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Allowing a batch of around 25 writ petitions, a Division Bench of Justice Anoop Chitkara and Justice Sukhvinder Kaur ruled that the Punjab government’s circular dated July 29, 2003 — which raised the pension commutation discount rate from 4.75 per cent to 8 per cent — would not apply to the petitioners. The court directed the state to recalculate its pension commutation benefits under the earlier, more favourable rate and refund the excess amount by March 31.

Chandigarh: The Punjab and Haryana High Court has strongly criticised the Punjab government for imposing financial cuts on retired employees, observing that the state could have curtailed expenditure on advertisements and “wasteful schemes” if it were indeed facing an economic crisis. Allowing a batch of around 25 writ petitions, a Division Bench of Justice Anoop Chitkara and Justice Sukhvinder Kaur ruled that the Punjab government’s circular dated July 29, 2003 — which raised the pension commutation discount rate from 4.75 per cent to 8 per cent — would not apply to the petitioners. The court directed the state to recalculate its pension commutation benefits under the earlier, more favourable rate and refund the excess amount by March 31.

Arbitrary classification of retirees struck down.

The petitions were filed by government employees who retired between July 31, 2003, and October 30, 2006. During this period, the Punjab government revised the pension commutation table, sharply increasing the discount rate to 8 per cent, which substantially reduced the lump-sum amount payable to retirees at the time of superannuation.

Although the state restored the earlier 4.75 per cent rate through another circular on October 31, 2006, it refused to apply the benefit retrospectively. This resulted in a class of retirees being placed at a clear disadvantage despite being similarly situated, prompting them to approach the High Court.

The Bench held that such classification was arbitrary and discriminatory, stressing that pension commutation is a statutory welfare measure and an integral part of post-retirement social security.

‘Burden of crisis unfairly placed on retirees’

Making sharp observations, the court said the state failed to explain why retirees were made to shoulder the burden of a “self-made financial crisis”.

“If the State of Punjab was in a financial crisis, it could have definitely reduced spending on unnecessary advertisements, billboards and wasteful schemes which only appeal for votes by the ruling party,” the Bench observed, adding that instead, cuts were imposed on employees who had already completed their service.

The court underlined that employees opt for pension commutation only in compelling circumstances, such as medical emergencies, housing needs, children’s education, or marriage. Denying them reasonable commutation terms, it said, could push retirees towards moneylenders and exploitative borrowing.

“It is the duty of a welfare State to support its retired citizens by offering pension commutation at lower interest rates so that they can plan the next chapter of their lives with dignity,” the judges asserted.

Relief is limited to petitioners

While granting relief, the High Court clarified that its order would be confined only to the petitioners before it. It declined to strike down the 2003 circular itself, noting that many retirees governed by it had not raised any grievance and that reopening settled cases after nearly two decades would be neither appropriate nor just. The Bench directed the Punjab government to re-evaluate the commuted pension amounts of the petitioners as per the pre-July 29, 2003 table and refund the excess sums within the stipulated time.