T.S.DAS & ORS. Vs. UNION OF INDIA & ANR.

Tags Interpretation Pension

Supreme Court of India (Full Bench (FB)- Three Judge)

Appeal (Civil), 2147 of 2011, Judgment Date: Oct 27, 2016

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2147 of 2011

T.S. Das and Ors. …..Appellants

Vs.

Union of India and Anr. ……Respondents

With

Civil Appeal No.8566 of 2014

J U D G M E N T

A.M.KHANWILKAR, J.

These appeals emanate from the divergent relief claimed by the
original applicants before the Armed Forces Tribunal (Appellants in Civil
Appeal No. 2147 of 2011 and Respondents in Civil Appeal No. 8566 of 2014),
which, however, involve overlapping points for consideration. Hence, we
deem it apposite to dispose of both these appeals analogously, by this
common judgment.

2. Civil Appeal No. 2147 of 2011 arises from an order passed by the
Armed Forces Tribunal, Principal Bench, New Delhi, in Original Application
No. 182 of 2009 dated 4th February, 2010. The Tribunal has rejected the
claim of the applicants therein for grant of a “Special Pension”. In Civil
Appeal No. 8566 of 2014 the decision of the Armed Forces Tribunal, Regional
Bench, Chennai, in O.A. No.83 of 2013 dated 22nd April, 2013, is challenged
by the Union of India. In that case, the Tribunal acceded to the claim of
the applicants therein for grant of a “Reservist Pension”.

3. Admittedly, the applicants before the Tribunal in both cases were
appointed as Sailors in the Indian Navy before 1973. The appointment letter
noted that the concerned applicant was engaged as a Sailor for 10 years
active service and 10 years on Fleet Reserve Services thereafter, if
required. The applicants were continued for a brief period beyond the
initial term of 10 years in active service/engagement and discharged
without drafting them to Fleet Reserve Services. Thus, each applicant was
discharged by the Indian Navy after July, 1976, on completion of their
active service and was paid gratuity. As the Tribunal granted relief to
similarly placed persons by directing the Authorities to grant Reservist
Pension/Special Pension, even these applicants moved the Tribunal for a
similar relief.

4. The 38 applicants in O.A.No.182/2009 (appellants in C.A.No.2147/2011)
had initially approached the High Court of Delhi by way of a Civil Writ
Petition No.4805/2008, to issue direction to the competent Authority to
grant special pension to them under Regulation 95 of the Navy (Pension)
Regulations, 1964 (hereinafter referred to as “Pension” Regulations). The
High Court vide order dated July 8, 2008 directed the competent Authority
to examine the claim of the said applicants for grant of a special pension.
The competent Authority after examining the matter rejected the claim of
the said applicants vide a speaking order dated 30th September 2008. The
competent Authority held that the said applicants were discharged from
service after completion of their initial engagement and were not drafted
to the Fleet Reserve, as they were not required. That fact was mentioned
in the discharge slips issued to them. The competent Authority also held
that Regulation 95 of the Pension Regulations was inapplicable to the said
applicants as they were not discharged as a measure of reducing the
strength of the establishment of the Indian Navy or of any re-organization.
Instead, they were discharged after completion of engagement period in
terms of Section 16 of the Navy Act, 1957. The applicants then approached
the Armed Forces Tribunal, Principal Bench, New Delhi by way of O.A. No.
182/2009 which, however, was dismissed on 4th February 2010. The Tribunal
held that the applicants were discharged from service after completion of
10 years period of engagement. They had no right to be drafted on the Fleet
Reserve. Reliance placed by the applicants on Regulation 269 of the Navy
Ceremonial, Conditions of Service and Miscellaneous Regulations, 1963
(hereinafter referred to as the “Conditions of Service Regulations”), was
negatived by the Tribunal on the finding that the said provision is only an
enabling provision and vests discretion in the Authority to draft the
concerned Sailor on Fleet Reserve. The Tribunal held that Regulation 95 was
not applicable to the case of the applicants who were discharged from
service after completion of 10 years of engagement. Accordingly, the
original application filed by the said applicants was dismissed being
devoid of merit. Against that decision, the appellants in C.A. No.
2147/2011 have approached this Court.

5. In the companion appeal filed by the Union of India being C.A.No.
8556/2014, the Armed Forces Tribunal, Regional Bench, Chennai, however, has
allowed the original application filed by the three applicants. The
Tribunal directed the competent Authority to grant Reservist Pension to the
said applicants payable from three years prior to the filing of the
original application i.e. from 29th October 2009 and to adjust the service
gratuity and the Death-cum-Retirement-Gratuity (DCRG) already paid to those
applicants from the arrears. The Tribunal while dealing with the claim of
Reservist Pension held that on expiry of the engagement of active service,
the applicants ought to have been drafted on the Fleet Reserve Service as
per the original engagement of service. Reliance placed by the Union of
India on the other decision of the Tribunal of Regional Bench of Kochi
dealing with similar issue, has been brushed aside by the Tribunal by
invoking the principle of equitable promissory estoppel. The Tribunal
concluded that the three applicants were entitled for grant of Reservist
Pension as per Regulation 92 of the Pension Regulations. The Tribunal also
accepted the alternative prayer of the said applicants for grant of Special
Pension as specified in Regulation 95 of the Pension Regulations on the
ground that because of the Government Policy dated 3rd July 1976 of
reducing the strength of establishment or re-organising any ships or
establishments resulting in paying off, the applicants were not drafted on
the Fleet Reserve Service. The Tribunal, further, noted that the applicants
could be given only one of the above pension and finally concluded that
they were entitled for Reservist Pension.

6. The applicants who had claimed Special Pension as per Regulation 95
of the Navy (Pension) Regulations, 1964, contended that because of the
change of Policy vide notification dated 3rd July, 1976, it entailed in
discontinuation of the Fleet Reserve Service. Thus, in terms of Clause (i)
of Regulation 95, they were entitled for a Special Pension.

7. According to the original applicants, they had signed a contract to
serve with the Navy for 10 years in active service and 10 years in Fleet
Service. They were under bonafide belief that they would be allowed to
complete their pensionable service i.e. 10 years in active service and 10
years in Fleet Reserve. Even the official document in the shape of service
certificate would reinforce this position. They submit that if they were
allowed to complete the term of service, as mentioned in the certificate of
service, they would have become entitled for Reservist Pension in terms of
Regulation 92 of the Pension Regulations. In any case, on account of re-
organisation of the Naval Establishment by abolishing the establishment of
Fleet Reserve, it inevitably resulted in reduction of the total strength of
the Indian Navy w.e.f. 3rd July 1976. That was the sole reason for not
drafting the applicants to the Fleet Reserve Service. As a result, the
applicants in any case were entitled to a Special Pension under Regulation
95 of the Pension Regulations. In that, all the Sailors in active service
during 3rd July 1976, were discharged because of the Government Policy,
who, otherwise, were entitled to be transferred to Fleet Reserve Service,
as per their initial term of engagement. Abolition of Fleet Reserve
Service in terms of Government Policy amounts to reduction of strength of
establishment of the Indian Navy or reorganization of establishment to that
extent. Reliance is placed on the exposition in the case of D.S. Nakara &
Ors. vs. Union of India[1] to contend that 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 for service
rendered. That cannot be denied to the original applicants on the basis of
Government Policy dated 3rd July 1976. Taking any other view would mean
that the said policy is made applicable retrospectively even to the case of
the applicants who were already in service with assurance that they would
remain in active service for 10 years and 10 years after in Fleet Reserve.
The Government Policy dated 3rd July 1976, if made applicable to the
applicants and similarly placed persons would result in changing their
service conditions to their detriment. That is impermissible, as expounded
in the case of BCPP Mazdoor Sangh & Anr. vs. NTPC & Ors.[2] and Union of
India & Ors. vs. Asian Food Industries[3]. Section 184-A of the Navy Act,
1957 forbids giving retrospective effect to a Regulation which
prejudicially affects the interests of any person. It is contended that
Regulation 269 of the Conditions of Service Regulations read with the
provisions of the Pension Regulations make it amply clear that every Sailor
who had served in the Indian Navy before or after the amendment of
Conditions of Service Regulations or coming into force of the Government
Policy w.e.f. 3rd July 1976, was entitled for a pension. The fact that
Government decided to discontinue the Fleet Reserve Service ought not to
impinge upon the salutary rights of the Sailors in active service to get
pension. The applicants have supported the reason given by the Tribunal,
that the principles of equitable promissory estoppel would apply to the
fact situation of the present case. According to the applicants, the
Government has adopted a pedantic approach in giving narrow interpretation
to the expression “if required” occurring in Regulation 269(1). If that
interpretation is to be accepted, the Regulation would be hit by Article 14
of the Constitution of India. In that, the Government would reserve its
right to keep the Sailors on Reserve Fleet Service, but would leave no
option to the Sailors who would be bound by the contractual obligation as
per the original service conditions to remain on Fleet Service for 10 years
after completion of 10 years of active service. The discretion provided to
the Government, as per the interpretation given to the expression “if
required” would be hit by the principle of contra proferentum, as observed
in the case of Central Inland Water Transport Corporation vs. Brojonath
Ganguly[4] in view of unequal bargaining power. The Department being a
Welfare State cannot be heard to adopt such argument as canvassed with
reference to the expression “if required”. The Government cannot be heard
to deny pensionary benefits to the Sailors who were in active service at
the relevant time when the Government Policy came into force for disbanding
the Fleet Reserve Service. It is one thing to say that the Government has
discretion to discontinue or re-organise its establishment, but that cannot
be done at the cost of the rights of the Sailors, in particular pensionary
benefits. It was argued that on conjoint reading of the provisions of
Service Conditions Regulations and the Regulations for India Fleet Reserve,
it would be amply clear that when the Sailor does not express his
unwillingness to continue after active service of 10 years it would follow
that he has been taken on the Fleet Reserve Service. In substance, the
argument is that the applicants had an accrued and vested right to get
Reservist Pension and that cannot be taken away much less by an amendment
to the Regulations or a Government Policy to discontinue the Fleet Reserve
Service. Reliance is placed on the decisions in Union of India vs. Asian
Food Industries[5], Dakshin Haryana Bijli Vitran Nigam vs. Bachan Singh[6]
and in Sonia vs. Oriental Insurance Co.[7]. Appellant No. 36 (In
C.A.No.2147/2011) has additionally submitted that he was recruited as a
direct entry Sailor on 7th February, 1950 and on completion of 10 years of
active service was drafted to the Fleet Reserve for second leg of
compulsory 10 years Fleet Reserve. He was discharged from the Fleet Reserve
on 30th March 1967 unilaterally by the respondents. By that time, he had
completed combined 17 years 01 month and 26 days of service. Relying on
Clause (2) of Regulation 92 of the Pension Regulations, it is contended
that he was discharged from the Reserve Fleet otherwise than at his own
request; and, therefore, was entitled to Reservist Pension. The fact that
he had not made any request for early discharge has been admitted by the
Department in its letter dated 8th May 2014 and yet he has been denied the
benefit of Reservist Pension, unlike extended to Sailors similarly
situated.

8.Per contra, it is submitted on behalf of the Union of India that the
period of engagement for continuous service of Naval Person in the Indian
Navy including their terms and conditions for continuous service in the
Indian Reserve Fleet and also entitlement for grant of Reservist Pension is
governed by Regulation 268 and 269 of the Conditions of Service Regulations
and also Regulation 92 and 95 of the Pension Regulations and Regulation 6
of the Indian Fleet Reserve Regulations. Since the original applicants
were enrolled as Sailors prior to 3rd July 1976, on completion of 10 years
of continuous service, their service could be drafted on Fleet Reserve
Service only if required, for a further period of 10 years in the Indian
Fleet Reserve, as per Regulation 269(1). But, due to discontinuation of
Fleet Reserve Service w.e.f. 3rd July 1976 the original applicants were not
and could not have been drafted to Indian Fleet Reserve. The enrollment in
the Indian Fleet Reserve is governed by the Fleet Reserve Act of 1940. It
is neither a matter of right nor automatic. As per Regulation 6 of Indian
Fleet Reserve Regulations the entries in the service certificate relied on
by the original applicants were made at the time of enrollment only to
indicate that a Sailor will serve 10 years active service followed by 10
years Fleet Reserve, if required. Such entry cannot create any right in
favour of the Sailor to be drafted on the Indian Fleet Reserve. Regulations
adverted to by the original applicants was an enabling provision and not
the condition of contract or any promise made to the Sailor that he will be
compulsorily drafted to the Fleet Reserve. There is no deeming provision in
that behalf in any of the Regulations governing the service conditions of
the Sailors. Majority of the Sailors opted to take discharge after
completion of 10 years of active service. Those who volunteered to be
drafted to the Fleet Reserve were considered by the Department on case-to-
case basis subject to fulfilling the requisite requirements therefor. Only
such Sailors who had completed the 10 years of active service and 10 years
of Fleet Reserve Service, as per the Regulation, were entitled for minimum
pension. The original applicants were not drafted to the Fleet Reserve due
to discontinuation of Fleet Reserve w.e.f 3rd July 1976. Resultantly, none
of the original applicants were eligible for Reservist Pension. It is
contended that this view has been taken by the Armed Forced Tribunal in
Case No. T.A.492/2009 (Niranjan Chakraborty, Ex-L/TEL No.92171) decided on
10.02.2010, in O.A.No.84/2010 (Ramachandran Pillai, Ex-SEA I, No.88568)
decided on16.05.2011, in O.A.No.42/2012 (Mangala Prasad Choubey, Ex-
LS,No.94834) decided on 19.06.2013, in O.A.No.08/2013 (Ex Navy Direct Entry
Artificer Association & Ors.) decided on 22.01.2014, in O.A.No.02/2014 (SS
Bansure, Ex-SEA I,No.84001) decided on 18.06.2014. The decision in the case
of Niranjan Chakraborty has been affirmed by this Court in SLP (C)
No.19790/2001 decided on 13th January 2014. Hence, the issue stood
concluded against the original applicants. The decision of the Armed
Forces Tribunal, Regional Bench at Chennai, which is impugned in the
present appeal, therefore, deserves to be overturned following the
dismissal of the appeal by this Court against the decision of the Armed
Forces Tribunal, New Delhi in T.A. No. 492/2009 dated 10th February 2010.
The principle of equitable promissory estoppel invoked by the Tribunal in
the impugned judgment is inapplicable to the present case, keeping in mind
the express provisions in the extant Regulations regarding the service
conditions of the original applicants. The original applicants cannot be
heard to claim any right to be transferred to the Reserve Fleet or for that
matter being automatically transferred thereat. For, unless the Sailor is
drafted to the Reserve Fleet by an express order of the Competent Authority
the question of entitlement to Reservist Pension in terms of Regulation 92
would not arise. The plea of equitable promissory estoppel cannot be
pursued as there cannot be estoppel against law ( Union of India and
Another vs. Dr. S. Baliar Singh[8]; Union Public Service Commission vs.
Girish Jayanti Lal Vaghela and Others[9].) Reliance is also placed on the
decision of the Constitution Bench in Roshan Lal Tandon vs. Union of
India[10] which has taken the view that the terms and conditions of service
of Government Servants can be unilaterally altered by the Government and
there is no vested or contractual right of the Government servant. Further,
the legal position of a Government servant is more of a status, than of
contract; and the hallmark of status being a relationship of rights and
duties imposed by the public law and not by agreement of parties. It is
further submitted that the original applicants (respondents in C.A. No.
8556/2014) were given an option to continue in Naval Service for extended
term following the discontinuance of Reserve Service, but all of them gave
unwillingness and hence they were discharged on completion of period of
engagement. Having opted to take discharge, those applicants in any case
cannot claim relief of grant of pension as per the relevant Rules. With
regard to the scope of Regulation 95 of the Pension Regulation, it is
submitted that the effect of Government Policy manifested in the
Notification dated 3rd July 1976, was not to reduce the strength of the
establishment of the Indian Navy or for that matter re-organisation of the
establishment as such. It was also not a case of paying off. In that,
the applicants were discharged on completion of their active service. For
being a case of paying off, the Sailors whilst in service were required to
be removed/ discharged because of discontinuance or closure of the Indian
Fleet Reserve. Merely because of discontinuation of Fleet Reserve, persons
affected may not become entitled to a Special Pension. Only if such re-
organization results in paying off of any ships or any establishments,
Clause (ii) of Regulation 95 would come into play. Accordingly, it is
submitted that even the relief of grant of a Special Pension, is devoid of
merit.

9.We have heard the learned counsel appearing for the concerned parties at
length. It is not in dispute that the applicants before the Tribunal were
engaged as Sailors before 1973. The provisions concerning commissions,
appointment and enrolments is found in Chapter IV of the Navy Act, 1957
(hereinafter referred to as “Act, of 1957”). Section 9 of the Act of 1957
provides for the eligibilities for appointment or enrolment in the Indian
Navy or Indian Naval Reserve Forces. The terms and conditions of service of
Sailors, as mentioned in Section 11 of the Act of 1957 are such as may be
prescribed. Sub-Section (2) thereof provides for the term of a Sailor in
the Indian Navy for a period of 10 years in the first instance. That was
subsequently increased to 15 years. By a further amendment in 1987, the
said term has been increased to 20 years w.e.f. 09.09.1987. Section 12 of
Act of 1957 is about the validity of enrolment as a Sailor. It postulates
that the incumbent shall be deemed to have been duly enrolled and shall not
thereafter be entitled to claim his discharge on the ground of any
irregularity or illegality or any other ground whatsoever. Chapter V of the
Act 1957 deals with conditions of service of Officers and Sailors. Section
14 stipulates that Officers and Sailors shall be liable to serve in the
Indian Navy or the Indian Naval Reserve Forces, as the case may be, until
they are discharged, dismissed with disgrace, retired, permitted to resign,
or released. Section 14 to 17 which may have some bearing on the matter in
hand, read thus:

“14. Liability for service of officers and sailors.-(1) Subject to the
provisions of sub-section(4), officers and sailors shall be liable to serve
in the Indian Navy or the Indian Naval Reserve Forces, as the case may be,
until they are duly discharged, dismissed with disgrace, retired, permitted
to resign, or released.

(2) No officer shall be at liberty to resign his office except with the
permission of the Central Government and no sailor shall be at liberty to
resign his post except with the permission of the prescribed officer.

(3) The acceptance of any resignation shall be a matter within the
discretion of the Central Government or the officer concerned, as the case
may be.

(4) Officers retired or permitted to resign shall be liable to recall to
naval service in an emergency in accordance with regulations made under
this Act, and on such recall shall be liable to serve until they have been
duly discharged, dismissed, dismissed with disgrace, retired, permitted to
resign, or released.

15. Tenure of service of officers and sailors.-(1) Every officer and sailor
shall hold office during the pleasure of the President.

(2) Subject to the provisions of this Act and the regulations made
thereunder-

(a) the Central Government may dismiss or discharge or retire from the
naval service any officer or sailor;

(b) the Chief of the Naval Staff or any prescribed officer may dismiss or
discharge from the naval service any sailor.

16. Discharge on expiry of engagement.-Subject to the provisions of section
18, a sailor shall be entitled to be discharged at the expiration of the
term of service for which he is engaged unless-

(a) such expiration occurs during active service in which case he shall be
liable to continue to serve for such further period as may be required by
the Chief of the Naval Staff; or

(b) he is re-enrolled in accordance with the regulations made under this
Act.

17. Provisions as to discharge.-(1) A sailor entitled to be discharged
under section 16 shall be discharged with all convenient speed and in any
case within one month of his becoming so entitled:

Provided that where a sailor is serving overseas at the time he
becomes entitled to be discharged, he shall be returned to India for the
purpose of being discharged with all convenient speed, and in any case
within three months of his becoming so entitled.

Provided further that where such enrolled person serving overseas
does not desire to return to India, he may be discharged at the place where
he is at the time.

(2) Every sailor discharged shall be entitled to be conveyed free of cost
from any place he may be at the time to any place in India to which he may
be at the time to any place in India to which he may desire to go.

(3) Notwithstanding anything contained in the preceding sub-section, an
enrolled person shall remain liable to serve until he is duly discharged.

(4) Every sailor who is dismissed, discharged, retired, permitted to resign
or released from service shall be furnished by the prescribed officer with
a certificate in the language which is the mother tongue of such sailor and
also in the English language setting forth-

(a) The authority terminating his service;

(b) the cause for such termination; and

Section 15 provides for the tenure of Officers and Sailors which is subject
to the provisions of the Act and the Regulations made thereunder. The
Regulations regarding conditions of service as framed under the Act of
1957, are the Naval Ceremonial Conditions of Services and Miscellaneous
Regulations, 1964. Regulations 268 deals with engagements including all
Direct Entry Sailors. Regulation 269 deals with continuous service.
Regulation 269 as applicable at the relevant time when the applicants were
appointed before 1973, as extracted in the judgment of the Tribunal in T.A.
No.492 of 2010, read thus:

“Regulation 269:

Continuous service. (1) Old [Entrants] Boys, Artificer Apprentices and
Direct Entry sailors may be enrolled for a period calculated to permit a
period of 10 years’ service to be completed from the date of attaining 17
years of age or from the date of being [ranked] in the Man’s [rank] on
successful completion of initial training, whichever is later, provided
their services are so long required.

Continuous Service sailors of all Branched shall be liable, if required,
for a further 10 years’ service in the Indian Fleet Reserve, subject to the
provisions of the Regulations for the Indian Fleet Reserve.”

(emphasis supplied)

Regulation 269 as amended reads thus:

“269. Continuous Service.-[(1) Old [Entrants] Boys, Artificer
Apprentices and Direct Entry sailors may be enrolled for a period
calculated to permit a period of 10 years’ service to be completed from the
date of attaining 17 years of age or from the date of being [ranked] in the
Man’s [rank] on successful completion of initial training, whichever is
later, provided their services are so long required.

Continuous Service sailors of all Branches shall be liable, if
required, for a further 10 years’ service in the Indian Fleet Reserve,
subject to the provisions of the Regulations for the Indian Fleet Reserve.

[(1A) New Entrants.-(a) Boys, [***] and Direct Entry sailors may be
enrolled for a period calculated to permit a period of 15 years’ service to
be completed from the date of enrolment or from the date of attaining the
age of 17 years, whichever is later, provided their services are so long
required.]

[(aa) Artificer Apprentices and Direct Entry (Diploma holders)
Artificers may be enrolled for a period of 26 years to be completed from
the date of enrolment or from the date of attaining the age of 17 years
whichever is later, provided their services are so long required.”]

(b) All new entrants with 15 years’ or 20 years’ initial engagement, as
the case may be, are to sign a declaration that they shall be liable to
resign a declaration that they shall be liable to recall to active service
after release upto two years in case of Non-Artificers and three years in
case of Artificers”] :

Provided that during the said period they shall not be required to
undergo refresher training or be entitled to any retaining fee, but when
recalled they shall be entitled to normal pay and allowances:

Provided further that if recalled they shall be liable to serve for
so long as their services are required:

Provided also that sailors released prematurely from service at their
own request shall also be liable to active service upto the period stated
above.

(1B)(a) In case of the existing sailors, their period of engagement
shall be governed by sub-regulation (1), except that they shall not be
transferred to Fleet Reserve.

(b) The existing Fleet Reservists shall not be required to undergo
refresher training but shall be entitled to the retraining ree till they
are wasted out.

(IC) Persons joining service on or after 3rd July, 1976 shall be deemed
the New Entrants.]

(2) No sailor shall be re-enrolled unless he fulfills the following
conditions:-

(a) Out of the three annual assessments immediately preceding re-
enrolment, he must have had at least two assessments of character and
efficiency not below ‘VG’ and ‘Sat’, respectively.

(b) Must be recommended by his Captain as in all respects suitable to
continue in Service.

(emphasis supplied)

Other relevant Regulation dealing with conditions of service of Sailors, is
Regulation 279. It provides for discharge. The same reads thus:

“279. Discharge “S.N.L.R.”-(1) Discharge S.N.L.R. (Service no longer
required) shall not be considered as a punishment but only as the
appropriate method of dispensing with the services of a man:

who is surplus to requirements,

whose retention would be to the detriment of the Service but who has not
recently committed a specific offence for which dismissal would be an
appropriate punishment in addition to any other sentence awarded.

On whom an adverse report has been forwarded in the post-enrolment
verification report.

(2) Subject to the provisions of sub-regulation (1), if the retention of
any sailor is considered undesirable on grounds of conduct or character, a
report, accompanied by his Service Documents, shall be forwarded to the
Administrative Authority, with a recommendation that the man be discharged
‘Service No Longer Required’.

(3) In all cases of recommendations for discharge of sailors as ‘Service
No Longer Required’ except those who are to be discharged as being surplus
to requirements, Captains shall establish clearly the fact that the sailor
recommended for discharge has been given suitable warning and opportunity
to improve. Evidence to this effect shall accompany the recommendation. In
exceptional cases, when in the opinion of the Captain, the retention of a
sailor is clearly undesirable, a recommendation may be forwarded and
discharge may be approved although the sailor has not previously been
warned.

(4) The Administrative Authority, if satisfied that discharge ‘Service No
Longer Required’ is appropriate, shall forward the application to the Chief
of the Naval Staff through Captain Naval Barracks with his recommendation.
It is essential. The man’s Service Documents completed up-to-date shall
accompany the application for discharge.

(5) Abroad, sailors recommended for discharge ‘Service No Longer
Required’ shall not be sent home until the approval of the Chief of the
Naval Staff for discharge has been received. If in the interim, the man is
transferred to another ship, the Service document sent with the man shall
be annotated to the effect that an application for his discharge has been
made and a copy of the application shall accompany his papers.”

Indeed, Regulation 279 providing for discharge can be invoked before the
expiration of tenure of service.

10. Besides these Regulations, we shall now advert to the Pension
Regulations framed in exercise of powers conferred by the Act of 1957,
known as the Navy (Pension) Regulations, 1964. Regulation 92 deals with
Reservist Pension and Gratuity which reads thus:

“92. Reservist pension and gratuity.-(1) A reservist who is not in
receipt of a service pension may be granted, on completion of the
prescribed naval and reserve qualifying service of ten years each, a
reservist pension of rupees eleven per mensem or a gratuity of rupees nine
hundred in lieu of pension.

(2) A reservist who is not in receipt of a service pension and whose
qualifying service is less than the period of engagement but not less than
fifteen years may, on completion of the period of engagement or on earlier
discharge from the reserve otherwise than at his own request, be granted a
reservist pension at rupees ten per mensem or a gratuity of rupees seven
hundred and fifty in lieu of pension.

(3) Where a reservist elects to receive a gratuity in lieu of pension under
this regulation, the amount of gratuity shall, in no case, be less than the
service gratuity that would have accrued to him under regulation 89 based
on the qualifying service in the Indian Navy, had he been discharged from
the active list.

Explanation.- The option The option to draw a gratuity in lieu of pension
shall be exercised on discharge from the reserve, and the option once
exercised shall be final; no pension or gratuity shall be paid until the
option has been exercised.”

Regulation 95 deals with Special Pension and Gratuity to Sailors which
reads thus:

“95. Special pensions and gratuity to sailors-When admissible.-A
special pension or gratuity may be granted at the discretion of the Central
Government, to sailors who are not transferred to the reserve and are
discharged in large numbers in pursuance of Government’s policy-

of reducing the strength of establishment of the Indian Navy; or

of re-organisation, which results in paying off of any ships or
establishments.”

Regulation 6 of Regulations of the Indian Fleet Reserve, framed under the
Indian Naval Reserve Force (Discipline) Act, 1939 reads thus:

“6. Claim to join fleet Reserve – No man can claim to join the
fleet reserve as a right.”

Re: Reservist Pension

11. We shall first deal with the question regarding entitlement to claim
Reservist Pension. Sub-Clause (1) of Regulation 92, throws some light on
this aspect. It provides that a “Reservist” who is not in a receipt of
Service Pension, be granted Reservist Pension on completion of the
prescribed Naval and Reserve Service of 10 years each. None of the
applicants claim that they are entitled for Service Pension, nor have they
been so granted. The eligibility of grant for Reservist Pension is upon
completion of the prescribed Naval and Reserve qualifying service of 10
years each. It is not in dispute that each of the applicants completed the
prescribed Naval Service of 10 years in the first instance, also known as
active service or engagement. It is also not in dispute that there is no
formal order issued by the Competent Authority to draft the services of the
concerned applicant on the Fleet Reserve Service after completion of 10
years of active service in the first instance.

12. As a matter of fact, the issue under consideration was the
subject matter before the Armed Forces Tribunal, Principal Bench, New Delhi
in T.A. No.492/2009. The Tribunal after analyzing the relevant provisions
observed as follows:

“9. It is an admitted position that the petitioner was not inducted for a
Fleet Reserve Service. He has filed a Discharge Certificate and profile of
his service on record and Service Certificate which does not show that the
petitioner was engaged for a Fleet Reserve Service at all or not. However,
learned counsel for the petitioner submitted that when he entered into the
service at that time as per rule 10 years of regular service and 10 years
of fleet reserve service and out of that five years service should be
counted for the purpose of qualifying service for pension. It is true at
relevant time when petitioner was inducted into service there was
requirement of keeping the incumbent in fleet reserve, therefore,
respondents are bound by the service conditions prevailing at that time and
they must give 5 years benefit of fleet reserve service. It is true that we
would have certainly acceded to the request but a difficulty arose that
Regulation 269 clearly contemplates that incumbent can be kept for reserve
fleet, if required. This Government policy to keep in fleet reserve was
discontinued in the year 1976. The Regulation 269 clearly contemplates that
incumbent can be kept in fleet reserve, if required that means this is
enabling provision giving liberty to respondents to keep the incumbent in
fleet reserve, it does not confer any right on the petitioner that he must
be necessarily kept in fleet reserve. This is the discretion of the
respondents that if they required, they keep the man in fleet reserve and
if they find that they do not require the incumbent for fleet reserve, the
incumbent cannot as a matter of right seek writ of mandamus, he has no
statutory right to be kept in fleet reserve. The expression “if required”
makes abundantly clear that discretion is with the respondents to keep the
incumbent in fleet reserve or not. Since this policy has been discontinued
in 1976, henceforth there is no provision to keep the incumbent in fleet
reserve. Petitioner was discharged in the year 1978. He knew the provision
at that time also that he is not kept in fleet reserve. Therefore,
petitioner cannot get the benefit of 5 years of service out of 10 years of
fleet reserve service so as to complete 15 years of qualifying service for
pension.”

13. This view taken by the Tribunal was challenged before this Court by
way of SLP(Civil) No. 19790/2010 which, however, was dismissed on 13th
January 2014. The said order reads thus:

“Heard.

We see no reason to interfere with the impugned order. The special
leave petition is dismissed.

We however make it clear that this order shall not prevent the
petitioner from making an appropriate representation to the competent
authority for grant of special pension in terms of the Regulation 95 of the
Navy (Pension) Regulation, 1964.

Mr. Mohan Jain, learned ASG submits that in case such a
representation is made, the same shall be examined by the competent
authority and appropriate orders passed in accordance with law. That
statement is recorded.

We make it clear that we have expressed no opinion about the merits
of the claim that the petitioner proposes to make for payment of special
pension. The matter is left entirely to the competent authority to decide
the same in accordance with law. In case the competent authority takes an
adverse view of the matter, the petitioner shall have the liberty to seek
redress against the same in appropriate proceedings before the appropriate
forum. No costs.”

14. It is justly contended by the Department that after the aforesaid
decision of the Tribunal having been affirmed by this Court, the opinion of
the Tribunal in the impugned judgment to the contrary may be treated as
impliedly overruled. Nevertheless, we may examine the correctness of the
approach of the Tribunal in the impugned judgment.

15. In absence of an express order of the Competent Authority to take the
applicants on the Fleet Reserve Service, the moot question is: whether the
applicants can be treated as deemed to be in the Fleet Reserve Service on
account of the stipulation in the appointment letter - that on completion
of 10 years of Naval Service as a Sailor, they may have to remain on Fleet
Reserve Service for another 10 years. That condition in the appointment
letter cannot be read in isolation. The governing working conditions of
Sailors must be traced to the provisions in the Act of 1957 or the
Regulations framed thereunder concerning service conditions. From the
provisions in the Act of 1957, there is nothing to indicate that the Sailor
after appointment or enrolment is “automatically” entitled to continue in
Fleet Reserve Service after completion of initial active service period of
10 years. The provisions, however, indicate that on completion of initial
active service of 10 years or enhanced period as per the amended
provisions is entitled to take discharge in terms of Section 16 of the Act.
The applicants assert that none of the applicants opted for discharge.
That, however, does not mean that they would or in fact have continued to
be on the Fleet Reserve Service after expiration of the term of active
service as a Sailor. There ought to have been an express order issued by
the competent Authority to draft the concerned applicant in the Fleet
Reserve Service. In absence of such an order, on completion of the term of
service of engagement, the concerned sailor would stand discharged.
Concededly, retention on the Fleet Reserve Service is the prerogative of
the employer, to be exercised on case to case basis. In the present case,
however, on account of a policy decision, the Fleet Reserve Service was
discontinued in terms of notification dated 3rd July, 1976. The said
notification reads thus:

“No.AD/5374/2/76/2214/S/D (N.II),
Government of India,
Ministry of Defence,
New Delhi, the 3rd July, 1976.
To,
The chief of the Naval Staff (with 100 spare copies)

Sub.:- CONDITIONS OF SERVICE OF SAILORS.

Sir,
I am directed to state that the President is pleased to approve the
following modifications in the conditions of Service of sailors:-

a) Initial Period of Engagement:- Be entrolled for 15 years.
b) Educational Qualification at Entry:- Be raised to Matriculation or
equivalent in the case of Direct Entry sailors of Seaman and Marine
Engineering branches and Bo Entry sailors of all branches.
c) Ages of Entry:- The age of entry for Boys be revised to 16-18 years
and that for Direct Entry sailors to 18-20 years.
d) Compulsory Age of Retirement:- Subject to the prescribed rules,
the age of compulsory retirement for sailors of all ranks upto and
including CPO rank will be 50 years. The compulsory retirement age of MCPO
I/II will remain 55 years.
e) Time Scale Promotion to Leading Rank:- Seaman First Class and
equivalents will be promoted to the Leading rank on completing of 5 years
service in man’s rank subject to passing the prescribed examination. The
date of implementation of this provision will be promulgated by Naval
Headquarters.
f) Transfer to Current Fleet Reserve:- Transfer of sailors into the
Fleet Reserve to be discontinued. The Existing Fleet Reservists will not be
required to undergo refresher training but will be paid the retaining free
till they are wasted out.
g) Recall to Active Service:- (i) All new entrants with 15 years
initial engagement and such of the existing sailors, who re-engage to
complete time for minimum pension, to sign a declaration that they will be
liable to recall to active service, after release upto two years in case of
Non-Artificers and three years in case of Artificers. During this period
they will not be required to undergo refresher trainings or be entitled to
any retraining fee, but when recalled they will be entitled to normal pay
and allowances. If recalled they would be liable to serve for so long as
their services are required.
(ii) Sailors released prematurely from Service at their own request will
also be liable to recall to active service upto the period stated above.
h) Regrouping and Remustering of sailors:- Future entrants (Both Boy and
Direct Entry) in Seamen and ME Branches will be on Group ‘B’ Scale of Pay.
Serving sailors in these branches including Regulating Branch, who are
matriculate or equivalents will also be remustered to Group “B” scale pay
with effect from 1st April, 1976. Those, who attain this qualification
later, will also be remustered to Group ‘B’ scale of pay, as and when they
so qualify. Remustering will invariably be effective from the first of the
month in which it occurs.
2. Administrative instructions, if any, will be issued by the Naval
Headquarters.
3. Appropriate Government Regulations/Orders will be amended in due
course.
4. This issues with the concurrence of Ministry of Finance (Def) vide
their u.o. No.452/NA/S of 1976.

Yours faithfully,

Sd/-

(P.S. Ahluwalia)
Under Secretary to the Gov. of India

16. As per this policy, the initial period of engagement was enhanced to
15 years. At the same time the transfer of Sailors to Fleet Reserve was
discontinued. This is made amply clear in Clause (f) of the policy. The
second part of the same clause pertains to “Existing Fleet Reservist”, who
were to be paid the retaining fee till they are wasted out.

17. As noted hitherto, none of the relevant provisions even remotely
suggest that the Sailor is “automatically” transferred to the Fleet Reserve
Service. Whereas, it is expressly provided that on expiration of the term
of service of engagement the Sailor would be placed on Fleet Reserve
Service only if an express order in that behalf is passed by the Competent
Authority to draft him on the Fleet Reserve and not otherwise. Section 16
of the Act, merely gives an option to the Sailor to take a discharge after
expiration of term of service of engagement. It is not a deeming provision
that if such option is not exercised by the concerned Sailor, he would be
treated as having been drafted on the Fleet Reserve Service for another 10
years “automatically”.

18. Regulation 269, spells out the conditions of service. It reinforces
the position that the services of a Sailor would be continued “so long
required” or “if required”. The second part of Clause (1) of that
Regulation uses the expression “if required”, for further 10 years service
in the Indian Fleets Reserve, subject to the provisions of the Regulations
for the Indian Fleet Reserve. This view taken by the Tribunal (Principal
Bench, New Delhi) in T.A. No.492 of 2009 commends to us.

19. As aforesaid, on introducing the new policy on 3rd July, 1976, the
Fleet Reserve was discontinued and instead the Sailors in service at the
relevant time were given an option to continue in active service for a
further term of 5 years. Some of the Sailors opted to continue till
completion of 15 years, who, then became eligible for “Service Pension”
having qualifying service.

20. The quintessence for grant of Reservist Pension, as per Regulation
92, is completion of the prescribed Naval and Reserve qualifying service of
10 years “each”. Merely upon completion of 10 years of active service as a
Sailor or for that matter continued beyond that period, but falling short
of 15 years or qualifying Reserve Service, the concerned Sailor cannot
claim benefit under Regulation 92 for grant of Reservist Pension. For, to
qualify for the Reservist Pension, he must be drafted to the Fleet Reserve
Service for a period of 10 years. In terms of Regulation 6 of the Indian
Fleet Reserve Regulations, there can be no claim to join the Fleet Reserve
as a matter of right. None of the applicants were drafted to the Fleet
Reserve Service after completion of their active service. Hence, the
applicants before the Tribunal, could not have claimed the relief of
Reservist Pension. The Tribunal (Regional Bench, Chennai) in O.A. No. 83 of
2013, however, granted that relief by invoking principle of equitable
promissory estoppel and legitimate expectation in favour of the applicants.
The Tribunal, in our opinion, committed manifest error in overlooking the
statutory provisions in the Act of 1957 and the relevant Regulations framed
thereunder, governing the conditions of service of Sailors. The fact that
on completion of 10 years of active service, the Sailor could be taken on
the Fleet Reserve Service for a further period of 10 years cannot be
interpreted to mean that the concerned Sailor had acquired a legal right to
join the Fleet Reserve Service or had de jure continued on Fleet Reserve
Service for a further 10 years after expiration of the initial term of
active service/engagement. There is no provision either in the Act of 1957
or the Regulations framed thereunder as pressed into service by the
applicants, to suggest that drafting of such Sailors on Fleet Reserve
Service was “automatic” after expiration of their active service/enrolment
period. Considering the above, it is not necessary to burden this judgment
with the decisions considered by the Tribunal on the principle of equitable
promissory estoppel and legitimate expectation, which have no application
to the fact situation of the present case.

21. The original applicants contend that if the Government Policy dated
3rd July, 1976 is applied to the serving Sailors, inevitably, will result
in retrospective application thereof to their deteriment. That is
forbidden by Section 184-A of the Act. This argument does not commend to
us. In that, the effect of the Government Policy is to disband the
establishment of the Reserve Fleet Service with effect from 3rd July, 1976.
As found earlier, drafting of Sailors to the Reserve Fleet Service was not
automatic; but dependent on an express order to be passed by the competent
Authority in that behalf on case-to-case basis. The Sailors did not have a
vested or accrued right for being placed in the Reserve Fleet Service.
Hence, no right of the Sailors in active service was affected or taken away
because of the Policy dated 3rd July, 1976. Even the argument of the
original applicants that the interpretation of expression “if required”
occurring in Regulation 269(1) bestows unequal bargaining power on the
Government is devoid of merits. The validity of Regulation 269(1) was not
questioned before the Tribunal nor any relief was claimed in that behalf.
Therefore, this argument is unavailable to the original applicants. In any
case, on a conjoint reading of the Regulations governing the Service
Conditions of the Sailors and more particularly having noticed that it is
the prerogative of the Government to place the Sailors to the Fleet Reserve
Service; and at the same time option was given to the Sailors to opt for
discharge in terms of Section 16 of the Act, we fail to understand as to
how such dispensation can be termed as unequal bargaining power. The
consequence of not placing the concerned Sailor to the Fleet Reserve
Service may result in deprivation of Reservist Pension. However, original
applicants may be entitled to get a Special Pension under Regulation 95 of
the Pension Regulations, being a separate dispensation for such Sailors,
unless discharged by way of punishment under Regulation 279.

22. Accordingly, we hold that none of the applicants before the Tribunal
are entitled for Reservist Pension in terms of Regulation 92 of the Naval
(Pension) Regulations, 1964. The Tribunal has relied on other decisions of
other Benches of the same Tribunal, which for the same reason cannot be
countenanced.

Re: Special Pension

23. The next question is whether the Sailors appointed before 1973 were
entitled for a Special Pension, in terms of Regulation 95 of the Pension
Regulations. Indeed, this is a special provision and carves out a category
of Sailors, to whom it must apply. Discretion is vested in the Central
Government to grant Special Pension to such Sailors, who fall within the
excepted category. Two broad excepted categories have been noted in
Regulation 95. Firstly, Sailors who have been discharged from their duties
in pursuance of the Government policy of reducing the strength of
establishment of the Indian Navy; or Secondly, of reorganization, which
results in paying off of any ships or establishment. In the present case,
Clause (i) of Regulation 95 must come into play, in the backdrop of the
policy decision taken by the Government as enunciated in the notification
dated 3rd July, 1976. On and from that date, concededly, the Fleet Reserve
Service has been discontinued. That, inevitably results in reducing the
strength of the establishment of the Fleet Reserve of the Indian Navy to
that extent, after coming into force of the said policy. None of the
Sailors have been or could be drafted to the Fleet Reserve after coming
into force of the said Policy - as that establishment did not exist anymore
and the strength of establishment of the Indian Navy stood reduced to that
extent. Indisputably, the Sailors appointed prior to 3rd July, 1976, had
the option of continuing on the Fleet Reserve Service after expiration of
their active service/empanelment period. As noted earlier, in respect of
each applicants the appointment letter mentions the period of appointment
as 10 years of initial active service and 10 years thereafter as Fleet
Reserve Service, if required. The option to continue on the Fleet Reserve
Service could not be offered to these applicants and similarly placed
Sailors, by the Department, after expiration of their empanelment period of
10 years or less than 15 years as the case may be. It is for that reason,
such Sailors were simply discharged on expiration of their active
service/empanelment period. In other words, on account of discontinuation
of the Fleet Reserve establishment of the Indian Navy, in terms of policy
dated 3rd July, 1976 it has entailed in reducing the strength of
establishment of the Indian Navy to that extent.

24. That takes us to the case of Appellant No.36 (in C.A. No.2147 of
2011). The said appellant asserts that he was discharged from the Fleet
Reserve unilaterally by the Department. By that time, he had completed
combined 17 years 1 month and 26 days of service, for which reason was
entitled to Reservist Pension under Regulation 92(2) of the Pension
Regulations. The said appellant is relying on communication dated 8th May,
2014 in support of this contention. Since this appellant was not in active
service when the Government Policy dated 3rd July, 1976 came into being and
claims to have been discharged from the Fleet Service on 30th March, 1967,
would be free to make representation to the competent Authority. It is for
the competent Authority to examine the factum as to whether the discharge
was unilateral and not at the request of the said appellant and including
whether he would be entitled for Reservist Pension in terms of Regulation
92(2) of the Pension Regulations. We may not be understood to have
expressed any opinion with regard to the questions that may require
consideration by the competent Authority in that regard.

25. Thus understood, all Sailors appointed prior to 3rd July, 1976 and
whose tenure of initial active service/empanelment period expired on or
after 3rd July, 1976 may be eligible for a Special Pension under Regulation
95, subject, however, to fulfilling other requirements. In that, they had
not exercised the option to take discharge on expiry of engagement (as per
Section 16 of the Act of 1957) and yet were not and could not be drafted by
the competent Authority to the Fleet Reserve because of the policy of
discontinuing the Fleet Reserve Service w.e.f. 3rd July, 1976. The cases
of such Sailors (not limited to the original applicants before the
Tribunal) must be considered by the Competent Authority within three months
for grant of a “Special Pension” from three years prior to the date of
application made by the respective Sailor and release payment after giving
adjustment of Gratuity and Death-cum-Retirement-Gratuity (DCRG) already
paid to them from arrears. They shall be entitled for interest @ 9% P.A.
on the arrears, till the date of payment.

26. The appeals are disposed in the above terms with no order as to
costs. Application for impleadment is also disposed of.

……………………………..CJI
(T.S.Thakur)

………………………………..J.
(A.M.Khanwilkar)

………………………………..J.
(Dr. D.Y. Chandrachud)

New Delhi,
Dated: 27th October, 2016

-----------------------
[1]

[2] AIR 1983 SC 130

[3]

[4] AIR 2008 SC 336

[5]

[6] (2006) 13 SCC 542.

[7]

[8] (1986) 3 SCC 156

[9]

[10] (2006) 13 SCC 542

[11]

[12] (2009) 14 SCC 793

[13]

[14] (2007) 10 SCC 627

[15]

[16] (1998) 2 SCC 208

[17]

[18] (2006) 2 SCC 482

[19]

[20] AIR 1967 SC 1889

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