Victory for Pensioners !: Recovery of Commutation of Pension Ends After 12 Years ! – CAT Mumbai Interim Order Grants Pensioners a Major Relief

CAT, Mumbai Grants Interim Relief to Pensioners: Recovery of Commutation of Pension Stopped After 12 Years

Recovery of Commuted Portion of Pension after 12 Years

CAT Mumbai Interim Order

The Central Administrative Tribunal (CAT), Mumbai, has granted interim relief to a group of pensioners from the Department of Posts, directing the authorities to stop recovering the commuted portion of their pensions after they have completed 12 years of retirement.

The applicants contended that the commuted amount of their pensions has already been recovered within 12 years, and further recovery beyond this period is unwarranted. They cited recommendations from the 5th Central Pay Commission, which suggested reducing the restoration period of commuted pensions to 12 years. They also pointed out precedents where state governments such as Gujarat and Andhra Pradesh implemented similar reductions in the recovery period.

The respondents opposed the plea, stating that the pensioners had voluntarily opted for commutation, fully aware of the 15-year recovery rule under Rule 10A of the CCS (Commutation of Pension) Rules, 1981. They also argued that challenging this statutory rule after more than four decades was barred by limitation.

The tribunal, however, observed that the respondents had not provided a convincing explanation as to why recovery should continue beyond 12 years if the commuted pension is already recovered. It noted that similar interim relief had been granted in other cases, including by the Punjab and Haryana High Court, where such recovery was deemed excessive.

As a result, the CAT, Mumbai, ordered the cessation of further recovery for specific applicants who have completed 12 years since their retirement. The matter is scheduled for further hearing on December 19, 2024.

Summary of Case: OA No. 860/2024

A group of pensioners from the Department of Posts filed an Original Application (OA No. 860/2024) before the Central Administrative Tribunal (CAT), Mumbai, seeking interim relief regarding the recovery of commuted pension. The applicants argue that recovery should cease after 12 years of retirement, instead of the currently prescribed 15 years under Rule 10A of the CCS (Commutation of Pension) Rules, 1981.

Facts in Brief

Background: The applicants retired from the Department of Posts and commuted 40% of their pensions. They claim the commuted amount has already been recovered in 12 years.

Rule in Question: Rule 10A specifies that commuted pensions are restored after 15 years from the date of commutation.

Justifications Presented to stop Recovery of Commutation of Pension :

• 5th Pay Commission: Recommended reducing the restoration period to 12 years.
• Economic Factors: Lower mortality rates and declining interest rates from 16% to 5.4%-6.5% between 2014 and 2024.
• State Governments’ Policies: Governments of Gujarat and Andhra Pradesh have already reduced the restoration period to 12 and 13 years, respectively.
• Representations Rejected: Despite representations by the applicants, their requests were denied by the respondents.

Calculation : to show that the commutation of pension Recovered within 12 years.

Date of  retirement	Basic  Pension	Amount of  40%  Pension  commuted	Commuted  value of  pension	Amt. being  recovered  during 15  years
31.01.2017	40,000/-	16000/-	15,73,248/-	28,80,000/-

Respondents’ Contentions

• Rule Validity: The applicants are challenging a statutory rule that remains valid and has not been struck down by any court.
• Delay in Challenge: The rule was framed in 1981, and the applicants’ challenge in 2024 is barred by limitation.
• Voluntary Nature of Commutation: Pension commutation is optional, and retirees agree to the 15-year recovery period upon opting for it.
• Legal Grounds: No case has been made for the rule violating legislative competence or fundamental rights.

Tribunal’s Interim Order

The CAT considered arguments from both sides and observed the following:

• Admissibility of 12-Year Recovery Period: Respondents have not denied that recovery of the commuted pension is generally completed within 12 years.
• Continuing recovery beyond 12 years, when the full amount is already recovered, lacks justification.
• Estoppel Does Not Apply: The doctrine of estoppel is irrelevant as the government is in an advantageous position and has not suffered detriment.
• Precedent: The Punjab and Haryana High Court has granted similar interim relief in a comparable case, and its decision has not been stayed by the Supreme Court.
• State vs. Central Rules: Respondents failed to establish significant differences between state and central government rules to justify a differing stance.

Interim Relief Granted : Stop Recovery of Commutation of Pension after 12 Years

The tribunal has directed that recovery towards the commuted pension shall cease for applicants No. 10, 11, 13, 14, 15, 27, and 39, as they have completed 12 years post-retirement. Further recovery in these cases is barred until further orders.

The OA is listed for further hearing on December 19, 2024.