Law Commission of India Report No. 53
Effect of The Pensions Act, 1871 On The Right To Sue For Pensions of Retired Members of The Public Services
Forwarded to the Union Minister of Law and Justice, Ministry of Law and Justice, Government of India by Justice P.B. Gajendragadkar, Chairman, Law Commission of India, on December 4th, 1972.
Minister for Law & Justice, Government of India,
My Dear Minister,
I am forwarding herewith the 53rd Report of the Law Commission on the effect of the Pensions Act, 1871, on the right to sue for pensions of retired members of the public services. This Report is made by the Commission suo motu by virtue of its terms of reference, particularly those in clauses 2 and 8.
The Commission believes that the recommendations made in its Report are non-controversial and will receive universal acceptance, and hopes that the Union Government will implement the same at an early date by suitable legislation.Yours sincerely, P.B. Gajendragadkar.
Effect of The Pensions Act, 1871 On The Right To Sue For Pensions of Retired Members of The Public Services
"4. Except as hereinafter provided, no Civil Court shall entertain any suit relating to any pension or grant of money or land-revenue conferred or made by the Government or by any former Government, whatever may have been the consideration for any such pension or grant, and whatever may have been the nature of the payment, claim or right for which such pension or grant may have been substituted."The section, thus, bars suits relating to—
(a) any pension conferred by the Government or any former Government;
(b) any grant of money made by the Government or by any former Government; or
(c) any grant of land revenue so made.These three types of claims are barred, whatever may have been the consideration for the pension or grant. And they are barred, whatever may have been the value of the payment, claim or right for which such pension or grant may have been substituted. 1. Para. 5, supra. 7. We are not, in this Report, concerned with the second and third types of claims.1 But the bar in respect of claims under category (a) creates hardship, in so far as pensions of retired public employees are concerned. On first principle, it may sound anomalous that with all the elaborate provisions found in the service rules as to eligibility for pension and other connected matters, the person eligible is to be barred from suing in court in "a matter relating to any pension conferred by the Government"—as is provided by section 4. No doubt, the next section—section 5—provides a procedure whereunder he can apply to the Collector (or other competent officer), for the grant of a certificate, and, if such certificate is granted, a suit is permissible. But such a provision, leaving the right to sue to the discretion of an executive officer, should require strong reasons to justify its existence. 1. Para. 6, supra, categories (b)&(c).s 8. Proceedings of the Governor-General-in-Council.---We made an effort to find out if the proceedings at the time when the Pensions Bill was introduced in the Council of the Governor-General in India disclose any such reasons. The proceedings have been thus recorded1— 1. Legislative Department, Proceedings of the Council of the Governor-General of India, assembled for the purpose of making Laws and Regulations etc., Pensions Bill (National Archives).
1871 September 1871
(i) that the bestowal of such pensions was an act of grace or State policy on the part of the ruling power; and
(ii) that the Government reserved to itself the determination of all questions affecting the grant or continuance. Pensions of Retired Members of the Public servants.Now, whatever be the merits of such a principle as regards pensions granted on political grounds or in view of loyalty to the Government and similar considerations, the principle fails to impress one as a just one when applied to pensions of retired public servants. To call the provision for such pensions "an act of grace or State policy", is hardly in conformity with the accepted understanding on the subject. A public servant, while in employment, looks forward to his pension as a legitimate and well-earned remuneration for his service, and, indeed, he regards it as part of his emoluments, though payable in future. He does not view it as an act of grace. In fact, even though by way of precaution the rules regulating his service may empower the Government to withhold pension, such withdrawal is rarely, if ever, ordered. In any case, it is one thing to give a power of withholding pension in extra-ordinary circumstances and for reasons which are relevant in a particular case, and quite a different matter to bar a suit by a general and drastic provision of the nature referred to in section 4 of the Act.1 Broadly stated, the true constitutional position appears to be that a person becomes entitled to receive the pension prescribed by the rules provided he has performed service for the requisite period. 1. Para. 6, supra. 11. Possible origin of the rule.—It may be that the provision in the present Act (and its predecessors) was suggested by the general rule of the common law that a civil servant cannot sue the Crown for pay.1 Once engaged, in law, the civil servant holds his position at pleasure.2 The legal nature of the civil servant's engagement is ambiguous.3 It may be that to some extent the English rule was derived from the immunity of the Crown from proceedings in Court (as it existed before the Crown Proceedings Act, 1947). 1. Richardson Incidents of the Crown Servants Relationship, (1955) 33 Can. Bar Rev. 459. 2. Riordan v. War Office, (1959) 3 All ER 552: (1960) 3 All ER 774n. (CA), noted by Grunfield in (1960) 23 Modern Law Review 194. 3. (a) I.R.C. v. Hambrook, (1956) 2 QB 641, and the cases there cited; (b) Marks v. Commonwealth, (1964. 111 CLR 549; and Blair in (1958) 21 MLR 265. 12. Criticism in England.—The propriety and even the correctness—of the English rule as to disabilities of civil servants has been criticised in modern times. The view that a, civil servant has no enforceable right to salary for services rendered has been stated to be "contrary to principle and against the weight of authority."1 A leading text book on English Constitutional law,2 after noting that it has been held that no debt is owed by the Crown to a civil servant in respect of his salary3 observes
"But it is hard to see why this need be so, and in one House of Lords case4 petition of right proceedings to determine the entitlement of a former civil servant to supplementary payments was successful."As has been pointed out,5 the denial at law of a right to sue for his salary does not represent the true position of the civil servant. 1. D.W. Logan The Civil Servant and his Pay, (1945) 61 L.Q.R. 240, 258, Proposition-C. 2. Wade and Bradley English Constitutional Law, (1970), p. 682. 3. Lucas v. Lucas and High Commissioner for India, (1943), p. 68. 4 Sutton v. Attorney-General, (1923) 39 TLR 294 (HL). 5 Mitchell Constitutional Law, (1968), pp. 211-213. 13. Position as to superannuation in England.—As regards claims based on superannuation, it appears that in England, a suit by a civil servant for claims based on superannuation is not maintainable.1 The civil servant in England enjoys no legal right to superannuation.2 In numerous decisions, this has been held3 to be the correct interpretation of section 30 of the Superannuation Act4 of 1934, taken together with section 2 of the Superannuation Act5-6 of 1859. 1 Nixon v. A.G., 1931 AC 184 (HL). 2 In preparing the discussion as to the position as to superannuation in England, assistance has been taken from Leo Blair The Civil Servant, (1958) Public Law 32, 40. 3 E.g., (a) Edmunds v. Att.-Gen., (1878) 47 LJ Ch;
(b) Cooper v. R., (1880) 14 Ch D 311;
(c) Yorke v. R., (1915) 1 KB 852;
(d) Transferred Civil Servants, (Ireland) Compensation (in re:), 1929 AC 242;
(e) Nixon v. Att.-Gen, 1931 AC 184.4 " nothing in this Act shall extend or be construed to extend to give any person an absolute right to compensation for past services, or to any superannuation or retiring allowance under this Act, or to deprive the Commissioners of His Majesty's Treasury, and the heads or principal officers of the respective departments of their power to dismiss any person from the public service without compensation". (Section 30, Superannuation Act, 1834). 5 "The decision of the Treasury on any question which arises as to the application of any section of this Act,... shall be final." 6 See also (a) section 9, Superannuation Act, 1887, and (b) section 4, Superannuation Act, 1909. 14. Rule an anachronism.—But the rule is an anachronism so far as India is concerned. A suit to recover arrears of pay of a civil servant is maintainable in India,1 and it is hardly logical to continue the bar in respect of suits for pensions. Considerations of State policy may justify the rule that (subject to certain reservations) a public servant holds office at the pleasure of the head of the State. But such considerations do not justify a general bar against suits for pensions. In the discussion on the Pensions Bill, Mr. Cockerell2 observed—"the fundamental principle of the Bill", (which in this respect was, as regards its application to the whole of British India, with the exception of a portion of the Bombay Presidency, a mere recapitulation of the existing law), was that "as the bestowal of pensions, money-grants or assignments of land-revenue was a pure act of grace on the part of the ruling power, so the latter justly and necessarily reserved to itself absolute freedom, of action in regard to the disposal of all claims respecting such allowances; hence no power could be left to the Civil Courts to act adversely to the interests or policy of the Government in such matters". Today this principle cannot be accepted as sound. 1 See also (a) section 9, Superannuation Act, 1887, and (b) section 4, Superannuation Act, 1909. 2. Mr. Cockerell in Proceedings of the Governor-General-in-Council, 8th August, 1871. 15. Whether pension is "property".—In fact, decisions on the question whether the pension granted to a public servant is "property" thereby attracting Article 31(1) of the Constitution, afford ample evidence of the judicial attitude in this matter. The question came up for consideration before the Punjab High Court in Bhagwat Singh v. Union of India., AIR 1962 Punj 503. It was held that a right to pension constitutes "property", and any interference with it will be a breach of Article 31(1) of the Constitution. It was further held that the State cannot, by an executive order, curtail or abolish altogether the right of the public servant to receive pension. On a Letters Patent Appeal,1 the Bench approved the decision that the pension granted to a public servant on his retirement is "property" within the meaning of Article 31(1) of the Constitution and he could be deprived of the same only by an authority of law and that pension does not cease to be property on the mere denial or cancellation of it. It was further held that the character of pension as "property" cannot possibly undergo such mutation at the whim of a particular person or authority. The matter again came up before a Full Bench of the Punjab and Haryana High Court2 and the majority took the same view. 1 Union of India v. Bhagwat Singh, ILR (1965) 2 Punj 1. 2 K.R. Erry v. State of Punjab, ILR (1967) 1 P&H 278 (FB). 16. Judgment of the Supreme Court.—The Supreme Court has recently held1 that a pension is not a bounty payable at the pleasure of the Government, but on the contrary, the right to pension is a valuable right vesting in a Government servant. Further, the right to receive pension is property under Article 31(1) of the Constitution, and the State has no power by a mere executive order to withhold the same. Similarly, the said claim is also property under Article 19(1)(f) of the Constitution. Accordingly, though a Civil Court may be barred from entertaining a suit with reference to the matters mentioned in section 4, such bar does not stand in the way of the issue of a writ of mandamus to the State to consider a claim for pension, according to law. 1 Deoki Nandan Prasad v. State of Bihar, AIR 1971 SC 1409 (1420), paras. 32 and 34 (July issue). 17. Decisions of High Courts.—We ought to emphasise that the relevant reasoning adopted in the judgment indicates that the Supreme Court assumed that a suit for the recovery of pension may be barred under section 4 of the Pensions Act. The assumption thus made by the Supreme Court is fully justified by the fact that High Courts have unanimously construed section 4 as referring not only to political pensions, but also to pensions of retired Government servants, and have, on this basis, refused to entertain suits even by retired Government servants, in respect of pensions.1 1. (a) Shatikat Hussain v. State, AIR 1959 All 769; (b) Buldeo Jha, v. Ganga Prasad, AIR 1959 Pat 17; (c) V.K. Namboodri v. Union of India, AIR 1966 Ker 185 (Joseph & Raghavan JJ.) (reviews cases); (d) Udho Ram v. Secretary of State, AIR 1936 Lah 85; (e) Saffanam v. State, AIR 1963 Mad 49. 18. Points summarised.—In our view, therefore, the present provision in section 4 is—
(a) unjust on principle;1
(b) based apparently on a common law rule which itself is of doubtful validity;2
(d) unrealistic4 and
(e) inconsistent with the basic legal character of the pensioner's right, and, in that sense, opposed to Article 19(1)(f) of the Constitution.1 Para. 10, supra. 2 Paras. 11 and 12, supra. 3 Para. 14, supra. 4 Para. 16, supra. 19. Private Member's Bill.—It may be of interest to note that a few years ago, a Bill to consolidate and amend the law relating to the grant of pensions etc.,1 payable by the Central Government, was introduced in Parliament, it also provided for repeal of the Pensions Act. But the Bill did not become law. 1 The Indian Pensions Bill, 1968 (No. 32 of 1968) (Lok Sabha) (11 April, 1968), (Shri Chaudhary Nitiraj Singh, then Member of Parliament). 20. Provision in Civil Service Regulations.—It is refreshing to find the correct position recorded in the Civil Service Regulations:-1
"Pensions are not in the nature of rewards, but there is a binding obligation on the Government which can be claimed as a right. Their forfeiture is only on resignation, removal or dismissal from service. Before a pension is sanctioned, the sanctioning authority can reduce the amount due under Article 470 of the Civil Service Regulations, and after it is sanctioned its continuance depends on future good conduct vide Article 351 CSR, but it cannot be stopped for other reasons."1 Government of India, Ministry of Finance, U.O. No. D. 2776-E.V. 52 dated the 8th May, 1952, printed as a Government of India's decision below Article 351, Civil Service Regulations. 21. Need for change.—For the above reasons, the drastic provision excluding the right of suit, contained in section 4 of the Pensions Act,1 should not apply to pensions of retired employees of the Government, and a change in the law is required in the interests of social justice and in view of the constitutional status of the right to pension2 under Article 19(1)(f) of the Constitution. 1 Para. 6, supra. 1 Para. 18(f), supra. 22. Recommendation.—We, therefore, recommend that the following Exception should be added to section 4 of the Pensions Act, 1871:—
"Exception —Nothing in this section applies to a pension payable to or in respect of any person1 appointed to a public service or post in connection with the affairs of the Union."Having regard to the position as to legislative competence,2 State pensions cannot, of course, be brought within the purview of the proposed change,—though we do recommend that the Union Government should draw the attention of State Governments to the constitutional status of the right to pension and impress upon them the desirability of passing legislation similar to that proposed in this Report. 1 Cf. Article 366(17) of the Constitution, as to the words "to or in respect of". 2 Para. 3, supra. 23. Other points not considered.—In making our recommendation as to section 4, we have not thought it necessary to consider whether the other provisions of the Pensions Act need modification or repeal. Our limited object in making this report is to remove the existing anomaly as regards the right to sue in respect of pensions earned by public servants in the employ of Government. We should, before we part with this Report, place on record our warm appreciation of the assistance we have received from Mr. Bakshi, Secretary of the Commission, in dealing with the problem covered by the Report. As usual Mr. Bakshi first prepared a draft which was treated as the Working Paper. The draft was considered by the Commission point by point, and, in the light of the decisions taken tentatively by the Commission, Mr. Bakshi prepared a final draft for consideration and approval by the Commission. Throughout the study of this problem, Mr. Bakshi took an active part in our deliberations, and has rendered very valuable assistance to the Commission. P.B. Gajendragadkar, Chairman. V.R. Krishna Iyer, Member. P.K. Tripathi, Member. S.S. Dhavan, Member. P.M. Bakshi, Secretary. New Delhi, Dated: 4th December, 1972.