Encl 215/A
Report of the High Powered Committee Constituted to
Assess the Financial Impact in the Implementation of the
Order dated 8.3.2010 of the Hon’ble Supreme Court in
Writ Petition (C) 96/2009 – Sunil Kumar Chand & Ors Vs Union of
India & Others
This
High Powered Committee was constituted vide Ministry of Defence O.M. No. 34
(1)/2006 – D (Pay/Services) dated 5.4.2010 to assess the financial implications
arising from implementation of the Hon’ble Supreme Court’s Order dated 8.3.2010
in W.P. (C) No. 96/2009 – Col. Sunil Kumar & Ors Vs Union of India &
Ors and Transfer Petition (C) No. 56/2007 – Union of India vs. N.K. Nair &
Ors. in the matter of Rank Pay. The Committee met on 7.4.2010 in the Chamber of
Defence Secretary.
2.
The Committee was apprised of the brief
background of the case. One Major A.K. Dhanapalan (Retd) filed a writ petition
in the Hon’ble Kerala High Court in 1996 challenging the process of revision of
pay w.e.f. 1.11986. His main pleas was that Rank Pay must not be deducted while
revising the pay. The writ petition was allowed by the Single Judge vide
judgment dated 5.10.1998. A writ appeal filed by the Union of India against the
Order of the Single Judge was dismissed by the Division Bench vide its judgment
dated 4.7.2003. An SLP filed by the Union of India in the Hon’ble Supreme Court
against the decision of the Hon’ble High Court was dismissed on ground of delay
vide Order dated 12.7.2005. The decision was then implemented in favour of the
sole petitioner, Maj. A. K. Dhanapalan (Retd).
3.
Thereafter, on the advice of the Learned
Additional Solicitor General of India, Transfer Petition (C) No. 56/2007
seeking transfer of 11 writ petitions filed in different High Courts on the
same issue was filed in the Hon’ble Supreme Court in 2007. The Hon’ble Supreme
Court granted stay in the matter vide Order sated 5.2.2007. In 2009, two more
writ petitions as mentioned above were filed in the Hon’ble Supreme Court in
the similar matter. Ministry of Defence filed a Counter Affidavit in the
Hon’ble Supreme Court. The Transfer Petition filed by the Union of India and
the two writ petitions were tagged together. All these cases were taken for
hearing on 8.3.2010 when the Hon’ble Supreme Court allowed all the writ
petitions, agreeing with the judgment of the Single Judge as well as that of
the Division Bench of the Hon’ble Kerala High Court. The Hon’ble Supreme Court
also directed the Government to pay interest @ 6% per annum thereon.
4.
The point under contention in all these
interconnected matters is the methodology for pay revision/fixation as
recommended by the Fourth Central Pay Commission and accepted by the
Government. The Pay Commission gave its recommendation on pay fixation in para
28.113 of its report which was accepted by the Government. The relevant para of
the Pay Commission Report is reproduced hereunder:
Fixation
of pay in the proposed scales
28.113. ‘In Chapter 30
we have recommended the method for fixation of pay in the proposed scales for
civilian employees, we recommend that the same method may be adopted for
fixation of pay of armed forces personnel also. Since rank pay is a separate
element for officers upto the rank of Brigadier and equivalent, the same may be
taken into account while fixing pay in the integrated scale of pay recommended
by us. An illustration showing the pay in the integrated scale of pay for army
officers of different ranks is given in Annexe 28.1. The following illustration
indicate the manner in which pay should be fixed for armed forces personnel.
Illustration No. 1
1. Rank Captain
2. Existing Basic pay Rs . 1300.00
3.DP/ADA on basic pay at the index
Average 608 and interim relief Rs 1650.00
4. Existing emoluments Rs 2950.00
5. Add 20% of basic pay Rs 260.00
Total Rs
3210.00
6. Pay to be fixed in Rs 3100 + Rank Pay Rs200
Integrated scale
5.
Till 31.12.1985 (i.e. prior to 4th
Central Pay Commission), the Service Officers had distinct pay scales for the
various ranks and there was no separate rank pay. The 4th Central
Pay Commission introduced for the first time for the Armed Forces Officers an
integrated pay scale from the rank of 2nd Lieutenant to the rank of
Brigadier. To differentiate between ranks, rank pay was carved out for the
ranks of Captain to Brigadier. The 4th Pay Commission specifically
mentioned that the method of pay fixation adopted for civilian employees may
also be adopted for Armed Forces personnel. Four illustrations on the manner of
fixation of pay of Commissioned Officers were given in the Report itself. Pay
fixation was done strictly in accordance with the recommendations of the
Commission accepted by the Government and the illustrations given in the
Commission’s Report.
6.
Going ahead with the above recommendations which
were accepted by the Government, Ministry of Defence issued Special Army
Instruction (SAI) dated 23.6.1987. Relevant portions of the SAI reads as
follows:
Fixation of Initial Pay in the Revised Scales
6. Fixation of initial pay in the revised scales will be regulated as
follows:-
(a) (i) An amount representing 20 percent of
the basic pay in the existing scale shall be added to the existing emoluments
of the officer.
(ii) After the existing emoluments have been
so increased, an amount equivalent to the rank pay, if any, appropriate to the
rank held by the officer on 01 January, 1986 at the rates prescribed in para 3
(a) (ii) above will be deducted. Thereafter, the officer’s pay will be fixed in
the revised scale at the next stage above the amount thus computed.
In addition to the pay so fixed in the revised scale,
officers were eligible for Rank Pay.
7.
This deduction of rank pay during the process of
fixation of pay has been challenged in the above court cases. The Hon’ble
Supreme Court vide Order dated 8.3.2010 has upheld the decisions of Hon’ble
Kerala High Court that Rank Pay must not be deducted.
8.
Controller General of Defence Accounts (CGDA)
was requested to work out the financial implications of implementation of the
above Order of Hon’ble Supreme Court. CGDA made a detailed calculation and
submitted their report on 6.4.2010. The Committee, after detailed
deliberations, assessed the financial impact on the basis of report of CGDA
dated 6.4.2010. The Committee noted that 46,480 serving officers (estimated)
are covered and arrears amounting to around Rs 426 crore are required to be
paid to them. On Pension side, arrears amounting to around Rs 83 crore are
required to be paid to retired officers. Calculations by CGDA reveal that
interest @ 6 % per annum as ordered by the Hon’ble Supreme Court on these
arrears on Pay and Pension comes to around Rs 932.94 crore and Rs 181.77 crore
respectively. Thus, the total financial impact calculated by CGDA is rs 1623.71
crore approximately. The repercussions on similar situations in subsequent pay
fixations will have additional financial implications.
9. Apart from the enormous
financial implications, actual implementation of the Hon’ble Court’s order
would involve the following stages: -
§
Revision of pay of officers on 1.1.1986,
1.1.1996 and 1.1.2006 with simultaneous revision of all pay linked
allowances/benefits. Enormous efforts are required to extract data from all
backed up resources, including information relating to promotion, annual
increment, stagnation increment, details of forfeiture, admissibility,
discontinuation of relevant allowances, calculation of Income tax and
apportioning the same over the years;
§
Calculation of DA on slab basis from 1.1.1986 to
31.12.1995 is time consuming;
§
Revision of retirement benefits (gratuity, leave
encashment) of officers retiring after 1.1.1986;
§
Revision of pension on 1.1.1986, 1.1.1996 and
1.1.2006;
§
In several cases, family pensions would have to
be revised on the basis of revised pay/pension of the officer;
§
In some cases, payments may have to be made to
legal heirs of the deceased retired officers; and
§
Interest at the rate of 6% per annum for upto 24
years in each case will have to be calculated and paid.
This would be a protracted
exercise taking a lot of time and involving huge manpower as each case will
have to be examined/calculated individually.
10. Financial implications of
around 1623.71 crores arising out of implementation of the Hon’ble Supreme
Court order dated 8-3-2010 would create
a substantial impact on the public exchequer. This impact in only one time. In
addition, it would also lead to enhanced recurring expenditure from
Consolidated Fund of India. It would further nullify the recommendation of the
Pay Commission as well as the decision of the Government thereon. The Committee,
therefore, is of the view that the financial implications and above facts and
in the present matter may be submitted to the Hon’ble Supreme Court for considerations.”
Sd/----------------- Sd/------------------------------ Sd/--------------------------
Indu Liberhan Sushama
Nath Pradeep
Kumar
Secretary Secretary Defence Secretary
Secretary Secretary Defence Secretary
Defence (Finance) D/o
Expenditure
M/o Defence M/o
Finance
*****
From Annexure I to UoI Additional Affidavit filed on 21.4.2011
1.
Extracts
from MoD Resolution No. 1(E) dated 18.3.1987
“The decisions of the Government of
India on the recommendations of the Fourth Pay Commission relating to personnel
below Officer rank of the Armed Forces were notified in the Ministry of Defence
Resolution No. 1-E dated 4th October 1986. Government have now given
careful consideration to the recommendations of the Commission relating to
structure of emoluments and allowances of Commissioned Officers and have
decided that recommendations of the Commission in respect of these shall be
accepted broadly, subject to the modifications mentioned below: -
Pay Scales:
Integrated Pay scale for officers
upto the rank of Brigadiers (including AMC, ADC and RVC officers, but,
excluding Military Nursing Service Officers) and equivalents in the Navy and
the Air Force would be Rs 2300-100-3900-150-4200-EB-150-5100. In addition to
pay in the integrated scale, rank pays will be admissible as follows: -
Rank Amount of Rank Pay
(Rs.
Per month)
Captain and equivalent -200
Major and equivalent -600
Lt Col (Selection) and
equivalent -800
Colonel and equivalent -1000
Brigadier and equivalent -1200
2.
Pay
Fixation in Integrated Pay scale of Services (Rs
2300-100-3900-150-4200-EB-150-5100) and corresponding Civilian Pay Scales
Services Pay Fixation in the rank of Captain (Rs 1100-50-1550) as per
SAI 1/S/1987 dated 23.06.1987
1. Existing Basic Pay Rs 1300
2. DA/AD on basic pay etc Rs 1650
3. Existing emoluments Rs 2950
4. Add 20% of Basic Pay Rs 260
Total
Rs 3210
5. Deduct Rank Pay Rs 200 Rs 3010
6. Pay to be fixed in
integrated scale
Rs 3100 +
Rank Pay Rs 200
Total emoluments Rs 3300
|
Civilian pay fixation in the pay scale of Rs 1100-1600 (MoF
Notification No. F.15 (1)-IC/86 dated 13.09.1986
1. Existing scale of Pay Rs 1100-50-1600
2. Revised scale of Pay Rs 3000-100-3500-
125-4500
3. Existing basic pay Rs 1300
2. DP/ADA/Ad hoc DA etc Rs 1650
3. Existing emoluments Rs 2950
4. Add 20% of Basic Pay Rs 260
5. Total
Rs 3210
Pay to be fixed in revised scale
Rs 3300
|
Services Pay Fixation in the rank of Major (Rs 1450-50-1800) as per
SAI 1/S/1987 dated 23.06.1987
1. Existing Basic Pay Rs 1600
2. DA/AD on basic pay etc Rs 1740
3. Existing emoluments Rs 3340
4. Add 20% of Basic Pay Rs 320
Total
Rs 3660
5. Deduct Rank Pay Rs 200 Rs 3060
6. Pay to be fixed in
integrated scale
Rs 3400 +
Rank Pay Rs 600
Total emoluments Rs 4000
|
Civilian pay fixation in the pay scale of Rs 1500-2000 (MoF
Notification No. F.15 (1)-IC/86 dated 13.09.1986
1. Existing scale of Pay Rs 1500-60-1800
-100-2000
2. Revised scale of Pay Rs 3700-125-4700-
150-5000
3. Existing basic pay Rs 1600
2. DP/ADA/Ad hoc DA etc Rs 1740
3. Existing emoluments Rs 3340
4. Add 20% of Basic Pay Rs 320
5. Total
Rs 3660
Pay to be fixed in revised scale
Rs 3700
|
2.From Part III of the Reply dated 3.4.2013 to RTI
Most Immediate
Court Case
Ministry of Defence
D (Pay/Services)
Sub: Implementation
of Supreme Court order dated 4.9.2012 in the rank pay case.
With
reference to the discussions held in the office of the AS (A) on 4.12.2102 on
the subject, it is requested that a revised DGL may be furnished regarding the
modalities and methodology of payment in the Supreme Court Rank Pay Judgment
dated 4.9.2012, which should address the following issues:
“…………………….. (vi) Whether the
Affidavit filed by the Committee of Three Secretaries in the Supreme Court will
have any impact on the re-fixation of pay in the Rank Pay case…..”
Sd/--------------------------
(Praveen Kumar)
Director (AG.I)
Jt CDGA (AT.I) Shri Mohinder Singh
MoD ID No. 34(6)2012-D (Pay/Services) dated 6.12.2012
Encl 71/A
Urgent/Court case
Office of the CGDA, Ulan Batar Road, Palam, Delhi Cantt-10
Subject: Implementation of
Hon’ble Supreme Court order dated 4/9/2012
in IA No. 9 of 2010 in Transfer Petition No. 56 of 2007
filed by UoI v/s N.K. Nair & Ors on the matter of Rank Pay.
Reference:
MoD, D (Pay/Services) two IDs both bearing No. 34 (6)/2012 – D(Pay/Services)
dated 06/12/2012 addressed to this HQ office and copy to your office.
*****
As
desired in MoD Ids cited above, the revised DGL addressing the issues regarding
minimum pay for each rank, integrated scale, method of fixation of pay from
01/01/1996 and admissibility of Grade Pay is forwarded herewith for
consideration.
2.
Regarding Dearness Allowance, Interim Relief and
Dearness Pay and Non-Practising Allowance in r/o AMC/ADC/RVC there is already
provision in Para 2 (e) of the DGL.
3.
Following is submitted for consideration
regarding method/procedures if the pay crosses the maximum of the pay scale
after requisite fixation and whether the excess amount should be treated as
personal pay or otherwise in Para 1(iv) of MoD ID dated 06/12/2012……...
4.
The DGL has been prepared by this HQ office as
per the Hon’ble Supreme Court order dated 04/09/2012. The DGL caters for the
affidavit filed by the Committee of Three Secretaries in Supreme Court.
However, Secretary Defence (Finance) being one of the signatories, views of MoD
(Finance) may be obtained in this regard.
5. The details of rank-wise calculations of the minimum and the
maximum of the pay scales as per proposed revised DGL have been called for from
the PCDA (O) Pune. The same will follow shortly.
Sd/-------------
(K L Mound)
ACGDA (AT-I)
Phone No.011-25665581
Sh. B. K. Mukhopadhyay
JS & Addl FA (M)
MoD (Finance) (AG/PA)
New Delhi
***************
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