Govt burdened retirees with cost of its self-made financial crisis: HC

The Punjab and Haryana High Court has ruled that Punjab could have curtailed unnecessary expenditure on announcements and wasteful schemes if it was facing a financial crisis, instead of imposing cuts on retired employees.The assertion came as a Bench ruled that the July 29, 2003, circular hiking the pension commutation discount rate from 4.75 per cent to 8 per cent would not apply to the petitioner-employees.

Allowing a batch of around 25 writ petitions filed by multiple employees who retired from the service between July 31, 2003, and October 30, 2006, the Bench directed the state to recalculate their commutation benefits under the earlier, more beneficial, table and refund the excess amount by March 31.

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The Bench ruled that the relief would remain confined to the petitioners alone.

The controversy arose from a brief period when Punjab changed the pension commutation formula, affecting a section of retired employees. Under the existing pension rules, government employees were permitted to commute a portion of their pension at a discount rate of 4.75 per cent. However, the state, by circular dated July 29, 2003, revised the commutation table and increased the rate to 8 per cent for employees retiring on or after July 31, 2003, substantially reducing the lump-sum amount payable at the time of retirement.

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The state later restored the earlier rate of 4.75 per cent through another circular dated October 31, 2006. But it declined to apply the benefit retrospectively. As a result, employees who retired between July 31, 2003, and October 30, 2006, were placed at a clear disadvantage despite being similarly situated.

The Bench of Justice Anoop Chitkara and Justice Sukhvinder Kaur said, “It is the duty of the welfare state to support its retired citizens by at least offering them commutation of pension at lower interest rates, so they can plan the next chapter of their lives with pride and dignity.”

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The Bench said, “If the state was in a financial crisis, it could have definitely reduced its spending on unnecessary advertisements, billboards and wasteful schemes, which only appeal for votes by the ruling party. However, they imposed cuts on employees who had completed their service, and if they had been wealthy, they would surely not have taken pension commutation, which itself indicates they have limited means.”