Important Supreme court Judgement – MACP should be given effect from 01.01.2006

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL DIARY NO.3744 OF 2016

Union of India and Ors.

—– Appellant(s)

Vs.

Balbir Singh Turn & Anr.

—– Respondent(s)

WITH

CIVIL APPEAL DIARY NO.5183 OF 2017

CIVIL APPEAL DIARY NO.5184 OF 2017

CIVIL APPEAL DIARY NO.6249 OF 2017

CIVIL APPEAL DIARY NO.7888 OF 2017

CIVIL APPEAL DIARY NO.18265 OF 2016

CIVIL APPEAL NO.244 OF 2017

CIVIL APPEAL DIARY NO.31768 OF 2016

CIVIL APPEAL DIARY NO.38019 OF 2016

CIVIL APPEAL DIARY NO.42810 OF 2016

CIVIL APPEAL DIARY NO.42879 OF 2016

DIARY NO.4546 OF 2017

DIARY NO.11491 OF 2017

DIARY NO.11871 OF 2017

DIARY NO.13664 OF 2017

DIARY NO.13665 OF 2017

DIARY NO.13666 OF 2017

DIARY NO.18186 OF 2017

DIARY NO.18048 OF 2017

DIARY NO.18045 OF 2017

DIARY NO.18185 OF 2017

DIARY NO.22593 OF 2017

DIARY NO.30116 OF 2017

DIARY NO.23164 OF 2017

DIARY NO.11493 OF 2017

DIARY NO.28798 OF 2017

JUDGMENT

Deepak Gupta, J. 

1. Applications for condonation of delay in filing and refiling the appeals are allowed.

2. This bunch of appeals is being disposed of by a common judgment since similar questions of law are involved.

3. The 6th Central Pay Commission was set up by the Government of India to make recommendations in matters relating to emoluments, allowances and conditions of service amongst other things. The Pay Commission also made recommendation with regard to armed forces personnel. On 30th August,2008, the Central Government resolved by a resolution of that date to accept the recommendation of the 6th Central Pay Commission (CPC for short) with regard to the personnel Below officer Rank (PBOR) subject to certain modifications clause (i) of the Resolution reads as follows:-

“(i) Implementation of the revised pay structure of pay bands and grade pay, as well as pension, with effect from 01.01.2006 and revised rates of allowances (except Dearness Allowance/Relief) with effect from 01.09.2008”.

clause 9 of the Resolution reads as follows:-

“(ix) Grant of 3 ACP up-gradation after 8,16 and 24 years of service of PBORs;”

4. Under the recommendations made by the 5th CPC there was a provision for Assured Career Progression (ACP). Vide this scheme, if an employee was not promoted he was entitled to get the next higher scale of pay after completion of 12/24 years of service. The 6th CPC recommended the grant of benefit of ACP after 10 and 20 years of service. The Union of India, however decided to grant 3 ACP upgradations, after 8, 16 and 24 years of service to PBORs, as per Clause (ix) extracted above. However, it would be pertinent to mention that the 6th CPC did away with the concept of pay scales and reduced the large number of pay scales into 4 pay bands and within the pay bands there was a separate grade pay attached to a post.

5. For the purpose of this judgment we are dealing with the facts of civil appeal diary No.3744 of 2016. It would be pertinent to mention that all the petitioners before the Armed Forces Tribunal (AFT for short) who are respondents before us are persons below officer rank. The respondents in this case retired after 01.01.2006 but prior to 31.08.2008. They claim that the benefit of the Modified Assured Career progression (MACP for short) was denied to them on the ground that the MACP was made applicable only with effect from 01.09.2008. The respondents approached the AFT praying that they are entitled to the benefit of MACP w.e.f 01.01.2006, i.e., the date from which the recommendation of the 6th CPC with regard to pay and benefits were made applicable. The stand of the Union of India was that the MACP was applicable only w.e.f. 01.09.2008 and, therefore, the respondents who had retired prior to the said date were not entitled to the benefit of the MACP. The AFT vide the impugned order dated 21.05.2014 held that the benefit of ACP granted to an employee is part of the pay structure which not only affects his pay but also his pension and, therefore, held that the ACP is not an allowance but a part of pay and, therefore, in terms of Clause (i) of the Government Resolution the MACP was payable w.e.f. 01.01.2006.

6. The question that arises for decision is whether the benefit of MACP is applicable from 01.01.2006 or from 01.09.2008.

7. The answer to this question will lie in the interpretation given to the Government Resolution, relevant portion of which has been quoted hereinabove. A bare perusal of Clause(i) of the Resolution clearly indicates that the Central Government decided to implement the revised pay structure of pay bands and grade pay, as well as pension with effect from 01.01.2006. The second part of the Clause lays down that all allowances except the Dearness Allowance/relief will be effective from 01.09.2008. The AFT held, and in our opinion rightly so, that the benefit of MACP is part of the pay structure and will affect the grade pay of the employees and, therefore, it cannot be said that it is a part of allowances. The benefit of MACP if given to the respondents would affect their pension also.

8. We may also point out that along with this Resolution there is Annexure-I. Part-A of Annexure-I deals with the pay structure, grade pay, pay bands etc., and Item 10 reads as follows :-

10

Assured Career Progression Scheme for PBORs. The Commission recommends that the time bound promotion scheme in case of PBORs shall allow two financial upgradations on completion of 10 and 20 years of service as at present. The financial upgradations under the scheme shall allow benefit of pay fixation equal to one increment along with the higher grade pay. As regards the other suggestions relating to residency period for promotion of PBORs Ministry of Defence may set up an Inter-Services Committee to consider the matter after the revised scheme of running bands is implemented (Para 2.3.34)

Three ACP upgradation after 8, 16 and 24 years of service has been approved. The upgradation will take place only in the hierarchy of Grade Pays, which need not necessarily be the hierarchy in that particular cadre.

Part-B of Annexure-I deals with allowances, concessions & benefits and Conditions of Service of Defence Forces Personnel. It is apparent that the Government itself by placing MACP in Part-A of Annexure-I was considering it to be the part of the pay structure.

9.The MACP Scheme was initially notified vide Special Army Instructions dated 11.10.2008. The Scheme was called the Modified Assured Career Progression Scheme for Personnel Below Officer Rank in the Indian Army. After the Resolution was passed by the Central Government on 30.08.2008 Special Army Instructions were issued on 11.10.2008 dealing with revision of pay structure. As far as ACP is concerned Para 15 of the said letter reads as follows:-

“15. Assured Career Progression. In pursuance with the Government Resolution of Assured Career Progression (ACP), a directly recruited PBOR as a Sepoy, Havildar or JCO will be entitled to minimum three financial upgradations after 8, 16 and 24 years of service. At the time of each financial upgradation under ACP, the PBOR would get an additional increment and next higher grade pay in hierarchy.

xx xx xx”

Thereafter, another letter was issued by the Adjutant General Branch on 03.08.2009. Relevant portion of which reads as follows:-

“…….The new ACP (3 ACP at 8, 16 and 24 years of service) should be applicable w.e.f. 1 Jan 2006, and the old provns (operative w.e.f. the Vth Pay Commission) would be applicable till 31 Dec. 05. Regular service for the purpose of ACP shall commence from the date of joining of a post in direct entry grade.

xx xx xx”

Finally, on 30.05.2011 another letter was issued by the Ministry of Defence, relevant portion of which reads as follows:-

“5. The Scheme would be operational w.e.f. 1st Sep. 2008. In other words, financial up-gradations as per the provisions of the, earlier ACP scheme (of August 2003) would be granted till 31.08.2008.”

Therefore, even as per the understanding of the Army and other authorities up till the issuance of the letter dated 30.05.2011 the benefit of MACP was available from 01.01.2006.

10. As already held by us above, there can be no dispute that grant of ACP is part of the pay structure. It affects the pay of the employee and he gets a higher grade pay even though it may be in the same pay band. It has been strenuously urged by Col. R. Balasubramanian, learned counsel for the UOI that the Government took the decision to make the Scheme applicable from 01.09.2008 because many employees would have lost out in case the MACP was made applicable from 01.01.2006 and they would have had to refund the excess amount, if any, paid to them. His argument is that under the old Scheme if somebody got the benefit of the ACP he was put in the higher scale of pay. After merger of pay scales into pay bands an employee is only entitled to higher grade pay which may be lower than the next pay band. Therefore, there may be many employees who may suffer.

11. We are only concerned with the interpretation of the Resolution of the Government which clearly states that the recommendations of 6th CPC as modified and accepted by the Central Government in so far as they relate to pay structure, pay scales, grade pay etc. will apply from 01.01.2006. There may be some gainers and some losers but the intention of the Government was clear that this Scheme which is part of the pay structure would apply from 01.01.2006. We may also point out that the Resolution dated 30.08.2008 whereby the recommendation of the Pay Commission has been accepted with modifications and recommendations with regard to pay structure, pay scales, grade pay etc. have been made applicable from 01.01.2006. This is a decision of the Cabinet.

This decision could not have been modified by issuing executive instruction. The letter dated 30.05.2011 flies in the face of the Cabinet decision reflected in the Resolution dated 30.08.2008. Thus, administrative instruction dated 30.05.2011 is totally ultra vires the Resolution of the Government.

12. Col. R. Balasubramanian, learned counsel for the UOI relied upon the following three judgments viz. P.K. Gopinathan Nair & Ors. v. Union of India and Ors. 1 , passed by the High Court of Kerala on 22.03.2017, Delhi Urban Shelter Improvement Board v. Shashi Malik & Ors.2, passed by the High Court of Delhi on 01.09.2016, K.K. Anandan & Ors. v. The Principal Accountant General Kerala (Audit) & Ors3 passed by the Central Administrative Tribunal, Ernakulam Bench, Kerala on 08.02.2013. In our view, none of these judgments is applicable because the issue whether the MACP is part of the pay structure or allowances were not considered in any of these cases.

13. In this view of the matter we find no merit in the appeals, which are accordingly disposed of. All pending applications are also disposed of.

…………………………..J.

(Madan B. Lokur)

……………………………J.

(Deepak Gupta)

National Anomaly Committee Discussion Items: Anomalies - Dopt Comments - Staff Side Reply

National Anomaly Committee Discussion Items: Anomalies - Dopt Comments - Staff Side Reply

National Anomaly Committee Meeting Agenda Items with the comments of DoPT and also reply from the NC JCM Staff Side

Description of Anomaly	Official Comments	Reply By Staff Side
Anomaly in computation of Minimum Wage  (Item No. 1)	As against the Minimum Wage decided to be Rs. 18000/- by the Govt. w.e.f. 01.01.2016, the Staff-Side has said that this should be not less than Rs. 26,000/-and the multiplication factor ought to have been 3.714 and not 2.57. They have further asked for the pay matrix to be changed. Objecting to the methodology adopted by the 7th CPC in computing the Minimum Wage, they have given a number of reasons like the retail prices of the commodities quoted by the Labour Bureau being irrational, adoption of the 12 monthly average of the retail price being contents to the Dr. Avkrovd f ormula, the website of the Agriculture Ministry giving the retail prices of commodities forming the basis of computation of minimum wage provides a different picture, so on and so forth. However, when one compares this item with the three situations given in DoPT’s OM.No.11/2/2016-JCA dated 16th August, 2016 and 20th February, 2017, it does not appear that this satisfies any of them to be treated as an anomaly.	The 7th CPC categorically stated that the principle adopted for minimum wage determination is Dr. Aykhoyd formula. But deviated from the same while actual computation was made. It becomes an anomaly under clause 1(a) of the definition (see OM dated 16.08.2016).
3% Increment in all stages  (Item No. II)	The Staff-Side argues that in spite of the foreword to the Report making it clear in para 1.19 that the prevailing rate of increment is considered quite satisfactory and has been retained, an illustrative list appended by them shows instances where the pay, gone up after the addition of annual increment by 3%, falls short of what it would have been. They have quoted para-5.1.38 of the report also which states that the rate of annual increment would be 3%.  While what the Staff-Side has stated has its own merits, the fact of the matter is that the principle followed here is whenever a stage of pay, after addition of an increment, falls short of the nearest hundred by less than 50, the employee would be entitled to get the amount mentioned in the immediately next cell in the Pay-Matrix. However, when the gap is that of more than 50, the pay, on addition of an increment, is rounded off to the nearest hundred which travels backward.  For instance, if staying at Rs.46,100/- one gets an increment @ 3%, instead of having his/her pay fixed at Rs. 47,483/- (which is the exact figure), it will be Rs. 47,500/- (thus gaining by Rs. 13/-). Thus it is not a case of permanent loss as the loss in one year is made good in the second/third year. Considering this to he a situation of swings and roundabouts, this may not be treated as a case of anomaly.	At the stage of admission of the items for anomaly, it is not desirable to go into the merit of the case. That will have to be the subject matter of discussion at the meeting. The anomaly on this item has arisen due to the non-adherence of the principle enunciated by the 7th CPC while actual are computed. The item becomes an anomaly under clause (a) of the definition (see OM.No. dated 16.08.2011).
Remove Anomaly due to index rationalization  (Item No. VI)	The Staff-Side has taken exception to the index rationalization followed by the 7th CPC while formulating its views as per which the fitment factor varies and moves upward as one goes up the hierarchical ladder with the level of responsibility and accountability also steadily climbing up commensurately. The Staff-Side argues that the multiplication factor should be one, i.e. 2.81.  Although the Staff-Side has remonstrated that the vertical relativity will suffer distortion in the process, it has to be stated that it is a policy decision about by the Staff-Side comes to be distorted when the pay of a feeder-cadre post and that of a promotional post becomes same. In this case it is not so. Hence it does not appear to qualify for being called an anomaly.	The vertical relativity between grades that was in existence has been distributed by assigning different multiplication factor for different levels by the commission. The so- called policy decision of the Government has only compounded the anomaly. As stated against item no. (ii) The merit or demerit of the issue is a matter for discussion at the meeting and cannot be employed to decide admissibility or otherwise of an item. The item is an anomaly under clause KO of the definition.
Minimum Pension  (Item No. X)	The Staff-Side says the minimum pension fixed after 7th CPC should be corrected and revised orders issued. From the brief explanatory note recorded under this point, it appears that the CPC had sounded out D/o pension on what the latter thought what the minimum pension should be. This is an exclusively pension-related issue on which, as informed by the Staff-Side, D/o Pension was asked for their views by the 7t1 CPC. Moreover, as will be evident, the basic focus of DoPT’s Q.M. No. 11/2/2016-JCA dated 16th August, 2016 and 20th February, 2017 is on taking on board those anomalies which are pay-related. Hence, this item may be taken up separately by the Staff-Side with the D/o Pension. Thus, instead of treating this as a case of anomaly, the Staff-Side is requested to take it up with the D/o Pension separately.	Pension related items are not to be excluded from the preview of the anomaly committee. No such specific decision has ever been taken. May be main focus is decided to be on pay related matters. That can be the view of the Govt. The item is clearly within the ambit of definition of anomaly clause I (a) where it is stated that the policy enunciated is deviated without the commission assigning any reason. No reason is adduced by the 7th CPC to fix minimum pension at 50% minimum wage. This is clearly an anomaly and requires to be admitted as such and discussed at the meeting.
Date of effect of allowances HRA, Transport Allowance, CEA etc.    (Item No.XI)	The Staff-Side has demanded that the grant of the allowances (revised) mentioned alongside should be made effective from 01.01.2016 and not from 01.07.2017.  This is a demand and cannot be treated as an anomaly. Moreover, the date from which a benefit is to be made effective is something which can be decided only by the Government. Hence, this may not be taken up at the NAC.	The Govt. has the prerogative to decide upon on any issue. We have not questioned that  authority at all. it is the rationale behind the decision that is questioned. While the 7th CPC has gone on record to state that its recommendations are with effect from 1.1.2016 the decision to give effect to revision of allowances from another date is a deviation and contravenes the principle enunciated. The Govt may have sufficient reason to do so but that can be explained at the meeting. The item is therefore an anomaly under clause 1(a) of the definition. In this connection we may also state that similar decision on earlier occasions were subjected to discussion and having reached disagreement were referred to the Board of Arbitration. The Government lost its case before the Board.
Anomaly in the grant of D.A instalment w.e.f 01.01.2016.  (Item No. XVIII)	Here the Staff-Side has questioned the methodology adopted by the Government in computing the DA instalment w.e.f. 01.01.2016.  It has, however, to be pointed out that even if there is merit in the contention of the Staff-Side involving this item, it does not qualify being called an anomaly when it is examined in the light of the three situations which, as per DoPT’s Q.M. No. 11/2/2016-JCA dated 16th August, 2016 and 20th February, 2017, would constitute anomalies.	When the Govt. takes decision to deviate from the recommendation of Pay Commission whereby either all or a section of employees are to incur financial loss, it amounts to deviating from the policy or principle enunciated by the commission. In the instant case in the face of recommendation to continue with the existing scheme of DA, the Govt. has taken decision to reduce DA entitlement. Apart from long term impact it also unsettles the principle. The item is covered within the ambit of clause 1(a) of the definition (OM No. Dated 16.08.2016). item has to be admitted.
Implement  the recommendation on Parity in Pay Scale between Sr.  Auditor/Sr. Accountant of IA&AD and organized Accounts with Assistant Section Officer of CSS.  (Item No. XII)	The Staff-Side says that although the 5th, 6th and now 7th CPC’s have recommended that the pay-scales of different cadres/categories/grades requiring the same recruitment qualifications should be the same, denial of the same benefit to the Statistical Assistants (SA’s) who are otherwise at par with Assistant Section Officers (erstwhile ‘Assistant’) is a violation of the principle. While ASO’s are placed in the Pay-Matrix of 7, SA’s are in the Pay-Matrix of 6. This arrangement is stated to have disturbed the horizontal relativity between the pay-scales of the SA’s in the Organized Accounts and IA&AD Cadre and ASO’s in the CSS cadre. In conclusion, it has been requested that SA’s should also be placed in Pay-Matrix no. 7.  Even if, the present case comes across as one of anomaly, it appears that the interests of the Statistical Assistants only are involved. ASO’s of CCS are coming into the question; but only as a reference point, by way of comparison. Hence the Staff-Side is requested to take up this issue at the Departmental Anomaly Committee concerned.	Where an item is related to more than one department, the said item shall qualify for admission at the NAC. The item is covered by clause i(c) of the definition.
Technical Supervisors  of Railways  (Item No. XV)	This particular item is exclusively Railways-specific. The Staff-Side, NC OCM) is requested to take it up at the Departmental Anomaly Committee of MR) Railways.	We shall take up the above issue in Railway DAC.
Anomaly  in  the assignment  of replacement of Levels of pay in the Ministry of Defence, Railways, Mines etc in the case of Store Keeper   (Item No. XVI)	Staff-Side says that although ‘Store keeper’ is one such category of posts which is common to various Departments like Defence, Mines, Railways etc and in spite of the nature of job, responsibilities being similar, the pay-scale of storekeepers across all the Departments is not the same. It is still less in the M/o Defence even after the entry-level qualifications which were different before the 7th CPC stage, have been revised.  If what the Staff-Side remonstrates that even after the requisite changes had been carried out in the R/Rules, the 7th CPC did not take any cognizance of it is true, it has to be assumed that it is a policy decision of the Government. Moreover, the issue appears to be M/o Defence-specific. The Staff-Side is requested to take it up at the Departmental Anomaly Committee meeting of the M/o Defence.	Where an item is related to more than one department, the said item shall qualify for admission at the NAC. The item is covered by clause i(c) of the definition.
Anomaly arising from the decision to reject option-1 in pension fixation   (Item No. VII)	As per the ToR of the NAC, anomalies are basically pay-centric. Under this point, the contention of the Staff-Side is pension-centric. Furthermore, the Staff-Side has themselves clarified that post-7th CPC, Government had set up a CoS headed by Secretary(Pension) to look into the first option recommended by the 7th CPC. Eventually, this was not found feasible to be implemented. With such a decision having been taken at the CoS level, it cannot be called an anomaly. In view of this, we may inform the Staff-Side to separately take it up with D/0 Pension without treating it as an anomaly that can be taken up at the NAC.	It the Govt deviates from the recommendation of the Pay Commission it give rise so anomaly as the Pay Commission recommendations are in consonance with the policy it had enunciated. In the instant case Govt. setup a committee to go into the feasibility of implementation of the recommendation. Feasibility of implementation cannot be the basis for rejecting a recommendation. The very feasibility question itself will have to discussed at the meeting. The issue is well within the ambit of definition of clause i (a) OM Dated 16.8.2016, where the principle enunciated is disturbed by the Government.
Parity in Pay Scales between Assistants/ Stenographers in field / subordinate officers and assistant Section Officer and stenographers in CSS.   (Item No. XIII)	Although the heading of this item is self-explanatory, the relevant text given in the paper sent is not complete as the pay-scales of Assistants and stenos posted in field have not been mentioned therein. Until their pay-scales are known they cannot be compared to check whether there is indeed any anomaly. The Staff-Side is requested to provide more information that is relevant so that it can be properly examined to find out whether an anomaly arises here or not.	We shall send further details.