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Chandigarh: In a significant but narrowly tailored relief for retired Punjab government employees, the Punjab and Haryana High Court has ruled in favour of petitioners who challenged a 2003 government circular that sharply reduced the pension commutation value for retirees over a specific three-year period.
A Division Bench of Justice Anoop Chitkara and Justice Sukhvinder Kaur, in its detailed judgment pronounced on December 23, upheld the challenge in the lead case filed by Gian Chand and others, along with more than 20 connected petitions filed between 2006 and 2019.
What the case was about
Pension commutation allows retirees to take up to 40 per cent of their pension as a lump sum in return for a permanent cut in their monthly pension. The amount is calculated using a commutation table that factors in age and a discount rate. A higher discount rate lowers the lump sum.
The petitioners—who retired between July 31, 2003, and October 30, 2006—challenged a July 29, 2003, circular that raised the discount rate from 4.75 per cent to 8 per cent, drastically reducing their lump-sum payout. While the state restored the lower rate through a 2006 circular, it did not apply the benefit retroactively, creating, the petitioners argued, an arbitrary and discriminatory classification.
Court’s findings
The Bench noted that retirees in the affected window suffered a “significant financial loss” as the commutation value dropped from 10.46 per cent to 6.21 per cent, even though the recovery period of 15 years remained unchanged. The court underlined the real-life compulsions that force retirees to opt for commutation—such as housing, healthcare, marriages, or children’s education—often at moments of acute financial stress.
Observing that a retiring employee reasonably expects the State to offer fair and immediate financial support, the court cautioned that denying such relief risks pushing retirees towards exploitative moneylenders.
Relief limited to petitioners
Accepting the State’s argument against universal relief, the court made it clear that the benefit of the ruling would be confined strictly to the petitioners before it. “We are only considering the scope and impact of the circular for the petitioners before us,” the Bench said, declining to strike down the 2003 circular across the board.
Who benefits
The relief covers over 200 retirees named across the petitions, drawn from Punjab government departments and public bodies, including the Punjab Roadways Transport Corporation (PRTC), the Punjab State Electricity Board (now PSPCL), Guru Angad Dev Veterinary and Animal Sciences University, Ludhiana, and the Punjab State Agricultural Marketing Board.
While the verdict offers meaningful redress to the affected retirees, it stops short of opening the door for similar claims from those who did not challenge the policy earlier.
