OROP arrears: Government says no cash, Supreme Court gives fourth extension but refuses sealed cover

About 21 lakh pensioners await payment of arrears due to them. The amount of payable arrears adds up to ₹ 28,000 crore for the financial years 2019–22. 

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"IT is confidential", said the Attorney General of India, as the Supreme Court asked him to share a copy of the "compliance note" with the other side in the case against the delay by the Union government in paying what it legally owes to former defence personnel under the One Rank One Pension (OROP) scheme.

"When you claim privilege, we will decide your privilege," the Chief Justice of India (CJI) Dr. D.Y. Chandrachud responded, immediately shooting down the request. "I am personally averse to sealed covers… There cannot be any secrecy in the court. The court has to be transparent."

The CJI and Justices P.S. Narsimha and J.B. Pardiwala were hearing the Union government's fourth request for an extension of the timeline to settle its debts with retired military personnel; this time, armed with an admission about the state of its finances.

The note placed before the bench contains the Union Ministry of Defence's submissions that the State does not have enough funds at present to clear all pending dues under the OROP scheme "in one go". It was made in consultation with the Union Ministry of Finance. The note proposed a categorised and staggered manner of payment of arrears.

The court on Monday accepted the Union government's request for another extension to the timeline, though only after making modifications to shorten it.

Sealed cover denied

"Just tell us when are you going to pay," asked the CJI, as the Attorney General began to read a part of the "compliance note" prepared by the Secretary of Department of Ex-servicemen Welfare, Ministry of Defence, Vijay Kumar Singh.

"But I don't have a copy of this," interjected senior advocate Huzefa Ahmadi, appearing for the Indian Ex-Servicemen Movement, a federation of military veterans.

The Attorney General, in response, contended that the contents of the note are "confidential" in that it contains "some sensitive information" that the Union government may not want discussed in open court.

"What happens is, we see something which he doesn't see and (then) we decide a case without showing it to him," said the CJI, adding further that, "We need to put an end to this sealed cover practice in the Supreme Court because then the high courts will also start following suit. And this is fundamentally contrary to the basic process of fair process."

Justice Narsimha then insisted that the Attorney General verbally explain what he wishes to highlight from the note just as the CJI appeared to return the file to him through the court master. "Please return this to the attorney," he was heard saying.

Nonetheless, the file was shared with Ahmadi and the Attorney General continued to read aloud the note, the contents of which state: "The planned outlay [of the Ministry of Defence] for the years 2022–23 is not in a position to assimilate this huge outlay in one go."

The bench had asked the Attorney General to prepare the said note at the last hearing on March 13 giving specific details about the quantum of payment to be paid, the modalities to be adopted and the order of priority it proposes to follow for the payment of arrears.

The note argues that the Ministry of Defence (MoD), being in control of strategic decisions "has to strike a fine balance between the financial outgo and the operational commitments", staging the MoD's argument for prioritised spending, and the Union government's discretion on prioritisation.

Asserting that borrowing, with such precarious state of finances, may have adverse macroeconomic implications and may not be feasible, the note says, "It is imperative that the government's discretion over balancing the welfare of different sections of the society be upheld, and a favourable consideration of which would also foster the principle of equity, and fairness in development."

As per the material placed on record, the total number of pensioners is 25 lakh persons, of which around four lakh persons do not qualify for receiving arrears under the OROP Scheme. For the remaining 21 lakh pensioners, arrears due and payable are in the range of ₹ 28,000 crore for the financial years 2019–22.

The budgetary outlay of the MoD for the financial year 2022–23 was ₹ 5.85 lakh crore, and of this, an amount of ₹ 1.32 lakh crore is the planned expenditure during the year, the note reveals. Meanwhile, an amount of ₹ 1.2 lakh crore has already been disbursed till February 2023 by MOD for 2022–23 as OROP arrears.

Proposing a categorised and staggered payback of arrears, the Union government suggested the following timeline:

• Approximately six lakh pensioners comprising family pensioners and gallantry award winners would be paid entirely by April 30, 2023.
• About four lakh pensioners above the age of 70 would be paid within four to five months.
• Remaining around eleven lakh pensioners would be paid in instalments by March 31, 2024.

Time granted

"…[W]hile fixing a time schedule for the payment, the material which has been placed on record has a significant bearing in regard to the compliance with the timeline," notes the Supreme Court order.

Basing its decision on the note placed before it, the court issued the following directions:

• The payment of OROP dues to family pensioners and gallantry award winners shall be made in one instalment on or before April 30, 2023.
• The payment of OROP dues to pensioners who have completed the age of 70 years or above shall be paid on or before June 30, 2023. The Union government shall either pay the entire dues in one instalment or spread out the payment in one or more instalments within the outer limit of June 30, 2023.
• The last tranche of OROP remaining due to the balance of the pensioners shall be paid in equal instalments on or before August 31, 2023, November 30, 2023 and February 28, 2024.

Before the bench disclosed its decision on the new timeline for payment of OROP arrears, Ahmadi urged the court to notice this was the fourth extension of time that the Union government had sought, but the CJI replied, "They're saying it is impossible to pay."

But Ahmadi persisted, "Why is it that the pensions to be given to the armed forces who have served this country in the best years of their lives is the last priority for this government?" adding that non-payment is a violation of the policy that the government itself had enacted. "If you didn't have the money, you shouldn't have made this policy."

"Mr. Ahmadi, we were upset with them for issuing that letter suo motu, but we cannot lose sight of the national interest," the CJI contended, while also airing the bench's disapproval with a January 20 communication by the Secretary, MoD that unilaterally declared that OROP arrears would be paid in four half-yearly instalments.

On February 27, the court had issued an order directing the Secretary, MoD, Department of Ex-Servicemen Welfare to file a personal affidavit "explaining the circumstances in which such a unilateral decision to extend time for payment was made in spite of the clear directions of this Court".

At the last hearing on March 13, the bench had cautioned the Attorney General that if the communication isn't withdrawn, the court would order the personal appearance of Secretary, MoD to explain the notification and may thereafter hold the official in contempt.

The Attorney General had assured the bench that the above notification would be withdrawn and had given an assurance that the first instalment would be paid by March 31. In the note placed before the court on Monday, the schedule for the first instalment was pushed ahead to April 30. The Supreme Court has confirmed this, but only family pensioners and gallantry awardees would get it by that date. The rest must wait.

The MoD had submitted that it has initiated the process of withdrawing the January 20 notification, stating, "The withdrawal of the communication dated January 20, 2023 has to go through the due process of clearance in the government at the highest level. Applicant has already initiated the process for complying with the order of this court on the very same day. It is also submitted that the applicant not being empowered to withdraw the communication dated January 20, on his own, both the intimation and initiation has been done on the very same day and the applicant is pursuing the matter in letter and spirit."

Ahmadi asked the bench to take notice of another circular that was issued on February 20 this year and promised the payment of arrears by March 15. "This circular could not have been issued without instructions from the highest levels," he said, contesting the government's stand that it currently does not possess the funds to pay all arrears in one go. The said circular bears the signature of the Assistant Comptroller of Defence Accounts. "It is not as if he doesn't know the financial position (of the State's finances)."

The order passed on Monday specifically mentions the above circular.

Towards the end of the hearing on Monday, by which time the Attorney General had started to walk away from the podium, Ahmadi made a last ditch attempt to convince the bench to order interest to be paid as compensation for the delay, but the bench called out the next case on the board and moved on.

Case name: Indian Ex-Servicemen Movement versus Union Of India, Department Of Ex-Servicemen Welfare Ministry Of Defence Secretary

Miscellaneous Application No. 219/2023 in W.P.(C) No. 419/2016