP and ACP schemes. Certain Sepoys receive the pay of the higher ranked personnel;(ii) The benefit of a new element in a pensionary scheme can be prospectively applied. However, the scheme cannot bifurcate a homogenous group based on a cut-off date;(iii) The judgment of the Constitution Bench in Nakara (supra) cannot be interpreted to read the one rank one pension rule into it. It was only held that the same principle of computation of pensions must be applied uniformly to a homogenous...

"No Legal Mandate That Same Rank Pensioners Must Be Given Same Pension": Supreme Court Upholds Centre's OROP Policy In Defence Forces [Updated With Judgment]

Shruti Kakkar

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