Bombay High Court questions the Government Law on New Pension Scheme

| August 16, 2017


The Bombay High Court has held recently that the New Pension Scheme brought in by the state government, through a Government Resolution dated October 31, 2005 (cut-off date), was not applicable to judicial officers in the state and the ones appointed after this cut-off date could choose to opt for the same.

A bench of Justice AS Oka and Justice AK Menon held that the officers who do not opt for the New Pension Scheme within two months will continue to be governed by the earlier pension scheme that was in operation prior to the said GR.

The court pronounced the judgment in a petition filed by Vihar Dhurve, wherein issues such as appointments to the lower judiciary, discontinuation of the pension scheme brought in after the Shetty Commission recommendations were raised.

Brief Case History

Following directions of the Supreme Court in All-India Judges Association and Ors vs Union of India and Ors, the Central Government constituted the first National Judicial Pay Commission under the chairmanship of (retd) Justice KJ Shetty in 1993. This commission submitted a report on the service conditions of judicial officers in 1999.

The Supreme Court accepted the recommendations of the Shetty Commission, subject to certain modifications that were set out in the judgment.

Although the apex court kept issuing directions to states to follow recommendations of the Shetty Commission, once salaries for judges of the High Court were increased, the court appointed (retd) Justice E Padmanabhan to look into the extent to which salaries of judicial officers can be increased.

Justice Padmanabhan submitted his report with various recommendations which were accepted by the apex court and directions were issued to implement the report from January 1, 2006.

Maharashtra issued government resolutions from time to time in order to comply with the directions of the Supreme Court regarding service conditions of judicial officers, however, the GR dated October 31, 2005, brought in all government servants, including judicial officers, under a new pension scheme.

Petitioner’s advocate Jalan Sandeep argued that this GR was in violation of directions of the Supreme Court as no modifications were sought to earlier directions before applying it to judicial officers in the state.

The New Pension Scheme

The Government of Maharashtra decided to bring in a new “Defined Contribution Pension Scheme” under the said GR, which would be on the lines of the Centre’s decision to replace the existing pension scheme.

This scheme would be mandatory for all government servants recruited on or after November 1, 2005, in state government service under the Maharashtra Civil Services (Pension) Rules, 1992.

The new contribution pension scheme will be based on defined contribution and will have two tiers – while Tier-I will be mandatory for all the government servants recruited on or after November 1, 2005, whereas Tier-II will be optional for them.

Under Tier-I, every government servant will have to make a monthly contribution at 10% of his ‘basic pay plus dearness pay (if any) plus dearness allowance’, which will be deducted from his salary bill every month.

The state government will make an equal matching contribution. The contributions and the investment returns will be kept in a non-withdrawable ‘Pension Tier-I Account’.

Under Tier-II, there will be an option for the employee to have a ‘Voluntary Tier- II withdrawable account’.

Court’s Directions

The court observed the fallacy in the argument submitted on behalf of the state and said: “The action of applying the impugned Government Resolution to the Judicial Officers is completely contrary to the directions of the Apex Court. In fact, the impugned Government Resolution is not at all applicable to the Judicial Officers who are appointed from November 1, 2005. The terms and conditions of service of Judicial Officers including the grant of pensionary benefits are governed by the directions of the Apex Court. Therefore, even if the letters of appointment issued to the Judicial Officers appointed after 1st January, 2005 contain a clause that the pension will be governed by the impugned Government Resolution, the same will not be binding on the Judicial Officers.”

Thus, pensionary benefits available to judicial officers before the said GR will continue to remain available and those officers who wish to withdraw from the pension scheme, which was made mandatory, will be allowed to do so.

Category: News, NPS, Pensioners

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