The Supreme Court on Wednesday upheld the validity of the Central government’s 2015 decision for One Rank One Pension (OROP) for defence forces personnel, saying there is no constitutional infirmity in it and the Executive is well within its limits to prescribe a policy keeping in view the financial implications.

A bench led by Justice DY Chandrachud, however, directed the Union government to carry out a re-fixation exercise from July 1, 2019 as per the terms of the communication of 2015, since it was to be done every five years and could not be undertaken possibly because of the present proceedings.

“Since the OROP definition is not arbitrary, it is not necessary for us to undertake the exercise of determining if the financial implications of the scheme is negligible or enormous,” it said. “OROP is itself a matter of policy and it was open to the makers of the policy to determine the terms of implementation. The policy is of course subject to judicial review on constitutional parameters, which is a distinct issue,” Justice Chandrachud stated.

The OROP scheme stipulated that benefits would be effective for pensioners from the cut-off date of July 1, 2014 and pensions of past pensioners would be re-fixed on the basis of pensions of retirees in the calendar year 2013. The scheme also mandated the re-fixation of pension every five years.

“The cut-off date (July 1, 2014) is only prescribed for determining the base salary used for computing the pension. While for those who retired on or after 2014, the last drawn salary is used for computing the pension; for those who retired prior to 2014, the average of the salary drawn in 2013 is used. This policy only seeks to protect those who retired before 2014 since the last drawn salary of the prior retirees might be too low and incomparable to the pay of the 2014 retirees,” the bench said.

The petitioner, Indian Ex-Servicemen Movement, had claimed that pensioners of the same rank, who were a “homogeneous class,” were arbitrarily being given varying pensions under the OROP scheme. The amount of pension should be uniform across armed forces personnel who retired with the same rank, the petition said, adding that the 2015 scheme created a separate class among the personnel equally situated in rank and length of service.

However, the court refused to accept the petitioner’s stand that re-fixation of pension after a gap of five years would leave them at a great disadvantage. It contended that such periodic equalisation would “cause great injustice to 24 lakh ex-servicemen, 6.5 lakh war widows and veteran widows and their families by creating a situation of ‘One Rank Different Pension’”.

On 10 July 2014, the minister of finance in the course of his speech while presenting the annual budget stated that the Union Government had adopted the policy of OROP to address pension disparity and a further `1,000 crore was set aside to meet the requirement of the year.

The government stated that the budget for pension had been increased after the implementation of OROP with effect from July 1, 2014. The yearly recurring expenditure on account of OROP is Rs 7,123 crore. For the six years from 1 July 2014, the total recurring expenditure is approximately Rs 42,740 crore, the defence ministry argued in the SC.

“Moreover, if the maximum salary drawn is to be used as the base value instead of taking the average salary, an additional outlay of Rs 1.45 trillion would be incurred, the court said.

The Centre had contended that both ‘same rank’ and ‘same length of service’ were necessary conditions for availing of OROP benefits. The ministry of defence had said the petitioners’ contention on OROP defeated one of the core values of the OROP — which was not only same rank but with the same length of service.

The Budget allocation for defence pensions in 2020-21 was Rs 1.34 trillion, representing 28.4% of the total defence Budget estimate.