G. Suguna Bai vs The State Of Telangana on 25 July, 2025

0
3

Telangana High Court

G. Suguna Bai vs The State Of Telangana on 25 July, 2025

Author: P.Sam Koshy

Bench: P.Sam Koshy

      IN THE HIGH COURT FOR THE STATE OF TELANGANA:
                        HYDERABAD
                            ***
             WRIT PETITION No.26042 of 2024 & Batch


Between:
M.V.S.N. Acharyulu & Others.
                                                         Petitioners
                                  VERSUS

The State of Telangana,
Rep. By its Chief Secretary,
Dr. B.R. Ambedkar Secretariat,
Hyderabad - 500 022 and Others.
                                                         Respondents


          COMMON ORDER PRONOUNCED ON: 25.07.2025


           THE HON'BLE SRI JUSTICE P.SAM KOSHY
                           AND
     THE HON'BLE SRI JUSTICE NARSING RAO NANDIKONDA


1.   Whether Reporters of Local newspapers
     may be allowed to see the Judgments?    : Yes

2.   Whether the copies of judgment may be
     marked to Law Reporters/Journals?       : Yes

3.   Whether His Lordship wishes to
     see the fair copy of the Judgment?      : Yes


                                                     _________________
                                                      P.SAM KOSHY, J
                                      Page 2 of 36


              * THE HON'BLE SRI JUSTICE P.SAM KOSHY
                                       AND
     THE HON'BLE SRI JUSTICE NARSING RAO NANDIKONDA
                + WRIT PETITION No.26042 of 2024 & Batch

% 25.07.2025
# Between:
M.V.S.N. Acharyulu & Others.
                                                               Petitioners
                                     VERSUS

The State of Telangana,
Rep. By its Chief Secretary,
Dr. B.R. Ambedkar Secretariat,
Hyderabad - 500 022 and Others.
                                                                Respondents

! Counsel for Petitioner(s)      : Mr. Rajkumar Gummi, learned counsel appearing on
                                   behalf of Mr. Karunakar Reddy, learned counsel for
                                   the petitioners in Writ Petition Nos.20932, 27542,
                                   28636, 29277, 31084 and 32535 of 2024.
                                   Mr. P.Suresh Reddy, learned Senior Counsel
                                   appearing on behalf of Mr. Dayakar Reddy, learned
                                   counsel for the petitioners, Mr. G.Raman Goud,
                                   learned counsel for the petitioners, Mr.
                                   D.Laxminarayana, learned counsel for the petitioners
                                   in Writ Petition Nos.30114, 30941, 31063, 31772,
                                   31775, 32458 and 34179 of 2024,
                                   Mr. P.Suresh Reddy, learned Senior Counsel
                                   appearing on behalf of Mr. Ponurupar Suman, learned
                                   counsel for the petitioner in Writ Petition No.32887 of
                                   2024.

^Counsel for the respondent(s) : Mr. Goda Shiva, learned Senior Counsel representing
                                   Mr. Ajgal Ravi Babu, learned Standing Counsel for
                                   State Bank of India in Writ Petition Nos. 32458,
                                   30941, 30114, 31063, 31775, 31772, 34179 and
                                   32887 of 2024.
                                   Mr. B.S.Prasad, learned Senior Counsel representing
                                   Mr. Ajgal Ravi Babu, learned Standing Counsel for
                                         Page 3 of 36


                                    State Bank of Hyderabad in Writ Petition Nos.32535,
                                    20932, 28636, 31084, 27542 and 29277 of 2024.

<GIST:
> HEAD NOTE:
? Cases referred
   1) (1987) 1 SCC 142
   2) 2019 SCC Online Del 6610
   3) (1983)1 SCC 305
   4) Civil Appeal No(s).3922-3925 of 2017, decided on 03.09.2021
   5) S.L.P. (C) No.39288 of 2012, dated 25.04.2018
   6) 1991 Supp (1) Supreme Court Cases 600
   7) 2025:AHC:6439-DB
   8) (1986) 3 Supreme Court Cases 156
   9) W.A.No.677 of 2022, decided on 03.01.2023
   10) 2004 (3) CTC 19
   11) Civil Appeal No.208 of 1958, decided on 19.11.1958
   12) (1985) 3 Supreme Court Cases 545
   13) (2000) 3 Supreme Court Cases 588
   14) (1952) 1 Supreme Court Cases 1
   15) (2017) 9 Supreme Court Cases 1
   16) (1974) 4 Supreme Court Cases 3
   17) W.P.No.20034 of 2003 (S-RES), decided on 22.03.2011
   18) WP(C).No.23282 of 2005(V), decided on 22.02.2008
   19) (2011) 1 Supreme Court Cases 640
   20) 2002 SCC OnLine P&H 891
   21) Civil Appeal No.4667 of 1999, decided on 23.08.1999
   22) 2019:PHHC:104149-DB
   23) 2024:PHHC:163694-DB
   24) CWP.No.9426 of 2023 (O & M), dated 27.11.2024
   25) Writ Petition No.24822 of 2024 along with batch, dated 28.04.2025.
                                            Page 4 of 36


             THE HONOURABLE SRI JUSTICE P.SAM KOSHY
                              AND
       THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA

 Writ Petition Nos.26042, 20932, 24794, 25032, 25375, 27199, 27389, 27438, 27480,
27542, 27569, 27576, 27809, 27812, 27836, 28019, 28450, 28478, 28558, 28569, 28585,
28591, 28636, 28651, 28654, 28674, 28700, 28743, 28755, 28806, 28829, 28863, 29026,
29230, 29236, 29277, 29299, 29344, 29412, 29450, 29460, 29487, 29499, 29504, 29519,
29526, 29619, 29734, 29742, 29794, 29797, 29847, 29940, 29983, 30031, 30114, 30188,
30272, 30282, 30533, 30568, 30589, 30632, 30643, 30659, 30704, 30787, 30810, 30834,
30846, 30850, 30898, 30916, 30918, 30941, 30958, 30976, 30989, 30996, 31024, 31050,
31063, 31084, 31102, 31124, 31157, 31170, 31173, 31209, 31224, 31228, 31236, 31245,
31285, 31330, 31377, 31531, 31560, 31678, 31680, 31701, 31744, 31748, 31751, 31772,
31775, 31822, 31828, 31829, 31842, 31843, 31847, 31849, 31851, 31852, 31906, 31933,
31960, 31966, 31985, 32014, 32033, 32046, 32063, 32097, 32111, 32120, 32121, 32130,
32177, 32195, 32213, 32217, 32220, 32222, 32224, 32229, 32233, 32238, 32240, 32242,
32269, 32298, 32307, 32318, 32344, 32345, 32349, 32350, 32361, 32364, 32365, 32366,
32375, 32376, 32389, 32391, 32397, 32422, 32440, 32455, 32458, 32463, 32464, 32465,
32481, 32486, 32496, 32498, 32499, 32500, 32514, 32530, 32534, 32535, 32536, 32543,
32548, 32561, 32563, 32581, 32584, 32589, 32593, 32598, 32601, 32638, 32639, 32655,
32667, 32668, 32689, 32702, 32713, 32719, 32791, 32810, 32847, 32849, 32854, 32882,
32887, 32889, 32954, 32991, 33010, 33039, 33082, 33160, 33175, 33215, 33269, 33292,
33327, 33514, 33622, 33625, 33719, 33966, 34179, 34321, 34351, 34615, 35047, 35622,
  36474, 36634 of 2024 & Writ Petition Nos.357, 476, 2121, 2130, 3155 and 3930 of
                                       2025
                                       and
                         Contempt Case No.2824 of 2024

COMMON ORDER:

(per the Hon’ble Sri Justice P.Sam Koshy)

These are batch of writ petitions where the grievance of all the petitioners

is common. Hence, in terms of the agreement that was arrived at during the

course of hearing, the Bench proceeded to hear all these batch matters

analogously and also decided to pass a common order.

2. Heard Mr. Rajkumar Gummi, learned counsel appearing on behalf of Mr.

Karunakar Reddy, learned counsel for the petitioners in Writ Petition
Page 5 of 36

Nos.20932, 27542, 28636, 29277, 31084 and 32535 of 2024, Mr. P.Suresh

Reddy, learned Senior Counsel appearing on behalf of Mr. Dayakar Reddy,

learned counsel for the petitioners, Mr. G.Raman Goud, learned counsel for the

petitioners, Mr. D.Laxminarayana, learned counsel for the petitioners in Writ

Petition Nos.30114, 30941, 31063, 31772, 31775, 32458 and 34179 of 2024,

Mr. P.Suresh Reddy, learned Senior Counsel appearing on behalf of Mr.

Ponurupar Suman, learned counsel for the petitioner in Writ Petition No.32887

of 2024, and Mr. Goda Shiva, learned Senior Counsel representing Mr. Ajgal

Ravi Babu, learned Standing Counsel for State Bank of India in Writ Petition

Nos. 32458, 30941, 30114, 31063, 31775, 31772, 34179 and 32887 of 2024,

Mr. B.S.Prasad, learned Senior Counsel representing Mr. Ajgal Ravi Babu,

learned Standing Counsel for State Bank of Hyderabad in Writ Petition

Nos.32535, 20932, 28636, 31084, 27542 and 29277 of 2024.

3. There are three set of writ petitions in this batch where the grievance is

common, but these three set of petitioners belong to different categories or

under different set of employers. Firstly, the majority writ petitions are by the

State Government employees, second is the batch of writ petitions pertaining to

employees who have retired after serving the State Bank of India and the third

category is all those employees from the banking sector who have worked in
Page 6 of 36

banks other than the State Bank of India, like the State Bank of Hyderabad,

Union Bank of India, Andhra Bank, etc. etc.

4. All the petitioners in this batch of writ petitions are retired employees of

either the State Government or from the State Bank of India or from other

nationalized banks.

5. All these writ petitioners on their attaining the age of superannuation and

retiring from service had voluntarily applied and received commutation of

pension under the respective pension rules governing the respective

employment under whom the petitioners were working. All these petitioners

have practically retired from service by now, by over a decade i.e. more than 10

years back.

6. The grievance that the petitioners have now raised is that the payment of

pension payable to the petitioners should now be restored entitling them for full

pension without any further deduction, instead of waiting for entire 15 years, as

is prescribed under the respective pension rules governing their employment.

According to the petitioners, the amount of commuted pension that each of the

petitioner have availed and received has already been recovered along with

interest also by the employer, and as such, there is no further necessity of
Page 7 of 36

recoveries from pension being continued for the remaining period of 15 years

from the date of commutation having been made.

7. In nutshell, what is prayed by the petitioners is that the fixation of

timeline of 15 years of reduced pension upon commutation being availed is bad,

arbitrary and also violative of Article 14 of the Constitution of India. That full

pension should be restored immediately on recovering the entire commuted

value along with interest, which in the normal circumstances, according to the

petitioners would get recovered between a span of around 11-12 years.

8. So far as the set of employees of the first category i.e. the petitioners who

have retired from the State Government service have challenged the Rule 18 of

the Telangana Civil Pensions (Commutation) Rules, 1944 (for short, the ‘Rules,

1944’) so far as the said rule of fixing restoration of full pension only on

completion of 15 years of recovery. There was also a prayer by the petitioners

for a direction to the respondents for reduction of the period of 15 years

prescribed under Rule 18 to 12 years. In addition, there was also a prayer for a

direction to the respondent to refund the excess amount of pension recovered

from the petitioners beyond the period of actual recovery of commuted value

along with interest.

Page 8 of 36

9. So far the petitioners from the State Bank of India and other Banks, they

have challenged the constitutional validity of explanation 2 of clause (d) of sub-

regulation 17 of Regulation 23 of the State Bank of India Employees Pension

Fund Rules, 2014 (for short, the ‘Rules, 2014′), so far as the petitioners of the

State Bank of Hyderabad, they have challenged the Regulation 41(5) of the

State Bank of Hyderabad (Employees) Pension Regulations, 1995, and so far as

the petitioners of the Union Bank of India, they have challenged the Union

Bank of India (Employees’) Pension Regulations, 1995.

10. Here the stand of the petitioners was that the commuted value of pension

was getting recovered in a period of around 6½ – 7 years. Therefore, any

recovery of pension being made beyond a period of 6½ – 7 years is arbitrary,

and as such, the rules have to be declared ultra vires and violative of Article 14,

16 and 21 of the Constitution of India.

11. Except for the mathematical calculation of the amount of pension

commuted being recovered by the respective employer, the grounds of

challenge in all these batch of writ petitions are same.

12. So far as the State Government as also the banking sector are concerned,

in all the aforesaid establishments, the commutation of pension is recovered for

a fixed period of 15 years. It is this which is under challenge in these batch of
Page 9 of 36

writ petitions. According to the pensioners, from the Government side it is

contended that the commutation of pension and if interest is also added to that

amount at the prevailing bank rate, even then the recovery of the entire amount

with interest could be made between a period of 12-13 years. Likewise, so far as

the pensioners from the banking sector are concerned, it is the contention that

since the bank claims to provide interest free commutation, the recovery of the

commuted value is done in a period of just around 6-8 years. According to the

pensioners, though the bank does not charge interest, but even if interest at the

normal prevailing rate is added to the commuted value, even then the entire

amount with interest gets recovered in just around 9-10 years. Thus, in all these

situations, the recovery of pension from the pensioners who have commuted

their pension should not be made for a period of 15 years and the petitioners

herein want the recovery to be stopped forthwith and any excess amount

recovered in terms of the calculation of the petitioners be refunded and the

Government and banking sector may take appropriate steps for reduction of the

recovery period from 15 years to a period strictly in terms of the calculation be

made.

13. In view of the said submission, the contention of all the counsel

representing the petitioners is that any recovery being made beyond a period of

12 years so far as the State Government pensioners are concerned is nothing but
Page 10 of 36

an act of undue enrichment being made by the State Government itself.

According to the petitioners, such act of undue enrichment has to be held

arbitrary and per se illegal at the threshold itself. According to the petitioners,

the pension and the commutation of pension is in fact a welfare measure

introduced by the employers so as to protect the post-retirement life of an

employee. Such a welfare measure cannot be made profitable for the

Government or in other words the Government being a welfare State should not

be permitted to earn profit in such situations. Hence, they should restore the full

pension in cases where pensioners have made commutation of their pension

immediately from the time the entire amount deducted stands recovered along

with interest on the same, or if it is interest free, then as and when the entire

amount itself stands recovered.

14. It was also the contention of the learned counsel for the petitioners that

any recovery being made beyond the period the entire commuted amount having

been recovered is totally unjustified. According to the petitioners even the Pay

Commission constituted by the Central Government had also recommended for

stopping of recoveries in such cases beyond the period of the entire amount

having been realized. It was also the contention of the petitioners that these days

life expectancy of an employee has also got increased substantially as compared

to the earlier time. Therefore, the Government / Employer is able to recover the
Page 11 of 36

entire amount commuted with a reduced risk of early death of the pensioner

who has availed the benefit of commutation. Whereas in the olden days, since

the life expectancy was less, and upon the death of a pensioner, the employer

was not in a position to recover the entire amount. According to the petitioners,

the request for reduction in the period of recovery from 15 years to a lesser

period is also on the ground that when the rules under challenge were framed,

the rate of interest charged was 4.57 % which now has risen up to 8 %. On

account of the increased rate of interest, the amount to be recovered also gets

increased substantially. This according to the petitioners is where the State

Government so also other the employers are acting in a way detrimental to the

interest of the employees amounting to undue enrichment. This act of undue

enrichment otherwise is unconstitutional and impermissible under law

particularly for the reason that the Government being a welfare State and having

recovered the entire amount along with interest there is no justifiable reason

available with the employer to continue the deduction for the entire period of 15

years. It was also the contention of the petitioners that if the entire amount

recovered in a span of 15 years is taken as against the amount of commuted

pension, it would reveal that the recovery made is exorbitant adding interest to it

also would be less than the amount which is being recovered.
Page 12 of 36

15. It was also the contention of the learned counsel for the petitioners that in

case where interest was attached to the recovery to be made and if the rate of

interest is taken at 8%, the amount that comes if added to the total amount of

pension commuted, the moment the entire amount stands recovered, the full

pension should be restored without there being any further recovery and without

waiting for the 15 years period that is reflected in Rule 18 of the Pension Rules.

So also, the learned counsel for the petitioners, representing the pensioners from

the Banking sector, also contended that when the banks claim that the banks are

not charging any interest on the commuted amount of pension it would be only

the amount commuted which needs to be recovered irrespective of any upper

limit of the period of recovery. Under such circumstances, the amount of

recovery should automatically stop and full pension has to be restored, and there

cannot be any recovery beyond the commuted amount. All this would go to

show that any recovery beyond the said period is nothing but undue enrichment.

16. Learned counsel for the petitioners had relied upon a catena of decisions

of the Hon’ble Supreme Court and also the other High Courts in support of their

contentions, viz.,

1) Common Cause” a registered Society and others vs. Union of India 1

1
(1987) 1 SCC 142
Page 13 of 36

2) Forum of Retired IPS Officers (FORIPSO) vs. Union of India and
another2

3) D.S. Nakara vs. Union of India 3

4) Somesh Thapliyal & Anr. Etc. vs. Vice Chancellor, H.N.B Garhwal
University & Anr. 4

5) Union of India vs. Gramin Bank Pensioners Samiti and Ors.5

6) Delhi Transport Corporation vs. D.T.C. Mazdoor Congress and
Another6

7) Ashok Kumar Agarwal and 48 Others vs. Union of India and
Another7

8) Central Inland Water Transport Corporation Limited and Others vs.
Brojo Nath Ganguly and Others
8

9) Special Collector, AMRP and SLBC, Ramagiri, Nalgonda and
Others vs. Sri Kinnara Syam and Others 9

10) Land Acquisition Officer-cum-R.D.O., Chevella Division,
Hyderabad and others vs. Mekala Pandu and Others
10

11) Basheshar Nath vs. Commissioner of Income-Tax, Delhi &
Rajasthan and Another
11

12) Olga Tellis and Others vs. Bombay Municipal Corporation and
Others
12

13) Nar Singh Pal vs. Union of India and Others 13

2
2019 SCC Online Del 6610
3
(1983)1 SCC 305
4
Civil Appeal No(s).3922-3925 of 2017, decided on 03.09.2021
5
S.L.P. (C) No.39288 of 2012, dated 25.04.2018
6
1991 Supp (1) Supreme Court Cases 600
7
2025:AHC:6439-DB
8
(1986) 3 Supreme Court Cases 156
9
W.A.No.677 of 2022, decided on 03.01.2023
10
2004 (3) CTC 19
11
Civil Appeal No.208 of 1958, decided on 19.11.1958
12
(1985) 3 Supreme Court Cases 545
13
(2000) 3 Supreme Court Cases 588
Page 14 of 36

14) State of West Bengal and Others vs. Anwar Ali Sarkar and
Others
14

15) Shayara Bano and Others vs. Union of India and Others 15

16) E.P. Royappa vs. State of Tamil Nadu and Another16

17) All India Regional Rural Bank Employees Association and
Others vs. Union of India and Others
17

18) Central Government Pensioners’ Association, Kerala
(Reg.No.1765/98) vs. Union of India and Another18

17. Per contra, learned counsel for the respondents contended that the issue

involved in the instant batch of writ petitions is nothing but a policy decision,

more particularly, an economic policy of the Government which has also been

adopted by the Banking sector as well. Therefore, according to the learned

counsel for the respondents, in an economic policy decision matter, it is not for

the Judiciary to advise or enact laws and rules, but it has to be left to the

wisdom of the law-makers and therefore the batch of writ petitions have to be

rejected on that ground. He further contended that the principle of estoppel

would apply against the petitioners. According to him, all the petitioners who

are the pensioners of the State Government have retired more than 10 years ago.

The statutory scheme was abundantly clear that an option was extended to the

14
(1952) 1 Supreme Court Cases 1
15
(2017) 9 Supreme Court Cases 1
16
(1974) 4 Supreme Court Cases 3
17
W.P.No.20034 of 2003 (S-RES), decided on 22.03.2011
18
WP(C).No.23282 of 2005(V), decided on 22.02.2008
Page 15 of 36

retiring employees to avail the benefit of commutation on specific terms.

Having opted to the commutation policy with wide open eyes, it is not open for

the retiring employees to later contend that the period of restoration of full

pension be reduced. They had, with wide open eyes, applied for the

commutation of pension and when the petitioners had applied they were well

aware of the rules and regulations and also the period of recovery, i.e., 15 years.

Having been aware of the commutation of pension and the period of recovery to

be made, still if the petitioners have voluntarily availed the benefit of

commutation, they cannot now turn around and cry foul so far as recovery being

made for a period of 15 years is concerned. Thus, the petitioners are

estoppelled from challenging the recovery proceeding at the first instance or

claiming for any relief of reduction in the period of 15 years. According to him,

the entire act of the petitioners having availed the commutation of pension was

voluntary without there being any force or external pressure being put. In that

event, the petitioners had also the option of not availing the benefit of

commutation of pension and thereby the petitioners would have got the full

pension without there being any recovery made whatsoever. It was also the

contention of the learned counsel for the respondents that the pensioners have

utilized the lump sum amount of commuted pension and they have already

earned from the said money. It could be a case where the pensioners must have
Page 16 of 36

invested it for better returns and in the process must have also generated income

from the same. Hence, now they cannot be permitted to challenge the recovery

which is being made strictly in accordance with the Rules of which they were

well aware of at the time when they had availed the benefit of commutation of

pension.

18. Learned counsel for the respondents further contended that though the 5th

Central Pay Commission had recommended reducing the restoration period to

12 years, but the Central Government did not accept the said recommendation.

However, the learned counsel for the respondents strongly contended that in

view of the 6th and 7th Central Pay Commission, it has been categorically

recommended that restoration of pension has to be only after the completion of

15 years. It was also the contention of the learned counsel for the respondents

that it is not just the life expectancy or the increase in the life expectancy or the

entire commuted amount being recovered within a span of 12 years alone a

relevant factor so far as restoration of full pension is concerned. He further

submitted that in addition to the aforesaid factor, there are many other factors

also which need to be taken care of and which is exclusively within the domain

of the experts in the field of deciding the same. From the factors like the risk

factor involved, i.e., taking into consideration the number of pensioners who

have commuted their pension, and before the recovery of the entire amount
Page 17 of 36

some of the pensioners expire and where the rule does not permit any further

recovery on the death of a pensioner who has commuted his pension from the

family pension payable to the family. Apart from that, another factor which

needs to be considered is the huge amount of financial resources which the

employer requires while making the payment towards commutation of pension.

Thus, mortality risk and the overall financial implications for the State and the

arrangement of financial resources available such as financial implications on

monthly basis considering the number of employees retiring and seeking

commutation of pension are also strong reasons to be taken note of and which

we strongly believe to be also the factors on the basis of which the law-makers

must have decided recovery being made for a period of 15 years and also fixing

15 year period under the Rules.

19. In support of the aforesaid contentions, learned counsel for the

respondents relied upon the following judgment of the Hon’ble Supreme Court,

viz.,

1) Bajaj Hindustan Limited vs. Sir Shadi Lal Enterprises Limited and
Another19

2) Rattan Chand & Others vs. Bhakra Beas Management Board &
Another20

3) R. Gandhi vs. Union of India and Another 21
19
(2011) 1 Supreme Court Cases 640
20
2002 SCC OnLine P&H 891

Page 18 of 36

4) Ram Kishan and Another vs. Punjab State Power Corporation Ltd.,
Patiala and Another22

5) Satish Kumar Goyal and Others vs. Union of India and Another 23

20. Having heard the contentions put forth on either side and also on a

perusal of the statutory provisions under challenge in the present batch of writ

petitions and the relief sought for by the petitioners, it would be relevant at this

juncture to take note of Rule 2 of the Telangana Civil Pensions (Commutation)

Rules, 1944, which speaks of commutation of pension. The relevant portion is

extracted as under, viz.,

“2.Commutation of Pension : — (a) A Government servant to whom the
Telangana Civil Pension (Commutation) Rules, 1944 apply, shall subject
to the condition hereinafter specified, be allowed to commute for a lump
sum payment any portion not exceeding one third of the pension granted
to him by the State Government :

Provided that –

(i) the expenditure involved can be met from the sanctioned
budget grants, and

(ii) the residue of the pension after the commutation, together
with the uncommuted portion of any permanent pension or
pensions payable to the Government servant by a local body
or by any Government in India shall not be less than
Rs.370/- (Rupees three hundred and seventy only).”

21

Civil Appeal No.4667 of 1999, decided on 23.08.1999
22
2019:PHHC:104149-DB
23
2024:PHHC:163694-DB
Page 19 of 36

21. As can be seen from above, Rule 2 allows a pensioner to commute for a

lump sum payment of any portion of his pension not exceeding total of 1/3rd of

pension payable to him. Likewise, Rule 18 of the above Rules, speaking of

restoration, categorically envisages restoration of the pension on completion of

15 years of time. Almost similar are the provisions so far as the Rules

regulating the commutation of pension for the pensioners in the banking sector.

Further, in all the cases, the restoration prescribes only after 15 years period.

22. Another aspect which needs consideration at this juncture is the reliance

on the judgment of the Hon’ble Supreme Court in the case of Common Cause

(supra), which has been heavily relied upon by the petitioners as also by the

respondents. For better understanding of the views expressed by the Hon’ble

Supreme Court in the aforesaid case, it would be relevant to take note of the

issue which arise before the Hon’ble Supreme Court for consideration and that

which is reflected in paragraph No.2, and the contention of the petitioners which

is reflected in paragraph No.5, and also the operative part of the order laying to

rest the issue raised which is reflected in paragraph No.9 of the said judgment.

For ready reference, the relevant paragraphs are extracted hereunder, viz. ,

“2. The Central Civil Services (Commutation of Pension) Rules, 1981 are
the appropriate rules in force so far as civilian employees under the
Page 20 of 36

Government of India are concerned. A set of regulations is in force in
regard to defence personnel.

………

5. The petitioners have contended that the commuted portion out of the
pension is ordinarily recovered within about 12 years and, therefore,
there is no justification for fixing the period at 15 years. Commutation
brings about certain advantages. The commuting pensioner gets a lump-
sum amount which ordinarily he would have received in course of a
spread over period subject to his continuing to live. Thus, two
advantages are certainly forthcoming out of commutation — (1)
availability of a lump sum amount, and (2) the risk factor. Again many of
the State Governments have already formulated schemes accepting the
15 year rule. In this background, we do not think we would be justified in
disturbing the 15-year formula so far as civilian pensioners are
concerned.

… …. …

9. In dealing with a matter of this nature, it is not appropriate to be
guided by the example of life insurance; equally unjust it would be to
adopt the interest basis. On the other hand, the conclusion should be
evolved by relating it to the “years-of-purchase” basis. An addition of
two years to the period necessary for the recovery on the basis of years
of purchase justifies the adoption of the 15-year rule. That is more or less
the basis which appears to be equitable. It may be that this would give
rise to an additional burden on the exchequer but it would not be heavy
and after all it would bring some relief to those who have served the
cause of the nation at great sacrifice. We are, therefore, of the view that
no separate period need be fixed for the armed forces personnel and they
should also be entitled to restoration of the commuted portion of the
pension on the expiry of 15 years as is conceded in the case of civil
pensioners. And for them too, the effective date should be from April 1,
1985.”

Page 21 of 36

23. The issue before the Hon’ble Supreme Court was primarily in respect of

the different years of weightage being given to persons in the Armed Forces

after putting different years of service as per rank and the demand was for a

uniformity to be maintained. Keeping that in mind was the observation that has

been made by the Hon’ble Supreme Court at paragraph No.9 which had been

reproduced above in Common Cause (supra).

24. In the course of deliberations, we find that there has been three different

set of litigations similar, if not identical, to the one in these batch of writ

petitions decided by three different High Courts. Those are the one decided by a

Division Bench of the Delhi High Court authored by Hon’ble Sri Justice Sanjiv

Khanna (as he then was) and heading the Division Bench in the case of Forum

of Retired IPS Officers (FORIPSO) (supra), decided on 17.01.2019.

Likewise, there has been two recent decisions, one by the High Court of Punjab

and Haryana in the case of Shila Devi and Others vs. State of Punjab and

Others 24 , in a batch of over 800 writ petitions; while the third case being

another batch of writ petitions decided by the High Court of Andhra Pradesh, at

Amaravathi in the case of Thupakula Venkateswar Rao and Others vs. the

24
CWP.No.9426 of 2023 (O & M), dated 27.11.2024
Page 22 of 36

State of Andhra Pradesh and Others 25 , while the instant batch of writ

petitions were reserved for orders. It can also be seen that there were few more

writ petitions of similar nature which were agitated before the High Court of

Punjab & Haryana with similar relief and have got decided following its

decision in Shila Devi and Others (supra).

25. Before referring to the three judgments on similar issues raised before

three different High Courts, it would be apt to look into the various advantages

derived by the pensioners upon commutation of pension. Firstly, as provided in

the rules, there will be a recovery only after a fixed period of 15 years.

Secondly, in the event of an untimely death of the pensioner, the Government /

Employer does not continue with the recovery any further from the family

members. Thirdly, the pensioner receives a lump sum amount at the time of his

retirement or when the pensioner opts for commutation, which could be

invested, whereby the pensioner would get better returns. Fourthly, the lump

sum commutation of pension also is income tax exempted, which further is an

advantage for a pensioner.

26. Apart from the aforesaid advantages, what also needs to be considered is

that the benefit of commutation of pension is a welfare measure introduced by

25
Writ Petition No.24822 of 2024 along with batch, dated 28.04.2025
Page 23 of 36

the Government / Employer. It is at the option available with the employee with

no force or pressure for opting the same from the side of the Government /

Employer. It is a pure voluntary act on the part of the employee / pensioner to

decide the portion of pension which he wants to commute in accordance with

the limits prescribed under the rules. Since it is governed by the rules and

regulations, the employees / pensioners were all well aware of the pros and

cons, advantages and disadvantages, and benefits and drawbacks. It is only after

understanding of these facts, an employees / petitioners herein had taken a

decision to opt for commutation. In the said circumstances, if with wide open

eyes, the employee having opted and availed the benefit of commutation of

pension, he does not have any right further, after so long a period, now to

question the mode of recovery exercised by the Government / Employer.

27. Keeping in mind the aforesaid factual matrix of the case, it would be now

relevant to consider the judgment of the Delhi High Court in the case of Forum

of Retired IPS Officers (FORIPSO) (supra), wherein in paragraph Nos.20 to

23, it has been held as under:

“20. Increase in life expectancy and its effect on commuted pension
cannot be viewed in isolation. Several factors, figures and the entire
pension provisions on the whole including cost to the exchequer have to
be taken into consideration. Commutation table can take into
consideration periodical increase in salary and better saving capacity
Page 24 of 36

during service period due to increase and enhanced pay scales. Courts
would hesitate and not go by one formula and mathematical calculations
on assumption and precept that the formula would be more fair, just and
appropriate. There can be many formulas. Calculations are complex,
convoluted and a tricky task. Fixation of payment of pension or
commutation of pension, etc. are highly difficult and cumbersome
exercise which the Court would not like to step into, undertake and even
interfere unless there is complete arbitrariness and discrimination that is
ex-facie apparent. Courts on perceived wisdom would not declare the
table as flawed, acting and preforming the role of an actuarial. Every
government, including the Central Government, has to take into
consideration their available resources and funds, for any increase and
enhancement in pension requires money which may well have to be
diverted from other schemes or would result in reduction of funds
available for poor, the marginalized and needy.

21. Pension, commutation of pension, etc. are policy matters, which are
examined and decided on the basis of recommendations of the Pay
Commissions by the authorities. No doubt, an executive order or policy
decision is not beyond the scope of judicial review but the Courts do not
go into the nitty gritty of the policy to substitute the table by making
various computations and calculations, which are possible by different
formulas or by applying a particular formula. Broadly, policy decisions
can be subjected to judicial review when they are unconstitutional
being de hors the provisions of the Act and the Regulations, if the
delegatee has acted beyond its power of delegation and if the executive
policy is contrary to the statutory or larger policy in matters of price
fixation, pay fixation, etc. Courts would not interfere unless formula or
method adopted is per se and ex facie irrational, arbitrary or can be
struck down on the four grounds mentioned above.

Page 25 of 36

22. These aspects were kept in mind and highlighted by the Supreme
Court in Common Cause’s case (supra) when they rejected the
contention that the commuted portion of pension would be ordinarily
recovered within 12 years, and therefore, there was no justification for
fixing period at 15 years. The Supreme Court observed that commutation
brings about its advantages as a lump sum amount is received, which
amount would have otherwise been paid over a period of time during a
person’s life-time. The Supreme Court had listed out two clear
advantages, namely, availability of the lump sum as pension and the risk
factor. We may add another advantage as the commutation of pension is
presently untaxed under the Income Tax Act, 1961. This considerably
adds to the monetary benefit accruing to the pensioners. Further, the rate
of return on the funds invested by the pensioners could vary and depends
upon market driven rate of interest. There are schemes for senior citizens
in which the rate of returns is high. Computations made by the petitioner
do not refer to the return by way of interest that the pensioner would
earn. In the aforesaid background the Supreme Court had specifically
rejected similar argument observing that while fixing the commutation
period, the Court should not be guided or go by the example of life
insurance.

23. We would want most favourable terms for the pensioners, but there
are restraints and the field experts and not the Court is the best judge to
evaluate on different and somewhat conflicting factors that have to be
taken into consideration. This is not to say that courts do not have
jurisdiction and aggrieved pensioners/employees if they are unjustly
treated cannot be granted relief, but for such interference the Court
should come to a firm conclusion that a grave error had crept in which
makes the court’s interference absolute to do justice. Interference in such
matter can result in creating all kinds of problems and cascading effects
as these are highly complexed and difficult matters requiring balancing
Page 26 of 36

of various competing interests, which would to some extent include
financial resources available.”

28. The aforesaid judgment of the Delhi High Court was also subsequently

subjected to challenge before the Hon’ble Supreme Court vide S.L.P. (C)

No.8852 of 2019, and the Hon’ble Supreme Court vide its order dated

15.04.2019, had dismissed the said S.L.P.

29. Similar views have also been expressed by the Punjab and Haryana High

Court in the case of Shila Devi and Others (supra), wherein more than 800 writ

petitions were clubbed together and decided by a common judgment. The

Punjab and Haryana High Court referred to various judgment, most of which

have also been relied upon by the learned counsel for the petitioners herein also.

The Punjab and Haryana High Court referring to the Delhi High Court’s

judgment in Forum of Retired IPS Officers (FORIPSO) (supra) held that:

“The aspect regarding the change in interest from 4.75% to 8% per
annum and the improvement in life expectancy were also considered, but
the Court found no ground to cause interference. In the instant case, the
5th Central Pay Commission had recommended commutation of pension
up to 40% of the pension and restoration after a period of 12 years
reckoned from the actual date of commutation. Admittedly, Government
of India on 27.10.1997 accepted recommendation of the 5th Central Pay
Commission to the extent that employee shall be entitled to commute 40%
of the basic pay, though period of restoration of commuted pension was
kept intact i.e., 15 years.”

Page 27 of 36

30. The Punjab and Haryana High Court went on to hold in paragraph

Nos.22, 26, 27 and 28 as under:

“22. As noted in the foregoing paras, 4th Punjab Pay Commission
recommended continuation of commutation of pension not exceeding
1/3rd of the amount of pension with the same restoration period and to
continue with existing commutation table and to adopt revised table
when notified for Central Government Employees. It is a matter of record
that Implementation Committee on considering recommendations of the
4th Punjab Pay Commission on 26.05.1998, recommended following of
the Government of India Rules in toto i.e., commutation of pension to be
allowed upto 40% of basic pension and restoration after 15 years. It is in
pursuance thereto that notification dated 21.07.1998 was issued deciding
that employees retiring on or after 01.01.1996 will be permitted to
commute pension equivalent to 40% of their basic pension and
restoration would be permitted after 15 years from the actual date of
commutation.

26. It is pertinent to note at this stage that the 7th Central Pay
Commission did not recommend any change in respect to commutation of
pension including the period of restoration. The 6th Punjab Pay
Commission on considering the report of the 7th Central Pay
Commission as well as the representations of the Employees Association
did not find any reason to differ and did not recommend any change. The
observations and recommendations as reproduced in affidavit dated
04.11.2024 read as under :-

“Observations and recommendations

8.11.3 Employee Associations have represented that the
commuted pension needs to be restored after 12 years and the
Page 28 of 36

commutation be allowed @ 40% of the pension as was previously
the case. Moreover, the existing rate of commutation is 40% for
Central Government pensioners.

8.11.4The 7th CPC has not recommended any change either in
maximum percentage of commutation or in the period of
restoration. It has in this context referred to the Supreme Court
judgment of 09.12.1986 wherein the hon’ble court specifically
observed that though the amount is recovered in 12 years yet
since there is a risk factor and some of the States are restoring
pension after 15 years, the existing period of restoration should
be retained.

8.11.5The Commission has no reason to differ and recommends
that the rate of commutation be raised to 40% with no change in
the period of restoration of the commuted amount.”

27. It is a matter of record that all the petitioners before us are retired
employees who have admittedly availed of the benefit of commutation of
pension. Admittedly, pension of some of the employees also stands
restored. All the petitioners were in service at the time of issuance of
notification dated 21.07.1998. They never raised any objection to the
stipulated period of 15 years for restoration of pension. Having availed
of a benefit which is clearly voluntary in nature, it is not open to the
petitioners to raise the grievances as noted above, at this stage, to seek a
variation in the terms and conditions accepted by them with open eyes.
They are not entitled to seek recovery of the amount so deposited by them
in accordance with the accepted terms and conditions.

28. In this factual matrix, the argument that it is a continuing cause of
action as it pertains to pension, is clearly unacceptable. There is no
question of any direction to the State to restore pension on expiry of 11.5
years or 12 years as prayed for or to refund the amount so recovered. It
is necessarily for the State to take a considered decision thereon after
Page 29 of 36

delving into the complex questions and underlying parameters which
would be involved for assessment of the issues. Admittedly, matters
related to commutation of pension are complex affairs involving vexed
issues traversing diverse field which calls for application of specialized
expertise. It is a settled position that in such matters the Court would
venture only in case of manifest and apparent arbitrariness. Learned
counsel for petitioners were unable to point out any material on record
to indicate that the formula adopted is per se and ex facie irrational or
arbitrary which calls for interference by this Court.”

31. Then comes the very recent judgment of the Andhra Pradesh High Court

in the case of Thupakula Venkateswar Rao and Others (supra), a batch of

writ petitions which stood decided after the present batch of writ petitions were

reserved for judgment. Incidentally, the Andhra Pradesh High Court has dealt

with a provision of law which is a ‘pari materia’ provision in the State of

Telangana as well. The Andhra Pradesh High Court taking into consideration

the aforesaid decision of the Delhi High Court in the case of Forum of Retired

IPS Officers (FORIPSO) (supra), and also the judgment of the Hon’ble

Supreme Court in the case of Common Cause (supra), held in paragraph

Nos.20 to 28 as under:

“22. Notwithstanding the above, it can be noticed that a similar issue
came up for consideration before the Apex Court, in Common Cause vs.
Union of India
, wherein, the Apex Court was considering certain
provisions of the commutation of pension Rules applicable to civilian and
defence pensioners on the ground that it permitted the Union of India to
Page 30 of 36

recover more than what was paid to the petitioners upon commutation. A
direction was thus sought that an appropriate scheme rationalizing the
provisions relating to commutation be brought into force. In deference to
the suggestions made by the Apex Court, Government of India took a
decision that recovery from pension payable every month towards
commuted value of pension would stop on completion of 15 years from
the date of retirement on superannuation or on pensioner completing the
age of 70 years, whichever was later. The contention of the petitioners
before the Supreme Court was that the commuted portion of the pension
was ordinarily recovered within about 12 years and therefore there was
no justification for fixing the period at 15 years.

23. A similar question arose before the Delhi High Court, in Forum of
Retired IPS Officers v. Union of India
. While dealing with a challenge
to the 15-year restoration period, it was held:

…………already reproduced in the earlier paragraphs……………

24. This Court also takes note of the fact that the risk factor involved in
commutation is a significant consideration. The State provides a lump
sum amount upfront, and in case of premature death of the pensioner
before the completion of the restoration period, the unrecovered amount
is foregone by the State. This aspect cannot be overlooked.

25. This Court also notes that the commutation of pension provides
certain advantages to the pensioner, as highlighted by the Supreme Court
in Common Cause case, namely, the availability of a lump sum amount
and the risk factor.

Additionally, the commutation of pension is presently not taxed under
the Income Tax Act, 1961, which adds to the monetary benefit accruing
to the pensioners.

Page 31 of 36

26. This Court finds merit in the submissions of the respondents that the
15-year period is a consistent policy followed by the State Government
adopted and based on the Central Government’s policy and upheld by the
Supreme Court in Common Cause case. Matters relating to commutation
of pension are policy matters, which are examined and decided on the
basis of recommendations of expert bodies like the Pay Commissions.

27. Furthermore, the respondents have placed before us the
recommendations of the 6th and 7th Central Pay Commissions which
recommended the 15 years period as the period for restoration of full
pension. Apart from this the 9th, 10th and 11th Pay Revision
Commissions constituted by the State Government also recommended the
continuation of the 15 year period for restoration of full pension.

28. The argument of the petitioners that the commuted portion is
recovered with interest within 11 years and 3 months is based on a
simplistic calculation that does not take into account various factors such
as mortality risk, and the overall financial implications for the State. As
observed by the Delhi High Court, such calculations are complex,
convoluted, and cannot be decided merely on mathematical formulae.”

32. The Andhra Pradesh High Court also went into the aspect of the power of

judicial review in policy decisions and in paragraph Nos.30 and 34, has held as

under:

“30. While it is true that Courts in exercise of the power of judicial
review do not ordinarily interfere with the policy decisions of the
executive yet equally settled is the principle that if the policy suffers from
unfairness, arbitrariness, or can be faulted on mala fides, irrationality,
or perversity, the same could render the policy unconstitutional. Equally
settled is the principle that if a policy framed by the Government is based
Page 32 of 36

on a number of circumstances on facts, law including constraints based
on its resources, the Court would dissuade itself from entering into the
realm which belongs to the executive. Reference in this regard can be
made to the Apex Court judgment in State of Punjab v. Ram Lubhaya
Bagga
, (1998) 4 SCC 117.

……………

34. Considering the fact that the Government has framed a Rule which
has as its substratum the policy based upon the recommendations of the
Pay Revision Commissions and when we test the impugned Rule on the
touchstone of the aforementioned principles, it can be seen that the
Government has prescribed a period of 15 years, considering various
factors including the risk factors which accompany the payment of a
lump sum amount to a pensioner and other economic considerations
accompanying it.”

33. As regards the contention of the learned counsel representing the

petitioners belonging to the banking sector challenging the regulation on the

ground that as per the banking norms recovery of commutation of pension is

made without charging any interest is concerned having perused the records and

provisions of the regulations under which commutation of pension is permitted.

We find that nowhere do the management of the respective banks have stated

that the amount shall be interest free or for that matter the amount of recovery

that would be made by the banks would be only to the extent of the amount

received by the pensioners towards commutation of pension. In the absence of

the aforesaid two situations, what has to be understood is the fact that,
Page 33 of 36

commutation of pension and the recovery of the same is purely a policy

decision of the employer which the employee could opt or could have got full

pension for the rest of his life.

34. Another contention was that since granting of pension and commutation

of pension is a welfare measure, the State Government or the Banks, cannot be

permitted to have undue enrichment by way of recovery of the amount more

than the commuted amount so far as the Banks are concerned, and the

commuted amount along with interest at the prevailing bank rate so far as the

Government is concerned. This contention of the petitioners also may not be

sustainable for the simple reason that, at the first instance, granting of pension

itself is a welfare measure and within the welfare measure itself there was yet

another welfare measure brought in by the employer by way of permitting

commutation of pension. If that be so, under no circumstances can be employer

be expected to permit commutation of pension without looking on the

economics related to it i.e., the total amount of money to be disbursed by way of

commutation of pension in a month or in a year, the total amount of funds to be

generated for the same, the mode of recovery etc. Therefore, as discussed

earlier, we are of the considered opinion that since all this relates to a fiscal

policy, the Courts cannot be permitted to substitute itself as a body to determine

what would be the most appropriate mode of recovery, which otherwise is to be
Page 34 of 36

left for the experts in the field who advise the Government and the banks in

respect of the same.

35. What is still to be considered is the fact that when the Government had

initially introduced the commutation of pension, the recovery was made life

long without there being any fixed period of recovery. It is only subsequently

that the schemes stood modified and the recovery was to be made for a fixed

period of 15 years, which has been uniformly adopted by practically every

employer.

36. The judgment of the Common Cause (supra) relied upon by either sides,

when it is read, would clearly give an indication that nowhere had the Hon’ble

Supreme Court restricted the employer or the Government from making the

recovery for 15 years. Neither did the Hon’ble Supreme Court make any

observations of recovering only the commuted amount paid to the pensioner or

for that matter recovering only the commuted amount along with interest.

37. In the given factual backdrop and the legal precedents referred to in the

preceding paragraphs, we are in full agreement and endorse the views taken by

the Delhi High Court as also the Punjab and Haryana High Court and the

Andhra Pradesh High Court decided under if not identical on similar facts,

whereby all the three High Courts had dismissed the batch of writ petitions. As
Page 35 of 36

a consequence, this Bench also does not find any substance in the submissions

made by the learned counsel for the petitioners, both, while challenging the

commutation of pension rules, so also the Regulations dealing with the

commutation of pension in the banking sector, those which are under challenge

in this batch of writ petitions. This batch of writ petitions thus being devoid of

merit, deserve to be and are accordingly, dismissed.

38. It has come to the notice of the Bench that there has been an interim

protection so far as recovery of pension being made by the respondent-

authorities and that the said interim protection of recovery was in operation for a

period roughly 9-10 months. Now that the Bench is disposing of these batch of

writ petitions, we only hold that the recovery which was stayed by the learned

Division Bench of this Court should not be recovered in one go by the

respondent-authorities, rather the recovery for the period for which it was stayed

by the learned Division Bench of this Court should now be recovered for the

period it remained stayed by the learned Division Bench beyond a period of 15

years for the number of months the recovery could not be made in each of the

case respectively before the full pension is restored.

39. In view of the fact that we have not found any substance in the claim of

the petitioners in assailing Rule 18 of the Rules, 1944, as also the explanation 2
Page 36 of 36

of clause (d) of sub-regulation 17 of Regulation 23 of the Rules, 2014 and we

have dismissed present batch of the writ petitions, the Contempt Case No.2824

of 2024 also becomes inconsequential and the same also stands closed at this

juncture without any further proceedings to be drawn.

40. As a sequel, miscellaneous petitions pending if any in these batch of writ

petitions, shall stand closed. However, there shall be no order as to costs.

________________
P.SAM KOSHY, J

_______________________________
NARSING RAO NANDIKONDA, J

Date: 25.07.2025
Note: L.R. Copy to be marked.

(B/o) GSD / Ndr



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here