OROP Judgment Summary

On March 16th 2022, Justices D.Y. Chandrachud and Surya Kant upheld the Union Government’s One Rank One Pension (OROP) policy.

OROP is a system of paying uniform pension to armed forces servicemen retiring at the same rank and with the same years of service, irrespective of the date of retirement. The pension of a retired serviceman is calculated as a proportion of their last drawn salary. The Government revises and typically increases salaries periodically. This meant that servicemen who retired earlier received a lower pension than those who retired later.

To address this disparity, the Union Government implemented the OROP policy in November 2015.

The Union’s OROP policy was challenged at the Supreme Court by ex-servicemen, who claimed that the policy was arbitrary, discriminatory, and violated the understanding of the OROP outlined in the Koshyari Committee Report.

The Court dealt with two principal questions. 

1. Was the Union’s 2015 OROP policy arbitrary and discriminatory?

As per OROP, servicemen who retired after January 1st 2014 would be entitled to pension based on their last drawn pay. Servicemen who retired prior to this date would be entitled to pension on the basis of the average of the maximum and minimum salary drawn for their rank in 2013. The Government stated that rates of pension would be revised every five years, rather than automatically, with the first revision due in 2019. The older retirees would therefore draw a lower pension than newer retirees until the revision.

The pension under OROP is also affected by the MACP scheme. As per the MACP scheme, for every 8, 16 and 24 years of service, a serviceman is entitled to an increase in pay, even without promotion. If the serviceman does not complete the requisite years of service, they will not be entitled to upgraded pay. This means that two servicemen retiring at the same rank but with different years of service would not be entitled to the same pay, and consequently, pension.

The OROP policy was challenged by ex-servicemen who claimed that the policy was arbitrary and discriminatory under Articles 14 and 21 of the Constitution of India, 1950, for creating categories of pensioners who despite having retired at the same rank were drawing different pensions. 

The Court held that the policy was not discriminatory. This is because the same definition of OROP is applicable to all pensioners irrespective of when they retired. It is not the case that the pension for one group of pensioners is reviewed automatically while for the others is reviewed periodically.

The decision to use the average of the maximum and minimum salary drawn for the rank in 2013 as the base salary for older retirees was a policy decision. The Court cannot interfere with this policy decision, and it is better for such matters to be addressed by elected representatives.

Further, there is no legal mandate that pensioners holding the same rank must be entitled to the same amount of pension—it is only necessary that the principle of computation of the pension must be uniformly applied. The MACP computation, the periodic revision of five years, and the cut-off date of January 1st 2014 would be retained.

2. Was the Union’s 2015 OROP scheme contrary to the original policy decision of the Government?

Ex-servicemen claimed that the framework for the OROP outlined by the Ministry of Defence in November 2015 was vastly different from the Union Government’s earlier understanding of OROP, as indicated by statements of Ministers of Finance and Defence in 2014.  

The Union’s earlier stance was based on the Koshyari Committee Report. As per the Report, OROP meant that uniform pension would be paid to armed forces personnel who retired at the same rank with the same length of service. This was irrespective of date of retirement, and enhancements in the rates of pension would be ‘automatically’ passed on to past pensioners.

The Court upheld the Ministry of Defence’s November 2015 communication. According to the Court, while the Union had said that it would implement the OROP policy at various points in 2014, it had not outlined exactly how it was to be implemented. The Union had not undertaken any policy decision until its communication in November 2015. The communication could not be struck down merely because it violated the ‘original understanding’ of the OROP. OROP is a matter of policy. The makers of the policy have the liberty to determine how it is implemented.