The division bench of Chief Justice Y K Sabharwal and Justice S H Kapadia was hearing three petitions filed by pensioners on the state government's refusal to pay them the revised pension arrears under the Fifth Pay Commission from 1996. The petitions were filed by Thane District Pensioners' Association, the Maharashtra Pensioners' Association and a letter written by nine pensioners to the Chief Justice that was converted into a suo moto petition by the bench.

Surprised at the submissions by special counsel for the state, Dhananjay Chandrachud, Chief Justice Y K Sabharwal asked,``All states have implemented the revision with retrospective effect. One thought Maharashtra was a well managed state''. The Chief Justice then proceeded to ask what were the sources for the pension funds.

Chandrachud had submitted that while the state had agreed to implement the Fifth Pay Commission's recommendations for the serving employees of the state with retrospective effect from 1996, it had agreed to pay the revised rates for the pensioners, with effect from July 1999 only. The bill for the pensioners if they were to be paid from 1996 would be a sum of Rs 1400 crore.

``In the present financial condition, it would be impossible to undertake such a huge expenditure,'' Chandrachud submitted. To the Chief Justice's query, he answered that the state paid pension from budgetary allocations made for the pension funds. He added that no allocations had been made for the pensioners' arrears in the budget. Chagla then remarked that it may not be necessary for the state to pay the pensioners immediately.``What they want is a ray of hope. If there are financial constraints they can pay at a later date,'' he stated.

Chandrachud, however, remarked that the state could not, at present, make such an announcement that would effect 4.17 lakh voters, due to the code of conduct. He suggested that the decision could be taken after the elections were over. Chagla, however, found it unacceptable claiming that the state must set something in motion for the present. The Chief Justice was then readying to pass an order, when Chandrachud suggested that he would himself write a letter to the state government to consider this suggestion to pay the pensioners their arrears in a phased manner.

If the state does not do so, it will file a separate affidavit on the sources of revenue for the pension funds and the difficulties the state is facing on the issue, the bench directed. The matter has now been made to stand over to August 20.